Australian Grain Industry Conference 2017 2 August 2017
WORLD WHEAT 2017/18 Themes Quality Issues The Great Pasta Drought of 2017 Why Are Cash Prices NOT Lower? Russian Export Capacity Issues US Needed as Exporter?
World Wheat S & D Met Tons (USDA) WORLD WHEAT 2015/16 2016/17 USDA 2017/18 USDA July 2017/18 MDP Project Carry In 217.7 242.8 258.0 258.0 Production 737.0 754.3 737.8 733.0 Ttl Supply 1124.7 1174.4 1173.8 1169.0 Feed Use 136.4 146.2 139.3 137.0 Food/Indu/Seed 575.4 592.9 596.0 595.0 Exports 172.9 181.6 178.4 176.0 Ttl Demand 881.9 920.6 913.2 910.0 Carry Out 242.8 258.0 260.6 257.0
World Wheat S & D Met Tons (USDA) WORLD WHEAT 2015/16 2016/17 USDA Jun 2017/18 USDA Jun 2017/18 MDP Project Carry Out 242.8 258.0 260.6 258.0 US 26.6 32.2 25.5 25.0 China 97.0 111.0 127.2 127.0 Net Carry Out 119.2 114.8 107.9 106.0 EU 15.6 10.8 10.1 11.0 Russia/Ukr 8.9 12.7 13.6 14.0 Canada 5.2 7.2 5.2 4.5 Australia 5.6 8.9 5.6 5.0 Argentina 0.6 0.5 0.5 0.5 ROW Carry Out 83.3 74.7 72.9 71.0
World Wheat Production LY 31.7 MMT 17 27.0 MMT LY 26.8 MMT 17 23.5 MMT LY 62.9 MMT 17 46.9 MMT LY 35.1 MMT 17 23.5 MMT
World Wheat Production LY 145.5 MMT 17 149.0 MMT LY 72.5 MMT 17 73.0 MMT LY 17.0 MMT 17 18.0 MMT
Global Wheat Production World Wheat Production Major Exporters in 2016/17 391.5 MMT Major Exporters est 2017/18 360.4 MMT
Global Wheat Exports World Wheat Exports Major Exporters during 2016/17 156.1 MMT Major Exporters expected 2017/18 156.0 MMT
World Wheat Summary Supply Major Exporters Production Down 30 MMT Y-on-Y Strong Wheat (Proteins over 12.5% on DMB) Significantly Lower Supply Think US, Canadian Spring Wheat, Durum, Russian 13.5%+ Protein, Australian? Lower Quality Wheat Semi Hard Wheat More Plentiful Think Russian 11.5% Protein, Low Protein US HRWW, Feed Wheat Chinese Stocks Building Since 2014/15 MY over 25 MM ROW Global Stocks Building (Ex China) Over Same Period Negative 11 MMT Demand Can World Feed Wheat Demand Stay Elevated? Will Global Food Demand Contract in 2017/18? Can Russia Handle 18-20% of Global Wheat Exports? Spreads For Quality Differences Widest Since 2008
World Wheat Prices Lower Protein French 11% DMB $195 HRWW 11.5% DMB $190 Ukraine 11.5% DMB $184 ASW $250
World Wheat Prices Quality - 12.5% Protein OB Canada 14.5% DMB $300 x PNW Baltic $203 HRWW 12.5% DMB $195 13.2% DMB $210 Russian $200 ASW $265-70 EC
AGIC 2017 US Wheat S&D Met Tons (USDA) US WHEAT 2014/15 2015/16 2016/17 2017/18 USDA July 2017/18 MDP Project Carry In 16.0 20.5 26.6 32.2 32.2 Production 55.1 56.1 62.9 47.9 46.2x38.1 46.9 45.8x37.6 Ttl Supply 75.3 79.7 92.6 83.9 83.1 Feed/Resid 3.1 4.1 4.0 4.1 4.0 Food 26.1 26.0 26.0 26.0 26.0 Seed 2.2 1.8 1.7 1.8 1.8 Exports 23.5 21.1 28.7 26.5 25.9 Ttl Demand 54.8 53.1 60.4 58.4 57.7 Carry Out 20.5 26.6 32.2 25.5 25.4
US Wheat Summary Supply US Production Lower, BUT High Beginning Stocks Buffer Impact Protein Premiums VERY Firm Expect Spring Wheat Supply Rationed Via Price Lower Quality Wheat Plentiful US HRWW 11% Protein DMB, SRWW in Surplus US Futures Structure Rewards Storage Huge Returns to Delivery Storage - $4/MT Month Return 2.4 MMT Deliverable Wheat vs Chicago, 3.25 MMT Deliverable Wheat vs KCY Demand US Feed Demand Limited by Plentiful Corn US Food Demand Capped Older Population and Glutionians US Wheat Exports Must BUY Stocks Out of Storage Spreads For Quality Differences Widest Since 2008 Delivery Wheat, By Definition, NOT Higher Quality
CME Wheat Monthly
WORLD CORN 2017/18 Themes Technology Outpaces Consumption Why Are Cash Prices NOT Higher? Export Capacity Issues in South America Currencies Chinese Stocks Fake News?
