cargill/cmcepresentation at qed conference: agricultural … · 2019-10-04 · agricultural...
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CONFIDENTIAL. This document contains Cargill Confidential information. Disclosure, use or reproduction outside Cargill or insideCargill, to or by those who do not have a need to know is prohibited. © 2019 Cargill, Incorporated. All rights reserved.
Cargill/CMCE presentation at QED conference:Agricultural Commodities
19th March 2019
Commodity Markets Council Europe
• CMCE is an association representing a range of commodity market participants - agriculture, energy, metals and other commodity derivative end-users, price reporting agencies, and trading venues. Its members are established and operate in the EU, EEA, Switzerland and neighbouringcountries
• Active in Europe since 2012, CMCE engages with EU and national policy-makers and regulators to promote well-functioning commodity derivative markets
2Agricultural Commodities
© 2019 Cargill, Incorporated. All rights reserved. 3
With
150,000employees
3
located in
70countries
our purpose is singular:to be the global leader in nourishing people
Over
years of experience
150
Agricultural Commodities
Cargill, our company
© 2019 Cargill, Incorporated. All rights reserved.
Agri commodities supply chain and the role of commodity firms
4Agricultural Commodities
Origination Processing Risk Management Distribution
• Commodity firms work to meet the challenge of matching supply of commodities with demand by organizing the supply chain and managing associated risks
• This includes originating, transporting, storing and transforming commodities • They seek to reduce costs through improving and optimizing supply chain
logistics, involving ownership of physical assets or facilities
Storing
© 2019 Cargill, Incorporated. All rights reserved.
Our businessWe provide insights to our partners
We transform raw materials into finished goods
We move products around the world
Insights
Transform
Move
Farmers
Customers
For farmersWe supply feeds, other inputs and expertise to farmers, and buy crops and livestock from them
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
For customersWe deliver finished goods to customers in the foodservice, retail, consumer packaged goods and industrial sectors
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Animal protein
Food ingredients
Animal nutrition
Branded foods
Bioindustrials
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Data analytics
Market expertise
Financial solutions
Risk management
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Insights
Transform
Move
Farmers
Customers
Roads Rail Rivers Oceans
All risk elements must be managed along the chain
OriginationWorld vs
local price, storing, drying, finance
LogisticsRail, truck,
barge
ProcessingCapacity
value, margin mgmt,
industrial efficiency,
world price
DistributionWorld vs
local price, ocean
freight, FX, counterparty risk, political
risk…
Risks accumulated in the value chain
Agricultural Commodities
FARMERSHigh price
expectationsFertilizer,
seed, land, equipment,
weather
END USERSLow price
expectationsWorld vs local price, quality, competitive
differentiation,
Megatrends
Disruptors
Econ
omics
DemographicsCONSUMER TRENDS
Agriculturalsupply C
limate
WEATHERGeopolitics & governments
Logistics bottlenecksUnforeseen events
The world of triggers
VOLATILITY
© 2019 Cargill, Incorporated. All rights reserved.
Managing price risk through futures markets: case of a rapeseed processor
Hedging riskHedging protects value chain actors
from fluctuating price movements
Conclusions
8Agricultural Commodities
• Liquid and well-functioning global derivative markets are essential for allowing commodity firms to hedge some of the risks related to their physical activities and assets, in particular price risk in the commodities that they buy and sell
• The use of the derivative markets:• Makes trade and processing of agriculture commodities more transparent and efficient, and provides
for predictable prices • Helps maintain stable food prices and provide products at a reasonable cost to consumers
• Allow commodity firms, producers, farmers and retailers to plan ahead, and therefore to be better equipped to invest and help the economy grow
© 2019 Cargill, Incorporated. All rights reserved.
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