Global market trends and grain flows

Transcription

1 Global market trends and grain flows GTA Advisory & Compliance Workshop Melbourne 28/7/14

2 A global perspective Prices driven offshore price discovery starts offshore Understanding broad trends critical another piece of the puzzle World grain import demand increasing at 2-5% p.a. & growth has to come from somewhere. Australia s share of global exports declining

3 Where is the export growth coming from? World grain import growth Steady import demand growth means each year we have find ~ Wheat 3-5 MMT Soybeans 5-6 MMT Corn 4-7 MMT Yield growth and additional plantings required to allow this to occur 15% 10% 5% 0% -5% World imports growth (5 YA) 1983/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / % Corn Soybean Wheat

4 United States Times are changing Most transparent & world price benchmark but is this still warranted Was # 1 exporter wheat, corn and soybean but other origins are now challenging. US growing record large corn and soybean crops but other areas exporting more to meet rising global demand US planted area is already maximised Wheat losing out in the production mix at expense of corn and soybeans other countries picking up Ethanol production plateauing Will continue to be production & export powerhouse yields, amount of crop grown 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% US share of world exports Corn soybean wheat

5 South America Higher prices more production Brazil s soybean plantings have nearly doubled in the past decade while corn has increased by around 25%. Higher world prices is allowing grain to be grown further from the ports and infrastructure is gradually improving South American climate and soils well suited to summer crops which is expected to see Brazil overtake the US as the major soybean exporter USDA expects South American soybean exports will continue to expand in the coming year to meet the growing global demand as US exports stagnate. Brazils soybean exports are expected to a further 45% in the next decade. Most of this export growth is expected to occur in Brazil and Argentina to a lesser extent South American production (MMT) soybean corn

6 Europe Overtook the US as the #1 wheat export country last year Should hold the tittle this year with a ~150 MMT wheat crop Expansion of the EU to 28 countries helping the export effort as they include more eastern European countries such as Romania Mostly soft wheat exports but Germany ships some hard wheat out of the Baltic Land is already fully utilised so capacity to grow more is limited to yields 35% 30% 25% 20% 15% 10% 5% 0% Share of world wheat exports US Canada EU Aust Argentina Black Sea

7 Black Sea Taking a larger share of world exports Russia / Ukraine and Kazakhstan Black Sea wheat exports have grown from 5% to 25% in past 15 years. Their importance is expected to continue to grow USDA forecasting Black Sea will account for 30% of global wheat exports by 2023 as more land comes under production. Also becoming a more important corn exporter Increasing Black Sea exports ant adding to global price volatility cheapest seller and variable climate 35% 30% 25% 20% 15% 10% 5% 0% Share of world wheat exports US Canada EU Aust Black Sea

8 China Driving world commodity prices China will continue to drive global commodity prices Oilseeds, milk, meat, wool, wheat, feed grains, energies, minerals Already takes 60% of world soybean imports.expected to be 74% of world trade by Feed grain imports expected to start to rise to feed rapidly population USDA forecasting corn imports of 22 MMT (3% world trade) by 2023 from current 3-5 MMT (15% world trade) Wheat imports not expected to increase substantially.focus on oilseeds and feed grains Will remain very pragmatic e.g. MIR World soybean imports (million tonnes) CHINA Other Asia Non Asian

9 SE Asia SE Asian accounts for 60% of Australian wheat exports Indonesia the most important destination with ~ 4 MMT which is 55% of their total wheat imports because of quality and proximity. Indonesia wheat imports forecast to grow at 3% annual which is ~225kt a year Vietnam, Australia s second largest wheat importer, forecast to grow at 3% p.a. which would add another 1 MMT of imports in 10 by Australia currently enjoys a 60% share of Vietnam's wheat imports. 4,000 3,500 3,000 2,500 2,000 1,500 1, Australian wheat exports to Asia kt (12/13) Bangladhesh China Indonesia Japan S Korea India Pakistan Phillipines Malaysia Myanmar Taiwan Thailand Singapore Sri Lanka Vietnam Other

10 Australia Production increases largely linked to productivity with most of the arable land already being cropped Share of global wheat exports declining as import demand grows Extreme volatility here to stay arid climate & large domestic consumption on east coast Domestic demand growth slowing Logistics focus following deregulation over capacity will put pressure on export elevation margins % 20% 15% 10% 5% 0% Domestic demand growth slowing (MMT) Barley Sorghum Wheat Australia share of world wheat exports declining 1980/ / / / / / / / / / / / / / / / / / / / / /2023