Australian Crop Forecasters · 2016-05-03 · •Booked 10.2mmt in LTA agreements for next 5 years. •PLUS approximately 3.0mmt booked through spot capacity for 15/16, in addition

© Copyright NZX Ltd. 20131

AustralianCropForecastersAustralianGrainsIndustryConferenceSingapore|1March2016

Ron StoreyNZX Agribusiness AustraliaMarch 2015

www.cropforecasters.com.au

Data|Knowledge|Independence

1. 2015 Crop Review2. Exports and Customers3. Australian Export Infrastructure4. What sort of buyer are you?5. Grain Pricing in Australia6. 2016/17 Outlook?


AGENDA

Who is NZX Australia? >> A Markets Business

“…Improving the economies in which we operate…”

7 August 2013 © Copyright NZX Ltd. 20133

Capital MarketsFunds ManagementAgri Commodities

1. 2015 CROP REVIEW

4

A LOT OF CHARTS – JUST AN OVERVIEW!

• WEATHER• PRODUCTION• QUALITY


2015 was an El Nino year – Apr-Nov

5 1 March 2016 © Copyright NZX Ltd. 2016

Australian grain production (mmt) – 6 good years !!


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Wheat Barley Canola Sorghum Other

ElNino

ElNino??

ElNino

0.0

0.5

1.0

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2.0

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3.0

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Lupins FieldPeas ChickPeas FabaBeans Lentils

Australian pulse production (mmt) –growth in Chick Peas...


Grain production by state


8.9Mt 4.2Mt

7.6Mt

2.2Mt

1.1Mt

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5.0

10.0

15.0

20.0

25.0

30.0

2011/12 2012/13 2013/14 2014/15 2015/16

APH AH APW ASW GP/FEED Other

HighScreenings

Wheat production by grade (mmt)


1. 2015 REVIEW - SUMMARY


WEATHER: Despite 2015 El Nino, average crop

PRODUCTION: East coast variable, SA & WA ok

QUALITY: Higher % off-grades (screenings) - later

2. EXPORTS & CUSTOMERS


• WHAT CROPS GO WHERE?• WHICH EXPORTERS DOING THE BUSINESS?

AUST WHEAT – Reaches far, but 70% Asia


WHEAT


WHEAT

2014/15

-Centred on Asia (70%)-India up in 14/15-Iran, Iraq down in 14/15

2013/14

• BARLEY

• 2014/15

• -Huge China impact in 14/15

• -Expect rebalance to Saudi in 15/16

• 2013/14


CANOLA

2014/15

-Very stable 13/14 v 14/15

2013/14

151 March 2016 © Copyright NZX Ltd. 2016

Global wheat – Australia steady ~20mmt


020406080

100120140160180

09/10

10/11

11/12

12/13

13/14

14/15

BlackSea EU Canada UnitedStates Australia RestofWorld

Aust Wheat exports – Asia is “home”


0.0

5.0

10.0

15.0

20.0

25.0

30.008

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09/10

10/11

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12/13

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14/15

China MiddleEast RestofAsia Other

Barley exports – China emergence has squeezed Mid East out, for now


0.0

1.0

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8.008

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Aust Canola exports – EU steady (nonGM)


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4.008

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09/10

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China MiddleEast RestofAsia Other Europe

Sorghum exports – China takes over!


0.00.20.40.60.81.01.21.41.61.8

08/09

09/10

10/11

11/12

12/13

13/14

14/15


Aust Wheat exporters – Big 6 = 80%


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5.0

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25.0

11/12 12/13 13/14 14/15

CBH Glencore Cargill PlumGrove Graincorp Emerald Other

0.0

1.0

2.0

3.0

4.0

5.0

6.0

11/12 12/13 13/14 14/15

CBH Glencore Graincorp ADM Cargill Bunge Other

Aust Barley exporters – Big 6


0.0

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1.0

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2.0

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3.0

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4.0

11/12 12/13 13/14 14/15

CBH Glencore ADM Cargill Other

Aust Canola exporters – Big 4


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0.8

1.0

1.2

11/12 12/13 13/14 14/15

PentAg Glencore Graincorp ADM Other

Aust Sorghum exporters – Big 4


SUMMARY - EXPORTERS

AUSTRALIAN EXPORTERSCBHGlencoreCargillGraincorpPlumgrove/MitsuiEmerald/SumitomoADMVitolNobleBungeQuadraCHS IncAgrex-Mitsubishi-RiverinaCentre State ExportsPentagAust Grain Exports


~80%

…..and many more….

