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TRANSCRIPT
Global market trends and grain flows
GTA Advisory & Compliance Workshop
Melbourne 28/7/14
A global perspective • Prices driven
offshore…price discovery starts offshore
• Understanding broad trends critical…another piece of the puzzle
• World grain import demand increasing at 2-5% p.a. & growth has to come from somewhere.
• Australia’s share of global exports declining
Where is the export growth coming from?
World grain import growth • Steady import
demand growth means each year we have find ~ – Wheat 3-5 MMT – Soybeans 5-6 MMT – Corn 4-7 MMT
• Yield growth and additional plantings required to allow this to occur
-10%
-5%
0%
5%
10%
15%
1983
/198
419
84/1
985
1985
/198
619
86/1
987
1987
/198
819
88/1
989
1989
/199
019
90/1
991
1991
/199
219
92/1
993
1993
/199
419
94/1
995
1995
/199
619
96/1
997
1997
/199
819
98/1
999
1999
/200
020
00/2
001
2001
/200
220
02/2
003
2003
/200
420
04/2
005
2005
/200
620
06/2
007
2007
/200
820
08/2
009
2009
/201
020
10/2
011
2011
/201
220
12/2
013
2013
/201
420
14/2
015
World imports growth (5 YA)
Corn Soybean Wheat
United States • Times are changing • Most transparent & world price
benchmark but is this still warranted • Was # 1 exporter wheat, corn and
soybean but other origins are now challenging….
• US growing record large corn and soybean crops but other areas exporting more to meet rising global demand
• US planted area is already maximised • Wheat losing out in the production
mix at expense of corn and soybeans…other countries picking up
• Ethanol production plateauing • Will continue to be production &
export powerhouse…yields, amount of crop grown
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
US share of world exports
Corn soybean wheat
South America
Higher prices more production • Brazil’s soybean plantings have nearly
doubled in the past decade while corn has increased by around 25%.
• Higher world prices is allowing grain to be grown further from the ports and infrastructure is gradually improving
• South American climate and soils well suited to summer crops which is expected to see Brazil overtake the US as the major soybean exporter
• USDA expects South American soybean exports will continue to expand in the coming year to meet the growing global demand as US exports stagnate.
• Brazils soybean exports are expected to a further 45% in the next decade.
• Most of this export growth is expected to occur in Brazil and Argentina to a lesser extent
0
50
100
150
200
250
300
South American production (MMT)
soybean corn
Europe
• Overtook the US as the #1 wheat export country last year
• Should hold the tittle this year with a ~150 MMT wheat crop
• Expansion of the EU to 28 countries helping the export effort as they include more eastern European countries such as Romania
• Mostly soft wheat exports but Germany ships some hard wheat out of the Baltic
• Land is already fully utilised so capacity to grow more is limited to yields
0%
5%
10%
15%
20%
25%
30%
35%
Share of world wheat exports
US Canada EU
Aust Argentina Black Sea
Black Sea Taking a larger share of world exports • Russia / Ukraine and Kazakhstan • Black Sea wheat exports have grown
from 5% to 25% in past 15 years. • Their importance is expected to
continue to grow • USDA forecasting Black Sea will account
for 30% of global wheat exports by 2023 as more land comes under production.
• Also becoming a more important corn exporter
• Increasing Black Sea exports ant adding to global price volatility…cheapest seller and variable climate
0%
5%
10%
15%
20%
25%
30%
35%
Share of world wheat exports
US Canada EU Aust Black Sea
China Driving world commodity prices
• China will continue to drive global commodity prices
• Oilseeds, milk, meat, wool, wheat, feed grains, energies, minerals
• Already takes 60% of world soybean imports….expected to be 74% of world trade by 2023.
• Feed grain imports expected to start to rise to feed rapidly population
• USDA forecasting corn imports of 22 MMT (3% world trade) by 2023 from current 3-5 MMT (15% world trade)
• Wheat imports not expected to increase substantially….focus on oilseeds and feed grains
• Will remain very pragmatic…e.g. MIR162
0
10
20
30
40
50
60
70
80
World soybean imports (million tonnes)
CHINA Other Asia Non Asian
SE Asia • SE Asian accounts for 60% of
Australian wheat exports • Indonesia the most important
destination with ~ 4 MMT which is 55% of their total wheat imports because of quality and proximity.
• Indonesia wheat imports forecast to grow at 3% annual which is ~225kt a year
• Vietnam, Australia’s second largest wheat importer, forecast to grow at 3% p.a. which would add another 1 MMT of imports in 10 by 2023. Australia currently enjoys a 60% share of Vietnam's wheat imports.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Bang
ladh
esh
Chin
a
Indo
nesia
Japa
n
S Ko
rea
Indi
a
Paki
stan
Phill
ipin
es
Mal
aysia
Mya
nmar
Taiw
an
Thai
land
Sing
apor
e
Sri L
anka
Viet
nam
Oth
er
Australian wheat exports to Asia kt (12/13)
Australia • Production increases largely
linked to productivity with most of the arable land already being cropped
• Share of global wheat exports declining as import demand grows
• Extreme volatility here to stay…arid climate & large domestic consumption on east coast
• Domestic demand growth slowing • Logistics focus following
deregulation…over capacity will put pressure on export elevation margins
02468
101214
Domestic demand growth slowing (MMT)
Barley Sorghum Wheat
0%
5%
10%
15%
20%
25%
1980
/198
119
82/1
983
1984
/198
519
86/1
987
1988
/198
919
90/1
991
1992
/199
319
94/1
995
1996
/199
719
98/1
999
2000
/200
120
02/2
003
2004
/200
520
06/2
007
2008
/200
920
10/2
011
2012
/201
320
14/2
015
2016
/201
720
18/2
019
2020
/202
120
22/2
023
Australia share of world wheat exports declining