GIWA Presentation Seeding Success Barley Update. Trevor Lucas CBHGrain Barley Trading Manager

Transcription

1 GIWA Presentation Seeding Success Barley Update Trevor Lucas CBHGrain Barley Trading Manager

2 Agenda Malting v Feed key developments Long term trends and new competition Receival Standards Malting barley declarations and management

3 GLOBAL BARLEY IMPORTS BY DESTINATION TY Imports 2006/ / / / / /12e 2012/13f Brazil China 1,127 1,091 1,551 2,341 1,656 2,400 2,500 Colombia EU Iran - 1,000 1, , Israel Japan 1,359 1,361 1,346 1,411 1,359 1,300 1,300 Jordan Kuwait Libya Mexico Morocco Russia Saudi Arabia 6,000 8,000 7,700 7,200 6,200 8,000 7,000 United Arab Emirates United States Others 1,614 2,242 2,557 1,679 2,108 2,290 1,450 TOTAL 14,641 18,594 18,203 17,288 15,207 20,090 17,1

4 Saudi Arabia Saudi feed demand has been steady for past 10yrs (7MMT). Feed barley imports continue to be subsidised by the Government however Saudi Grain and Fodder are the only permitted importer. Single buyer has eliminated importer speculation and pressurised global feed values over the past 2yrs. Saudi Ministry has signed a supply agreement with the Ukrainian Government to secure long term supply. Argentina however evolving as the key supplier. In 2008, the Saudi Ministry of Agriculture (MOA) announced Saudi Arabia s animal feed policy that included a 50 percent reduction in barley imports by 2015.

5 Japan - Feed Japan is a mature market with a consistent annual demand between 800kmt 1MMT. Market dominated by Unicoop and Kogyoki (approx 50% import market share each). Unicoop are a long time procurer of WA feed barley, supporting CBHGrain barley pools. Kogyoki import via monthly tenders and accept any origin, worlds cheapest barley. Unicoop are typically spot buyers and are starting to get tempted by cheaper lower quality originations (Black Sea, Argentina).

6 Japan - Shochu Mature market with annual import approximately 200kMT. Shochu sales have fallen in Japan over past decade however appears to have bottomed. WA still the largest supplier annually (between kMT) however is currently struggling to maintain or grow why? Competition from East Coast Hindmarsh Agronomic demise of Stirling and Baudin in WA Reluctance to accept WA Hindmarsh or Vlamingh BASS will be promoted as a replacement for Baudin; however acceptance can take up to 3 yrs.

7 China Malting and FAQ China s total barley import is recovering, as local growers turn to subsidised crops and beer industry grows. Brewers now CONTROL Chinese barley imports, squeezing malt-houses profits, reducing speculation and pressurising premiums; very evident over past 2 seasons. Lower value, quality germinating barley commands the highest demand as maltsters search for arbitrage opportunities. High value, premium malting demand typically sourced direct from brewers (ABInbev, CRB) and toll malted by the malt-house. Premium malting demand steady between kMT (100% imported).

8 China Malt2 and FAQ China import demand growing (1 1.5MMT). Not a new market; replacing local production, which is typically low quality and value. Australia well placed to continue to dominate this market as Hindmarsh, Vlamingh and high yielding feed provides traders and Chines buyers a growing suite of options. Canada and Argentina looking to aggressively take market share away from Australia. Expect Malt1 premiums to remain under pressure while access to lower value varieties continues to grow.

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12 Historic Malt/Feed Spread (WA) Historic Malt/Feed Spread (WA Pool) $80.00 $70.00 $60.00 $50.00 Spread $40.00 $30.00 $20.00 $10.00 $- 1990/ / / / / / / / / / / / / / / / / / / / / /12 Malt / Feed Spread 20 yr Average Spread 10yr Average Spread 5yr Average Spread Linear (Malt / Feed Spread)

13 Hindmarsh High yielding variety beginning to dominate grower barley acreage WA 25% / SA 25% / VIC 60% / NSW 50% 2011/12 provided a perfect storm of low malting premiums to encourage growers to seek yield in 2012/13. Suspect reduced access to premium varieties will provide support for their values, albeit at narrower levels seen in the past. Strong evidence the market is evolving to align supply with market demand segments. Varieties like Hindmarsh will continue to frustrate storage and handlers as value propositions are difficult to ascertain.

