AAAC Outlook: Coarse Grains & Oilseeds 26 th November Brad Glass

Transcription

1 AAAC Outlook: Coarse Grains & Oilseeds 26 th November 2010 Brad Glass

2 Glencore overview Presentation Overview Review of global coarse grains and oilseed S&D Review of Australian market influences Key drivers moving forward for global and domestic markets Disclaimer: this presentation is an overview only please validate your own information to be tailored to your own situations.

3 Glencore International AG Overview Major international participant in resources, energy and agricultural products markets Provide value-added services such as logistics, marketing, purchasing and financing to long-standing producers and consumers Industrial asset portfolio (in mining, smelting, refining and processing) which complements sourcing and marketing operations Consistently profitable (35 years) with a strong and liquid balance sheet Experienced management team with 100% employee ownership

4 Glencore International AG Overview Marketing Operations Over 3,000 employees Some 50 main offices Over 40 countries Main offices: Baar, Switzerland (Headquarters) London, UK Rotterdam, Netherlands Stamford, USA Singapore Industrial Operations Over 60,000 employees 22 plants Grain ports, storage, bio-diesel etc 14 countries Stakes in publicly listed companies: Xstrata Plc, 35.2% Century Aluminum, 47.0% Minara Resources, 70.6% Beijing, China

5 Unique Global Infrastructure Xstrata Xstrata Centur y Netherlands (Biodiesel) Various Russneft Companies Kubal Tennessee Zinc Xstrata Columbia Falls Xstrata Xstrata Century Aughinish Xstrat a Xstrata Kazzinc Portovesme Eurallumina Windalco / Alpart Hungary (Ethanol) Pasar Prodeco / La Jagua Sinchi Wayra Rostov on Don (Port) Xstrata Los Quenuales / Perubar Graspan Xstrata Xstrata Aguilar/AR Zinc Moreno (Crush) Xstrata Xstrata Mopani Murrin Murrin Group Cobar Zinc/Copp er Alumina/Alumi nium Coal Nickel Grain Oil Century Xstrata Zinc/Copper Xstrata Nickel Xstrata Coal Xstrata Aluminium Xstrata Alloys

6 Glencore Agricultural Products Group Origination / Marketing 30million mt of grain, 5million mt of edible oil/ oilseeds, 0.7 million mt of sugar Grain storage and port facilities Argentina, Australia, UK, Poland, Hungary, Romania, Russia, the Ukraine, Kazakhstan Oilseed crushing Argentina, the Ukraine BioFuel Netherlands, Argentina, Brazil, Hungary & UK Rice milling Argentina, Uruguay Flour milling Brazil, Russia Farming Australia, Paraguay, Russia, Kazakhstan the Ukraine

7 BARLEY: Key Drivers World Balance Sheet Tight Crops smaller in Europe/Ukraine/Canada Russian Crops devastated by drought. Russian ban on exports, Ukraine inhibiting exports. Production down 24.9 mmt yoy Australia losing production in WA Australia gaining production East Coast Malt S&D snug but Chinese will use germinating feed off grade

8 Feed Barley Price Fremantle Jan Nov 2010

9 Barley - China China Beer Production is 41,359,000 KL Forecast Growth is 3.1% increase Per capita beer consumption 30.2 L (inc 1.2L yoy) mmt of wheat used for Malting Australia export 1.25 mmt feed/malt in 09/ mmt of Australian lower grade malt and feed barley entered Chinese market in past 12 months In 2010 the quantity of the total barley import may exceed 2.5 mmt (including germinating feed for malt).

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12 Corn: Market Drivers

13 Change in world corn demand

14 CBOT Corn

15 CBOT Corn Jan-Nov 2010

16 US Corn for Ethanol Production

17 China - Market Influence Chinese Corn Crop Estimates range from mmt. Chinese Demand for Food, Seed and Industrial Demand may exceed 167 mmt in 2010/11. (USDA Nov 162 mmt) China & India holding a larger share of world grain stocks supplies not available to the market

18 Corn: Flags Production & Consumption Speculation of deal between China & Argentina for 6-8 mmt. Strategic deal reduces exposure to tight US Balance sheet USDA expecting record Corn crop in Argentina at 25 mmt up 11% yoy La Nina concerns in Argentina, with the trend towards drought conditions later in the season.

19 Argentina Soil Moisture at 10 th November

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21 World Canola Production: Major Markets 2008/ / /11 YOY Change % EU % F.S.U % Australia % Canada % China % Pakistan %

22 Australian Canola Export by Origin Season 2009/10 Western Australia 920,310 mt South Australia 232,893 mt Victoria 45,500 mt

23 Canola Price Fremantle Jan Nov 2010

24 Australian Canola Exports: Destinations (mt) Season 2009/10 Bangladesh 50,876 Pakistan 504,632 UAE 124,571 India 5,500 Japan 169,447 Europe 343,677

25 Soybeans Impact on Oilseed Complex

26 CBOT Soybeans

27 CBOT Soybeans Jan-Nov 2010

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30 Change in world Soybean demand

31 Chinese Imports of US Soybeans (mmt) Year

32 Chinas Soybean Imports: Percentage of World Total

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34 La Nina: Reports strongest in 50 years?

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36 Trend in Chinese Agriculture Consumption past 20 years. 1989/ /10 % Change Population 1.2 billion 1.3 billion 2% Wheat % Corn % Rice % Rapemeal % Soy Meal % Cotton % Soy Oil % Palm Oil % Poultry % Pork % Dairy % Source: AgResource Company 2010

37 04:04 24Nov10 RTRS-China sees big corn shortage, urges more bank aid BEIJING, Nov 24 (Reuters) - China's Banking Regulatory Commission (CBRC) has called on banks to urgently offer special support to the agriculture sector in the face of severe shortages of corn, cotton and sugar, among other crops. Local media reported that the notice, issued on Monday, marked the first official admission that the country faces corn shortages, following repeated assurances from the government grain authority that the country has ample reserves. Special financial support should be offered to those involved in production, processing and circulation of some farm products to counteract looming shortages for short-grain rice, corn, vegetables, cotton, sugar and other crops, the commission said on its web site ( CBRC is among several Chinese authorities that have published detailed measures as part of efforts to combat rising prices. Annual inflation rose to a 25- month high in October, largely driven by food price rises. The State Administration of Grain last week said it would boost state sales of vegetable oils and soy on top of weekly sales of corn, rice and wheat, but many buyers of corn have been restricted from weekly bidding. The regulator urged banks to boost lending to agriculture-related industries as the top priority to help stabilize farm prices. Domestic futures prices of cotton, sugar and corn frequently hit record high levels this month before the central bank moved to tighten credit inflows to the commodity markets by raising banks' reserve ratio twice this month, in part to reduce speculative capital.

38 Summary World Grain Demand Production trendlines increases a necessity growth in production US trying to reinvigorate their economy, recent purchase of US$600 bln of US Treasurys weaker US$ World economic growth returning but focus is in SE Asia & Latin America for Agricultural demand.

39 Summary (cont) China to try to limit inflation and slow their segments of their economy food inflation Food vs Fuel debate to return? Return of the term AGFLATION Market issues are more structural not as speculative as seen in 2007/08 Watch for major producer concerns issues arising

40 Thanks for your time today, Questions? Glencore Grain WA Office: Rob Haddrill & Shaun Cleary