India- Oilseed Sector. Addressing Quality, Supply, Logistics and Hedging Issues A PRESENTATION BY. McDonald Pelz Global Commodities

Transcription

1 India- Oilseed Sector Addressing Quality, Supply, Logistics and Hedging Issues A PRESENTATION BY McDonald Pelz Global Commodities

2 Oil, Oilseeds and India Use One word to Explain consistency of India in Global Markets: Bad Use two words for consistency/importance of India in Global Markets: Not Bad Please explain consistency of India in Global Markets : Not Bad Enough ( to ignore)

3 What strikes your mind when you think of India? Chaos? Regulatory concerns? Un reliable supplier? Un reliable customers? Bad logis9cs? Unknown devil.. A black box Informa9on arbitrage High government interven9on India was the only Surplus country in Grain Deficit South East Asian Region Mcdonald Pelz has established an Asian Link to take care off above concerns concerns 3

4 More mouths to Feed 1,800 60% 1,600 1,400 50% 1,200 40% 1, % % % 15% 15% 15% 16% 16% 16% 17% 17% 17% 17% 18% 18% 18% 18% 18% 17% 17% 17% 17% 10% % % OF WORLD Population Urban % Source: Population Reference Bureau MCDP Analysis India will become most populated na9on by 2030 Agriculture under stress Urban popula9on expected to increase at rapid pace- consump9on will increase South Asia will become worlds biggest demand hub Changing Demographics will put lot more stress on Land resources 4

5 Direction of Global Trade 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 % Consuming Countries popula9on possibly will increased steadily Producing Countries will see stagnate popula9on Welcome to Asian and African Markets Exporting Countries EUROPE % NORTHERN AMERICA % South America % Russia % Population in Million 5

6 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 6

7 Love IT Hate IT but you cannot Ignore IT 000mt, Source: USDA India has cri8cal Role to Play in Global Supply Chain across all commodi8es 7

8 Global Markets and India YEARS OF INDIAN SURPLUSES- LA NINA India/South Asia YEARS OF INDIAN SHORTAGE- EL NINO Rest of world World waiting for India to Export Global Markets waiting for India to Import

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 Global produc9on shrinks- india act as supply hedge India proximity to - freight spread India stayed food self sufficient Source: FAO Paper Important is to understand Indian exports increases mainly in years of global deficit Important balancing Role in Global Supply Demand Economics 9

10 Soybean and Mustard Sown Areas Soybean Areas Mustard Areas Mustard Highly Monsoon sensi8ve Areas

11 India Market Share Commodity Country 2011/ / / / /2016 Soymeal Imports South Asia 966 1,205 1,354 1,594 1,727 Southeast Asia 11,415 12,486 13,746 14,883 15,922 Commodity Country 2011/ / / / /2016 Soybeans Imports South Asia ,246 2,470 Southeast Asia 5,798 5,603 6,151 6,711 7,200 Commodity Country 2011/ / / / /2016 Soybean meal India 4,391 4,354 2,742 1, Reducing Market share in Expanding Market- Marred by Weather and Global Excess Supplies

12 El Nino and Impact on Indian Production Weather Event India Production Govt Proc Year Weather Event Monsoon Impact Grain Production Rice Wheat Pulses Soybean Rice Wheat El Nino Drought Netural El Nino -12% Drought Netural 1% Netural 3% La Nina 10% La Nina 5% El Nino -21% Drought La Nina La Nina 4% Mild El Nino -8% Mild Drought Netural 6% Mild El Nino Strong * Numbers as per GOI Projection All no in mmt Impact of current year El- Nino is s9ll to be seen on wheat crop next year crop Expected impact on rice crop is higher due to dry spells in southern peninsula Rain deficit in key pulses regions lead to big rally in pulses prices in

13 The Indian Way

14 Indian Grains Trade GLOBAL TRADE- STANDARDIZED INDIAN EXPORTS- CUSTOMIZED

15 Actual rake, vessel loading pictures

16 Key considerations- sourcing from INDIA Traditional Service Setup But India Requires more than Just Price Data Sources and Information Tool: Market is not very transparent- Information Platform Ncdex for commodity Prices tools are very much essential to know the Right offering Have good agency support- as India can Impact prices on either side

17 TIGHT ROPE TO WALK Surveyor Customer Supplier Indian Infra Market volatility, aggregation, small suppliers, Infrastructure and customer expectation is a tight rope to walk

18 RIGHT TOOLS FOR PRICING Tools for Decision Making- Shared with our customers Right Tools for Decision making Source: Inhouse

19 KEY CONSIDERATIONS- SOURCING FROM INDIA Traditional Setup India participates in Global markets in years of global shortages- so selection of counter party is very important Traditionally Indian Trader expects prices to come down at harvest Not many are still accustomed to- Global Thinking Big Trading Houses- Work on Basis- Short India at harvest and convert position in basis- works well in bullish markets. Local Traders take cash shorts So Better????? Selec8on of Sound counter party -there are no standard products and contracts in India

20 KEY CONSIDERATIONS- SOURCING FROM INDIA Other Important Notes: Monsoon sets the tone of crop production- impacts supply in country Role of Surveyors: Very Critical- Presence of International Surveyors Trading Companies: Presence of Global Majors and Big Indian corporates like ITC Quality consistency: Difficult Grading system not Developed Domestic Market- Very competitive, Cash market no means to hedge for domestic shippers Shipment slots- First come first serve- requires investments in warehouse bookings India export by Land Route to Bangladesh Transit Time days to major destinations Keep Contracts and Quality specifica8on as simple as Possible

21 Year Some Forecast Models

22 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

23 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 31 years McDonald and Pelz has become the industry leader and it is our objective to maintain this status through our growth globally.