Louis Dreyfus

Aust Milling Group

Arrow Commodities

Robinson Grain

Rural Logic

Grainlink

Etc etc etc

3. Australian Export Infrastructure


• PORT CAPACITY GROWTH• BULK VS CONTAINERS

Australian Export Infrastructure

• BULK: Added 4mmt to bulk export capacity• Added new players

• CONTAINERS: Built container exports to regularly exceed 3 mmt

• RESEARCH and DEVELOPMENT: raised spend by 30% from $150M to $200M

27

In the last 5 years Australia has…


2010 - 17 x Bulk Export Terminals


Mackay

Gladstone

Fisherman Is

Newcastle

Pt Kembla

MelbournePortland Geelong

EsperanceAlbany

Kwinana

Geraldton

ThevenardPort Lincoln

Wallaroo

Port GilesPort Adelaide

2016 - 22 x Bulk export terminals


Wilmar

NAT

QuattroBunge

Outer Harbor

Australian Bulk Export Terminals – More choiceRegion/Port Operator Est 2016 Capacity

(mmt)WA (4 ports) CBH 15.0WA (Bunbury) Bunge 0.5

SA (6 ports) Viterra/Glencore 7.2SA (Port Adelaide) Patricks 0.2

East Coast (7 ports) Graincorp 15.0QLD - Brisbane Wilmar 0.3NSW - Newcastle Newcastle Agri Terminal 1.0NSW – Port Kembla Quattro 1.0VIC - Melbourne Emerald 1.2TOTAL 41.4 MMT


EXPORT CONTAINER BUSINESS• CONTAINER EXPORTS HAVE CONTINUED TO GROW

• THERE IS A WIDE CHOICE OF CONTAINER EXPORTERS

• APART FROM THE MAJOR BULK EXPORTERS (CBH, Glencore, Cargill, Graincorp, Emerald, ADM, Bunge, etc), THERE ARE MANY MORE SUCH AS….

• COMPANIES REPRESENTED HERE AT AGIC ASIA 2016

• See GTA member website www.graintrade.org.au

• MELBOURNE AND SYDNEY ARE THE MAJOR CONTAINER PORTS, BUT EVERY STATE HAS CONTAINER EXPORTS


Wheat container exports (mmt)


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1.00

1.50

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3.0009

/10

10/11

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14/15

WA SA Vic NSW Qld

Canola container exports (mmt)


0.000.020.040.060.080.100.120.140.160.18

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10/11

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14/15

WA SA Vic NSW Qld

Sorghum container exports (mmt)


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0.60

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1.00

1.2009

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14/15

WA SA Vic NSW Qld

3. Summary - Australian Export Infrastructure


• MORE CAPACITY – BULK and CONTAINERS

• MORE CHOICES FOR BUYERS

• 15/16 EXPORTS – RUNNING WELL AHEAD OF LAST YEAR

4. WHAT SORT OF BUYER ARE YOU?


Is the buying decision driven by……

The Mill Managerwho is motivated

by

PERFORMANCE IN THE MILL

CUSTOMISED

The Procurement -Trading Manager

who is motivated by

PRICE

COMMODITISED

OR

COMMODITISED or CUSTOMISED?COMMODITISED >>> CUSTOMISED

Any Origin >>> Aust only

Any Load Port >>> Port specific

Grain Specs >>> Flour specs

No Carryover >>> Continuous supply

Basic service >>> Technical service

Low loyalty >>> Relationship based

Price !! >>> Price & Service


For Example - Exports by Load Port/s


0.00

1.00

2.00

3.00

4.00

5.00

China Indonesia VietNam Japan SthKoreaContainers BRIS NTL PKE MEL GEELPTL PAD GIL LINC THEV WALESP ALB BUN KWI GER

5

12

11 311

22 x Bulk Export Terminals


Mackay

Gladstone

Fisherman Is

Newcastle

Pt Kembla

MelbournePortland Geelong

EsperanceAlbany

Kwinana

Geraldton

ThevenardPort Lincoln

Wallaroo

Port GilesPort Adelaide

ASW Brisbane & Kwinana-Specs may be the same-But different varieties, functionality is different