14 GLOBAL BARLEY EXPORTS BY ORIGIN TY Exports 2006/ / / / / /12e 2012/13f Argentina ,531 3,600 4,200 Australia 1,927 3,377 3,278 3,846 4,088 5,200 4,100 Canada 1,337 2,947 1,618 1,203 1,052 1,400 1,700 China Croatia Egypt EU-27 4,366 3,888 2,374 2,389 4,594 3,400 2,500 India Kazakhstan Kenya Moldova Russia 1,691 1,277 3,598 2, ,400 1,500 Serbia Turkey Ukraine 2,911 3,814 5,871 5,752 2,446 2,000 2,500 United States Others TOTAL 14,641 18,594 18,203 17,288 15,207 20,090 17,125

15 Argentina the New Frontier Argentina is the only origination significantly increasing its barley plantings. Restrictive wheat export taxes has incentivised growers to switch former wheat acreage into barley. Traders such as InterBrau opened up the Chinese and EU markets to Argentinean malting barley. The main variety grown is Scarlett, a traditional EU variety accepted by both EU and Chinese markets. Argentine feed has been the price leader into Saudi for past 18 months, traditionally the Black Sea s domain. Barley values traditionally linked with CBOT wheat Unstable government and weather will limit future supply reliability.

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17 WA Barley Receival Standards Increased 2.5mm screen Agtator Shake from 20 to 40 Implemented for the following reasons; Improve the accuracy of screenings measurement for CBH Operations on in-turn and out-turn. Reduce CBH s exposure to quality claims. Improve malting barley buyers confidence when selling against CBH weighted average specifications.

18 WA Barley Receival Standards Reduce 2.5mm screenings from 25% to 20% max for MALT1 Due to be implemented in the 2013/14 harvest. Implemented for the following reasons; Closer align WA receival standards to end user requirements. Limit the detrimental effect of grower on-farm blending. Improve the value and marketability of WA malting barley. Leverage of CBH s ability to offer MALT2 segregations. Reward growers for delivering premium quality malting barley. Improve the reputation of WA malting barley.

19 FARM WEEKLY ARTICLE The problem malting barley buyers face can be evidenced with practices such as below; he said he remedied a quality problem by buying barley seconds from growers throughout the Great Southern. Most of it was 90% screenings but had a colour of 60, he said. So we blended five tonnes in road train and our barley made Malt1 no trouble at all. The so-called Malt that I have been delivering over the last couple of weeks is bad quality grain he said

20 WA Barley Receival Standards Colour it matters..and it stays! The first shipment of 11/12 malting barley has had a customer complaint and claim; Fyi, there is serious complain about CBH Baudin malting barley shipped on MV Pos Jade ETA Dec 28, Condition of Baudin is very dirty, color is brown-black (very different to typical color of malting barley), dark muddy waste water after cleaning, more cleaning water is required and ph control is very difficult in malting. OB malting plant suspects that CBH shipped inferior and unclean Baudin malting barley. There will be claim report and I will pass the report by separate message.

21 Malting Barley Declarations and Management Maintaining high levels of varietal purity is critical to the industry. All varieties of malting barley have different characteristics that effect selection and how it is grown, malted and brewed. For growers, every variety is managed differently due to agronomic requirements. In the malthouse, every variety is malted differently due to quality variation in these characteristics. Growers need to be very careful when blending grain prior to CBH delivery. Some varieties are getting old, so we need to be vigilant.

22 World Barley Ending Stocks World Barley Ending Stocks 40,000 35,000 30,000 Tonnes,000 25,000 20,000 15,000 10,000 5, Year