Protein Trends & Technologies Seminar May 23-24, 2017

Transcription

1 Protein Trends & Technologies Seminar May 23-24, 2017

2 Overview o Introduction to Mercaris o Overview of Organic o Understanding the Organic Supply Chain Grains Dairy o What to Watch: 2017 and beyond o How to Get an Edge in Today s Market (Opportunities)

3 Market Data Service and Trading Platform for organic, transitional, and non-gmo agricultural commodities.

4 Volume Weighted Average Prices Spot & Forward Food & Feed US Regional Basis Canadian IP vs. Conventional Price Tracking Trade Volume Reports Acreage Infrastructure/Mapping Demand Analysis Mercaris Data Service

5 Where does Mercaris get Data? o On-line Price/Volume Survey Price data available from 2013 Approximately 60 first handlers participate Prices represent 8-15% of total organic corn, wheat, soybean crop o Analysis of other datasets: US Customs, USDA (where available) o Trading Platform Real time prices, volumes Over $4.5M notional traded in Q1 2017

6 Mercaris Online Trading Platform 1. Matches buyers and sellers electronically 2. Secure, centralized location for transactions 3. Increases the pool of buyers and sellers you can do business with 4. Low transaction costs

7 Organic as Driver of Food Industry Growth 10% CAGR in Sales 2016 Estimated Sales: $45-47B Source: OTA State of the Industry 2016

8 Organic Sales by Category Share of Total Organic Sales, 2015 Organic Sales CAGR Source: OTA State of the Industry Established: Fruits and vegetables accounted 36% percent of U.S. organic food sales and only 10% of growth, year-on-year. Dairy is the second largest category.

9 Organic Grains & Dairy Emerging: Meat, fish, poultry, snack foods, breads, grain, and packaged foods will require disproportional growth in grains & oilseeds relative to other crops. 2% Animal Feed Demand 26% 48% 24% Dairy Cows Poultry Beef Hogs/Other

10 Is Organic Demand Outpacing Supply? Source: OTA State of the Industry 2016

11 What s Different (and Difficult) about Organic? Production o o 3-year transition period New farm management techniques Handling/Processing/ Manufacturing/Logistics o o o o Limited organic processing and storage availability (costs & lead time) Consistent organic raw commodity supply Market transparency issues in commodity and finished product market Understanding sustainability implications of going organic Everything Else Financial risk management, higher stakes Rotational crops (barley, oats, legumes) Price discovery Achieving/maintaining organic certification

12 Organic Corn Prices 30 day average, 2017

13 2016 Total Organic Corn Acreage

14 Organic Soybean Prices 2015 to present

15 Organic Soybean Prices 30 day average 2017

16 Organic Wheat Prices & Imports Commercial Grade Prices, 2017

17 Organic Dairy- Dramatic Growth Million lbs 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Estimated Organic Fluid Milk Production Source: Mercaris

18 Organic Dairy- Gaining Market Share Million lbs. 50,000 40,000 30,000 20,000 10,000 - Total Fluid Milk Sales Total Conventional Milk Products Total Organic Milk Products Organic Market Share 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Organic Market Share %

19 Growth of Organic Dairy Products Milk Fat-Milk Equivalent (MM lbs.) Dairy Product YoY Organic Fluid Milk 1,593 1,592 0% Organic Yogurt % Organic Cheese % Organic Cream % Organic Butter % Total $2,814 $2,995 6%

20 Organic Dairy- Volatile Ingredient Prices

21 What to Watch for in 2017 and Beyond: Innovation in the Supply Chain o Direct contracting with growers and co-ops, some long-term o Transitioning farmer incentives o Vertical integration buying, leasing land o Investments in new supplier & processing capacity o Whole rotation contracting o New product launches

22 What does this mean? o Now is a good time to buy, launch new products, expand existing product lines o Lower organic commodity prices means lower input costs o Organic prices still a major premium to conventional o Be aware that US Farmers are feeling some pain

23 To Access Market Reports/Analysis or Trading Platform: Contact: (312) Kellee James (312)