Welcomes to the tales- by Indian subcontinent s Historians

Transcription

1 Until lions have their historians, tales of the hunt shall always glorify the hunter Welcomes to the tales- by Indian subcontinent s Historians A PRESENTATION BY McDonald Pelz Global Commodities

2 Global Trade and India In Past- Use one word to Explain consistency of India in Global Markets: Bad In present- Use two words for consistency/importance of India in Global Markets: Not Bad In Future -Please explain Importance of India in Global Markets : Not Bad Enough ( to ignore) Simulated from talk of Martin Seligman

3 The Irrelevant Factors Population Precipitation Production Peripheral Prospects/Prices

4 What strikes your mind when you think of India? On any given day trains were running on Indian Railway tracks. The total number of passengers carried in was billion million passengers were on the move on any given day-???????? 4

5 Direction of Global Population World, Region, Country Change % change WORLD % Consuming Countries Sub-Saharan Africa % AFRICA % Egypt % South Africa % Nigeria % China % Japan % Republic of Korea % Southern Asia % Bangladesh % India % Pakistan % Indonesia % Philippines % Exporting Countries EUROPE % NORTHERN AMERICA % South America % Russia % Population in Million Consuming Countries population To increase steadily Producing Countries- Stagnated population Welcome to Asian and African Markets Indian population will overtake china around 2025 and will only slow down growing in 2045 ( in normal situation) 5

6 We are going to cover. In next 30 mins Source: Economist India demand is function of availability of domestic supply not the consumption potential Population pressure is increasing- demand elasticity is very high Map not true representation of Indian Geo Borders- Just rep 6

7 What strikes your mind when you think of India? Chaos? Regulatory concerns? Un reliable supplier? Un reliable customers? Bad logistics? Unknown devil.. A black box Information arbitrage High government intervention All of above is true but we await a bigger opportunity 7

8 Love IT Hate IT Increasing share in Global Trade 000mt, Source: USDA India has critical Role to Play in Global Supply Chain across all commodities 8

9 Global Supply Hedge El- Nino Effect on Global Crop Production India was the biggest exporter of grains, oilseeds and meal in the Asian region Important role in global supplies -la nina India stayed food self sufficient years of Bad Monsoon 2014, 2015 lead India to exhaustion of Indian stocks Source: FAO Paper It is important to watch monsoon of It will be the most important event of commodity traders Important balancing Role in Global Supply Demand Economics 9

10 El Nino- La Nina and Indian Monsoons Rest of world World waiting for India to Export Global Markets waiting for India to Import In Past continuous failure of monsoon lead to technological response from India

11 Myth Busters- India Is a Veg Pro Country? Vegetable Protein- Animal Protein Changing Dynamics 11

12 India s Role in Global Wheat market Important Years 000mt, Source: USDA Poor US/Black sea crops and higher carry-out stocks leads to Export of Indian wheat Low Government carry out stocks in India and expectation of poor crops lead to imports In year of low stocks market enter period of higher volatility 12

13 India s Role in Global Corn market India Corn exports act as hedge against US supplies fluctuations (Weather Pattern) 000mt, Source: USDA So Buy Chicago- Sell India gives a good trading hedge to cover for short positions 13

14 China and India (Soybean Vs Veg Oil Import Index) India Veg Oil Import Index China Soybean Imports India China Years Veg Oil Imports Index Soya Imports Index mt, Source: USDA India Vegetable Oil imports have risen at a faster pace than soybean import into China 14

15 India Role in Global Veg Oil Market 000mt, Source: USDA Hunger games by Manmohan kids globalization lead to demand spurt, increase in grain production 15

16 % Growth of meat products Source: USDA, McDonald Pelz Analysis SA + SE is fastest growing meat market in the region It means more oilseed and feed grain demand 16

17 Why Indian Grain Complex is volatile???? India Production 2,34,233 2,40,033 2,43,368 2,44,408 2,29,466 2,37,700 Exports 16,006 22,899 21,073 17,361 12,048 11,120 Domestic Consumption 2,12,383 2,12,871 2,30,175 2,31,796 2,22,239 2,37,510 Ending Stocks 46,638 50,963 43,118 38,446 34,279 29,069 Stock to Use Ratio 22% 24% 19% 17% 15% 12% China Production 4,56,736 4,76,215 4,89,867 4,93,518 5,07,782 5,01,554 Exports 1,550 1,419 1,182 1,251 1,027 1,335 Domestic Consumption 4,58,292 4,75,671 4,83,046 4,90,059 4,95,165 5,11,750 Ending Stocks 1,61,340 1,72,178 2,01,035 2,35,568 2,72,933 2,83,502 Stock to Use Ratio 35% 36% 42% 48% 55% 55% World Production 23,21,406 22,67,650 24,72,956 25,14,435 24,56,791 25,73,119 Exports 3,44,662 2,99,933 3,73,885 3,94,131 3,77,325 4,12,777 Domestic Consumption 22,83,835 22,90,224 23,89,297 24,31,270 24,45,523 25,29,098 Ending Stocks 4,67,163 4,55,637 5,19,826 5,79,181 6,02,483 6,22,607 Stock to Use Ratio 20% 20% 22% 24% 25% 25% India % of Global Prod 10.1% 10.6% 9.8% 9.7% 9.3% 9.2% India % of Global Demand 9.3% 9.3% 9.6% 9.5% 9.1% 9.4% India % of Global End Stocks 10.0% 11.2% 8.3% 6.6% 5.7% 4.7% 000mt, Source: USDA Observation on difference of Grain demand between India and china is important 17

