THE COMMODITY BUST YEARS?

Transcription

1 THE COMMODITY BUST YEARS? The Potential for Sustained Low Crop Prices, and Industry Implications A Multi-Client Study July 2015 Study Objective Global grain and oilseed markets have shifted from being in a deficit position over most of the last decade to a situation where supplies have been replenished, and prices have fallen dramatically from record levels. Without a readily apparent new driver of rapid consumption growth, the prospect exists for supplies to remain abundant and, at times, even burdensome over the coming years, assuming normal weather. On the other hand, cattle and beef prices remain near record highs, with herd rebuilding just starting in North America, while hog and poultry markets are in differing stages of rebounding from disease issues. If sustained, this commodity price reset could have profound implications across the supply chains for agriculture and food, as well as for businesses that serve the sector. The allocation of crop area could shift within North America and globally, and compressed crop-production margins could present new challenges to producers. At the same time, pressure could continue easing on livestock and poultry producers. This is occurring within a dynamic environment, in which domestic consumer buying habits are evolving, overseas markets have become pivotal for certain commodities, trade agreements are in late stages of negotiation, and Big Data and other technologies are pervading the supply chain and affecting management practices. Given these developments, Informa Economics is undertaking a special multiclient study to examine the prospects that a low-price environment for grains and oilseeds will persist, the developments that could cause prices to rebound, and the implications of a sustained realignment in prices for crop and animal agriculture, food, biofuels, transportation, finance and other ancillary industries.

2 Multiclient Study: The Commodity Bust Years? 2 Commodity Price Developments over the Last Decade Key Questions Addressed by the Study What forces will drive supply and demand in the agriculture sector over the next 5-10 years? What is the outlook for economic growth in key countries? Will growth in world population and especially middle-class incomes be enough to keep up with productive capacity? What are the implications if growth in China is higher or lower than expected? What countries/regions beyond China can emerge as growth markets for agricultural commodities? Will India realize its potential over the next decade, or will it still remain a longerterm prospect? How could other macroeconomic factors, such as exchange rates, influence conditions in the agriculture sector? How long will low crop prices continue for grains and oilseeds? What besides weather events could emerge to drive prices higher? Geopolitical developments?

3 Multiclient Study: The Commodity Bust Years? 3 Trade impediments? Changing consumer patterns? How will crop area allocations shift within and across the main countries producing grains and oilseeds? Under pressure from low prices, will South America or the U.S. cut back on soybean area? Will the Black Sea become more or less competitive with respect to grain exports? Will U.S. and other producers increasingly seek value-added crop opportunities and, if so, what will those likely be? How will meat and poultry production evolve among major countries? Will better margins drive meat exports for efficient producers? What will be the impact on/from U.S. government policies: Support programs? Trade negotiations? What is the outlook for farm incomes in the U.S.? In light of the crop-price outlook, will high production costs and increasing environmental regulations squeeze production margins? What will be the interplay between commodity production/price developments and the adoption of the use of Big Data and other technologies pervading the supply chain? How will this affect management practices? Will low prices impact technology adoption rates? What would be the implications of a sustained realignment in commodities markets? Who will be the winners and losers? What industry segments? What regions? How will the structure of supply chains be affected? Will this spur further consolidation in certain segments? What are the implications for risk-management and financing needs and practices? What ripple effects could occur to ancillary industries? Study Deliverables Study Kickoff Webinar/Conference Call. Subscribers and Informa study staff will review the detailed plans for the study and identify the topics and issues that subscribers want to receive the most attention during the research and analysis. Comprehensive Study Report. All subscribers will receive the comprehensive study report, containing the findings from the analysis along with supporting tables and figures.

4 Multiclient Study: The Commodity Bust Years? 4 Group Presentation. Following delivery of the report, the findings will be presented by the study team to subscribers as a group. Depending on the preferences of subscribers, this can take the form of a half-day meeting in person or can be conducted via a webinar. Optional One-Day Seminar at Subscribers Offices. As requested, Informa staff will travel to subscribers offices to present and discuss the study findings. Please note that a professional fee will be charged for these meetings, and travel costs for Informa staff will need to be reimbursed. Preliminary Study Schedule The following is a preliminary schedule for the study. Dates will be finalized once subscriptions are sufficient to proceed with the study. July/August 2015: Study kickoff webinar/conference call; November 2015: Study completed and report delivered to subscribers; and November/December 2015: Group presentation and start of presentations at subscribers offices. Study Fees The fees for participating in the study are $15,000 for Informa clients and $18,500 for nonclients. For the optional one-day seminar at clients offices, an additional fee of $2,500 plus travel expenses will be charged. About Informa Economics Informa Economics, Inc. is the world leader in management consulting, commodity market analysis and risk-management advisory services for the agribusiness, energy and transportation industries. Founded in 1977, the company is now a unit of Informa plc and serves hundreds of firms and institutions worldwide. The Informa Economics Group encompasses Agra CEAS Consulting in Europe and Informa Economics-FNP in Brazil, creating an international network with offices in the U.S., Canada, the United Kingdom, Belgium and Brazil, and employing over 200 people. Our mission: "To be a vital force in the success of agriculture, food, energy and transportation interests around the world." Informa offers a comprehensive package of reports containing estimates and forecasts of U.S. and world supply/demand fundamentals and prices for the crop, livestock/meat and energy markets. The following markets are covered:

5 Multiclient Study: The Commodity Bust Years? 5 All major grains, oilseeds and products (i.e., meal and oil); Cotton and fibers; Sugar (U.S. and world markets); Livestock, meat, poultry and dairy; Feed ingredients; and Energy products. Related to this work, Informa analyzes transportation conditions and government policies. Additionally, Informa has developed a global framework for conducting longterm supply/demand forecasts for crops (grains and oilseeds) and livestock, meat and poultry, encompassing major countries and regions. Prices are forecast for the U.S. Informa s Consulting Group provides management consulting services to organizations in the agriculture, renewable fuels, food processing, foodservice and conventional energy sectors. Clients include corporations, cooperatives, trade associations and government agencies in the U.S., Canada and overseas. Informa advises clients on a broad range of economic, market, risk management, financial, strategic and policy issues. Additional information about Informa Economics is available on our website,

6 Multiclient Study: The Commodity Bust Years? 6 ENROLLMENT FORM Yes, I want to participate in the multi-client study, The Commodity Bust Years? The Potential for Sustained Low Crop Prices, and Industry Implications. The cost of the study is $15,000 for clients and $18,500 for non-clients. One-half of the study fees will be billed upon initiation of the study, and the remaining half will be billed upon delivery of the final report. Please have someone contact me to provide further information. Name: Signature: Title: Company: Street Address: City, State, ZIP: Telephone: Please Return This Form to: Tom Scott Scott Richman Joe Somers Chief Executive Officer Senior Vice President Vice President Informa Economics, Inc. Informa Economics, Inc. Informa Economics, Inc. 775 Ridge Lake Blvd., # Ridge Lake Blvd., # Elm Street Memphis, TN Memphis, TN McLean, VA T: (901) T: (901) T: (703) F: (901) F: (901) F: (703) tom.scott@informaecon.com scott.richman@informaecon.com joe.somers@informaecon.com