Weather and US Row Crop Yields
World Corn S & D Met Tons (USDA) WORLD CORN 2015/16 2016/17 USDA 2017/18 USDA July 2017/18 MDP Project Carry In 209.6 212.8 227.5 232.0 Production 968.8 1068.8 1036.9 1012.5 Ttl Supply 1317.8 1418.5 1410.2 1390.3 Feed Use 602.5 631.3 652.2 640.0 Food/Indu/Seed 363.1 422.7 411.4 405.0 Exports 119.6 159.7 152.5 155.0 Ttl Demand 1105.0 1191.0 1209.4 1210.0 Carry Out 212.8 227.5 200.8 190.3
World Corn S & D Met Tons (USDA) WORLD CORN 2015/16 2016/17 USDA 2017/18 USDA July 2017/18 MDP Project Carry Out 212.8 227.5/232.0 200.8 190.3 US 44.0 44.1 59.1 51.0 China 100.5 110.8 81.3 81.3 Net Carry Out 68.3 72.6 60.4 58.0 EU 6.7 6.0 5.6 6.0 Russia/Ukr 1.8 2.4 2.7 2.5 Brazil 6.8 9.8/12.9 9.6 10.5 Argentina 1.1 3.6 3.3 2.5 ROW Carry Out 51.9 50.8 39.2 36.5
Global Corn Production LY 384.8 MMT 17 351.0 MMT LY 28.0 MMT 17 27.0 MMT LY 219.6 MMT 17 203.0 MMT LY 103.0 MMT 17 95.0 MMT LY 41.0 MMT 17 40.0 MMT
AGIC 2017 Awhere slide China weather
World Corn S & D Prospects Supply Total Supply Lower, But World (ex China) End Stocks Fall Less Than 10 MMT US Crop Still Unknown Crop Tours in August Will Better Highlight Yields Brazil Crop Larger Than Expected One Month Ago Ukraine Crop How Large? Chinese Crop and Stocks What is Reality? Demand Currency Impact on Brazilian, Argentine Export Flows 2017/18 Planting Decisions In Brazil, Argentina Will US Exports Again Find Buyers in 2 nd Half of Marketing Year? Chinese Balance Sheets Very Interesting!
World Barley Production World Production 2016/17 148.0 MMT World Production 2017/18 138.5 MMT
World Barley Production World Barley Exports 2016/17 28.5 MMT World Barley Exports 2017/18 24.2 MMT
Currencies
US Corn Supply & Demand Met Tons (USDA) US CORN 2015/16 2016/17 USDA June 2017/18 USDA June 2017/18MDP Projection Carry In 44.0 44.1 60.2 60.2 Production 345.5 384.8 362.1 351.0 Ttl Supply 391.2 430.3 423.6 412.7 83.5 HA x 170.7 83.5 HA x 165.5 Feed/Residual 130.1 137.8 139.1 136.5 Ethanol 132.7 138.4 139.7 139.7 Food/Seed 36.1 37.3 38.1 38.0 Exports 48.2 56.5 47.6 47.5 Ttl Demand 347.1 370.1 364.5 361.7 Carry Out 44.1 60.2 59.1 51.0
CME Corn Monthly
US Corn S & D Prospects Supply Higher Planted Area Good/Excellent rating lower, but not significantly lower. Yield Projections Market using/trading 164-5 bu/acre, down 5% from LY. Market expects a 13.8 14.2 bil bushel (355 MMT) US production estimate due to larger area. We are at just under 14.0 bil bushels (351 MMT). US June Stocks Higher than expected, but export inspections running strong. Demand Domestic 85-87% of Total Demand South American sellers very competitive. Ukrainian maize crop under pressure, NO quality old crop supply. Will US Farmer Store Even MORE of His Stocks On Farm in 2017/18? US Ending Stocks Is sub 2.1 bil bushel (53.3 MMT) US ending stock projection $4.50/bushel CZ7? Is a 1.8 bil bushel (45.7 MMT) figure needed to maintain rally?
Grains Summary WHEAT On Surface, Bearish Global Fundamentals for 2017/18 MY Major Exporters Production Down Significantly Major Exporters Need to Draw Down Stocks to Service Projected Demand Farmers Not Accommodating Bearish Pundits Price Weakness Possible Feb 2018 Forward IF 2018 Northern Hemisphere New Crop Looks Promising CORN On Surface, Bullish Global Fundamentals for 2017/18 MY Sizable Brazilian, Argentine, US Stocks Cap Prices Through Calendar 2017 Ukrainian maize crop under pressure Chinese maize crop and stocks HUGE unknowns? Will US Farmer Store Even MORE of His Stocks On Farm in 2017/18? US Ending Stocks Is sub 2.0 Billion Bushel US Corn Ending Stocks Forecast $4.00 CH8 Bullish? Does Market NEED To BUY Corn Acres in 2018? Is a 920 Million Bushel US Wheat Ending Stocks Forecast $6.00 WH8 Bullish?
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