18 Global Stocks to use Ratio Stocks to Use Ratio India 22% 24% 19% 17% 15% 12% China 35% 36% 42% 48% 55% 55% East Asia 33% 34% 39% 45% 51% 51% Former Soviet Union % 16% 18% 21% 16% 20% Middle East 23% 24% 28% 29% 28% 23% North Africa 29% 23% 27% 25% 29% 24% North America 15% 14% 17% 20% 22% 25% South America 12% 16% 22% 19% 14% 15% South Asia 18% 19% 16% 15% 14% 12% Southeast Asia 19% 20% 19% 18% 16% 14% Sub-Saharan Africa 9% 9% 10% 11% 8% 9% World 20% 20% 22% 24% 25% 25% 1.3 Billion People to Feed and stock ratio of 12pct just represents a month of stock in country We have witnessed Pulses, wheat, sugar supply shocks already- not geared up to absorb more India is not prepared for next drought or crop disaster 18

19 Life of a Pulses Trader Fragile- In search of answers 19

20 Challenges of Trade to Indian Subcontinent EVERYTHING WE HEAR IS AN OPINION, NOT A FACT. EVERYTHING WE SEE IS A PERSPECTIVE, NOT THE TRUTH. Government Data Accuracy Problem of MBR Fumigation Import Regulation and Duties Import Margins Government Intervention Price Government Distribution Price 20

21 Pulses Business. Set to Expand Annual population growth of 1.76% reaching to a number of 1.34 billion Annual production growth of pulses is 0.80%, less than the half of population growth in India Increasing ratio of protein from 26% to 33% in past 20 years and expected to increase up-to 36% in next 3 / 4 years.. Growth in protein diet in India should lead to increased pulses demand 21

22 India The Destination for Pulses Volatility and average price of Chickpeas USD / MT 40.00% 30.00% 20.00% 10.00% 0.00% % % % % / / / /17 Volatilty Average Price Increasing production of Chickpeas in Australia from 0.5 MN MT to 2.00 MN MT Average price realization for CNF values of Imports to India has been volatile Production in India due to high price increased by almost30% current year. Chick volume constrained by daily volatility 22

23 MSP and Buffer Stock Dilemma Tradeoff MSP Is one way street, can only go up- creating spread between domestic prices and Import Prices We expect MSP rise to continue thus making High price Islands MSP support key element of Government Food security Policy 23

24 Government Stocks and Buffer Norms Year April July Oct Jan % of Cons % % % % % % % % % 31 myn pro % Govt Dist Buffer Norm OMSS Split OMSS OMSS South Imp april 400 East 826 may WB 690 june NE 280 july ,100 Assam 280 august ,49,205 North 2391 september ,36,033 Delhi 450 october ,56,901 Har 830 november ,41,261 Pun 688 december ,20,092 South 350 january ,45,172 West 720 february ,07,277 MP 650 march ,60,437 April Total 4567 Total Government Started this year with lowest in last 10 years on wheat At zero OMSS government ends its year at 11,6 myn mt of stocks Wheat consumption has steadily risen in country around 90 myn mt Let us wait for another bumper wheat.. Or otherwise ( Australian Farmer J) Buffer Norms are divided into 4 phases and 28myn mt of government procurement is must 24

25 Wheat Lineup Unit- mt, Source: Indian Port Lineup Month/Country July Aug Sept Oct Nov Dec Jan Feb March April Grand Total AUSTRALIA East KOLKATA, INDIA South CHENNAI, INDIA GANGAVARAM, INDIA KARIAKAL, INDIA KATTUPALLI PORT, CHENNAI KOCHI, INDIA TUTICORIN, INDIA VISAKHAPATANAM, INDIA West HAZIRA, INDIA JAIGARH, INDIA MUMBAI, INDIA NEW MANGALORE, INDIA BULGARIA FRANCE RUSSIA UKRAINE Grand Total Australia had 40% market share and Ukraine 50% 25

26 India Importing Aussie Wheat India has won 6 and lost 3 test matches against India 26

27 WE PROVIDE INSIGHTS- Beyond Data and Information to our Customers US Black Sea China Demand SoAM Asia- Producer and Consumer of grains and Oilseed- we are here to cater your requirements Wheat Market

28 WORLDWIDE MCDONALD PELZ India Office 111, Centrum Plaza Sector-53, Gurgaon India Phone: McDonald and Pelz is a cash grain, oilseed, and renewable energy brokerage organization whose aims and goals are to help our customers in the buying and selling of their products. Over the past 32 years McDonald and Pelz has become the industry leader and it is our objective to maintain this status through our growth globally.