Important your supplier knows what you want


Who to talk to?1) Your suppliers in Australia2) Grain standards – Grain Trade Australia

www.graintrade.org.au3) AGIC ASIA 2014, 2015 & 2016 are steps to help the

Customer-Australian Grain Industry partnership4) Grain Quality Information – AEGIC www.aegic.org.au

5. AUSTRALIAN EXPORT GRAIN PRICING


• CALCULATING AN AUSTRALIAN FOB PRICE• SHIPPING AUCTION SYSTEM FINISHES IN 2016• WATCH PORT ZONE SPREADS

Calculating USD FOB Replacement CostSA & WA East Coast

1 Internal “Track” Price A$..... A$.....

234

+ Port costs+ “Capacity” auction fee

~ $20Pre 2015: $10-50From 2016: $5-10

~ $20$8-10$5-10

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= A$ FOB pricex AUD/USD rate

A$......0.7200

A$......0.7200

7 = US$ FOB Replacement US$....... US$.......

42

- The “auction system” for port capacity will expire in 2016- Relationship between the “Track” price to USD FOB price more reliable- Therefore important to watch the price spreads in each port zone



CBH Example in WA…..

• Booked 10.2mmt in LTA agreements for next 5 years.

• PLUS approximately 3.0mmt booked through spot capacity for 15/16, in addition to LTA capacity (i.e., 13.2mmt booked year-to-date)

• Lower execution risk of $5 - $9 per tonne in 15/16, c.f. $38 on average under the auction in 14/15

• >>> Better relationship of Track to FOB

APW1 prices atKwinana, Geelong, Port Adelaide (A$/t)


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Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Geelong PortAdelaide Kwinana

$25Spread


• Profarmer collects prices on all grains, at every port, every day

• Converts them to FOB USD flat price (and USc/bu BASIS)

• Profarmer provides FOB replacement cost report : for every grade, every port

• www.profarmergrain.com.au

6. 2016/17 OUTLOOK?


• WEATHER• 2016/17 CROP FORECAST• 2016/17 BALANCE SHEETS

MAR-MAY 2016 – Looks promising


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Wheat Barley Canola Other

2016/17 – Very early forecast


Key Question?

Q: Will Australian growers grow wheat @ USD4.50/bushel?

A1: If it rains in April/May (planting) – Yes!!

A2: A$270/t today is unprofitable


Wheat Balance Sheet

2013/14 2014/15 2015/16Carry in 4.7Mt 5.4Mt 4.5MtProduction 26.4Mt 23.6Mt 23.8MtUsage 25.7Mt 24.5Mt 24.3MtCarry out 5.4Mt 4.5Mt 4.0Mt

50

Carryout stocks decline, but comfortable….


Barley Balance Sheet

2013/14 2014/15 2015/16Carry in 0.4Mt 0.2Mt 0.2MtProduction 9.4mt 8.1Mt 8.8MtUsage 9.6Mt 8.1Mt 7.9MtCarry out 0.2Mt 0.2Mt 1.1Mt

51

Stocks to grow…. Comfortable …


Canola Balance Sheet

2013/14 2014/15 2015/16Carry in 0.2Mt 0.3Mt 0.2MtProduction 3.7Mt 3.3Mt 2.8MtUsage 3.6Mt 3.4Mt 2.9MtCarry out 0.3Mt 0.2Mt 0.1Mt

52

Very tight stocks ……………………


Sorghum Balance Sheet

2013/14 2014/15 2015/16Carry in - 0.3Mt -Production 1.6Mt 2.0Mt 1.7MtUsage 1.3Mt 2.3Mt 1.3MtCarry out 0.3Mt - 0.4Mt

53

Building stocks, but depends on China? ……


SUMMARY


1. 2015 Crop Good, despite 2015 El Nino

2. Exports Asia is critical for Australian grain

3. Export Infrastructure Well placed to meet demand

4.What sort of buyer? Requires buyer-seller communication (AGIC Asia)

5. Grain pricing Watch port zone FOB spreads

6. 2015/16 Balance Sheet Early days, strong exports, slight stocks rebuild

Thankyou–Questions?

+61395149000

[email protected]

cropforecasters.com.au

[email protected] +61418332431© Copyright NZX Ltd. 201355

Data|Knowledge|Independence

Documents

Australian Crop Forecasters · 2016-05-03 · •Booked 10.2mmt in LTA agreements for next 5 years. •PLUS approximately 3.0mmt booked through spot capacity for 15/16, in addition