SCB Group CASS. Joachim Emanuelsson. COO - SCB Group

Transcription

1 1 SCB Group CASS Joachim Emanuelsson COO - SCB Group

2 2 Contents History of agricultural commodities markets Factors that influence agricultural commodities prices The energy market Biofuels and agricultural commodities Financial markets and physical markets Hedging, Who? Why? and How? Simulation game

3 3 The Beginning of Futures Contracts Rice futures traded in Japan during the 17th century The Midwest s farmer s problem led to CBOT From physical markets to organized futures markets The trading pit of the Chicago Board of Trade, around 1900

4 4 The Beginning of Futures Contracts Changing times, pit to screen Stocks/Bonds/Currencies/ Commodities/Energy Volumes on futures markets are increasing The trading pit of the Chicago Board of Trade, around 2000

5 5 Users of the Futures Markets Arbitrageurs Speculators Hedgers Exchange

6 Major Exchanges 6

7 7 Major Growing Regions and Crop Cycles Source: Amis Market Monitor

8 8 Major Growing Regions and Crop Cycles Source: Amis Market Monitor

9 9 Major Growing Regions and Crop Cycles Source: Amis Market Monitor

10 10 Factors That Have an Impact on Markets CURRENCIES WEATHER CONSUMPTION HABITS TRADE BARRIERS STORAGE COST PRICE FARMER S MARGINS AG POLICIES POPULATION GROWTH ENERGY PRICES ACREAGES Affecting mostly supply Affecting mostly demand Affecting both

11 11 The Weather Factor Situation in April 2016 Situation in May 2016 Source : AMIS

12 12 The Weather Factor CBOT Soybean Price in US$/bu Source : Bloomberg, Reuters and Agnewswire

13 13 USDA, a Compass for Agricultural Markets Monthly reports on acreages, stocks, production estimations and previsions Crop ratings Weekly export notices Most reliable data? Source : USDA

14 14 USDA, a Compass for Agricultural Markets Source : Agriculure.com & Bloomberg

15 15 The Baltic Dry Index Index on dry bulk freight prices on major trading routes What insights provide the Baltic Dry Index? Source : cnbc.com

16 16 The Stock-To-Use Ratio What is the Stockto-Use ratio? High ratio/low ratio Inverse correlation with prices! A B

17 17 The Stock-To-Use Ratio A B Source: Reuters

18 The Energy Market : the Case of Crude Oil 18

19 The Energy Market : the Case of Crude Oil 19

20 20 The Energy Market : the Case of Crude Oil 1: US spare capacity exhausted 2: Arab Oil Embargo 3: Iranian Revolution 4: Iran-Iraq War 5: Saudis abandon swing producer role 6: Iraq invades Kuwait 7: Asian financial crisis 8: OPEC cuts production targets 1.7 mmbpd 9: 9-11 attacks 10: Low spare capacity 11: Global financial collapse 12: OPEC cuts production targets 4.2 mmbpd 13: OPEC production quota unchanged

21 21 The Energy Market Sources: BP Statistical of World Energy 2017

22 22 The Energy Market Sources: BP Statistical of World Energy 2017

23 23 The Energy Market Sources: Credit: Bloomberg New Energy Finance

24 1992M1 1992M9 1993M5 1994M1 1994M9 1995M5 1996M1 1996M9 1997M5 1998M1 1998M9 1999M5 2000M1 2000M9 2001M5 2002M1 2002M9 2003M5 2004M1 2004M9 2005M5 2006M1 2006M9 2007M5 2008M1 2008M9 2009M5 2010M1 2010M9 2011M5 2012M1 2012M9 2013M5 2014M1 2014M9 2015M5 2016M1 2016M9 2017M5 24 Biofuels Agricultural - Energy Food Price Index, 2005 = 100, includes Cereal, Vegetable Oils, Meat, Seafood, Sugar, Bananas, and Oranges Price Indices Fuel (Energy) Index, 2005 = 100, includes Crude oil (petroleum), Natural Gas, and Coal Price Indices 0.00 Source: IMF

25 25 Biofuels Agricultural - Energy Source: World Bank

26 26 Ethanol Made from sugar, wheat or corn Blended with Gasoline Many valuable byproducts Starch Feed Products CO2

27 The Biodiesel Cycle 27

28 28 Food Versus Fuel Source: Oil World

29 29 World Biofuel Production Sources: BP Statistical of World Energy 2017

30 Main Biofuel Products 30

31 Main Biofuel Products 31

32 32 The Importance of Hedging Markets are unpredictable Volatility during the last decade increased Physical trade flows increased as well Speculation is providing liquidity to all commodities markets

33 33 The Importance of Hedging Source: EU Parliament

34 34 How to Hedge a Physical Position? My target price is 165 /mt John Hedging Closing Hedge Seeding Growing Growing Growing Growing Harvesting Storage Selling Physical Delivering Physical PRICE RISK

35 35 Placing an Order on Financial Markets Buyer 50 MT (10 lots) Seller 50 MT (10 lots) Broker Exchange Long 10 lots 10 Open Interests Short 10 lots

36 36 Correlation Between Physical and Futures, Why is it Important? Source: aroundcommodities.com Theory Source: Chicago Mercantile Exchange Reality

37 Winners 2017! 37

38 Simulation Game! 38

39 39 SCB The world s biggest biofuels brokerage firm Daily Telegraph Top rated Biofuel Broker The Wall Street Journal Leading experts in the renewable market Bloomberg

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