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Globoil 29 September 2015
www.vicorus.ch Jonathan Grange
An innovative international brokerage business specializing in physical agricultural commodities with offices in Montreux, Madrid, Istanbul, Hamburg, Georgetown, Mumbai
Product origination: Black Sea (Russia, Ukraine, Romania, Hungary, Bulgaria, EU)
Destination: consumer business in the Mediterranean to Turkey, through the Middle East to North Africa, Spain, Italy and Greece & SE Asia
A diverse client base including farmers, originators, trading houses, importers, processors and consumers.
CerealsWheat, Corn, Barley, Rye, Millet
OilseedsSoybeans, Sunflower seeds, Rapeseeds, Linseeds
FeedstuffsSunflower meal, Rape meal, Wheat Bran, Rice bran, Sugar Beet Pulp, Soybean meal
PulsesYellow peas, Feed peas, Chick Peas
Vegetable oilsSunflower oil, Rape oil, Soya oil
www.vicorus.ch Jonathan Grange 25 Sep 2015
Global Agri Outlook
www.vicorus.ch Jonathan Grange 25 Sep 2015
Agenda
Macro economic factors
Supply
Logistics
Demand
Technology
Conclusion
www.vicorus.ch Jonathan Grange 25 Sep 2015
Macro economic factors
Geo Politics
Interest rates
FX
Energy Prices
Fund activity
www.vicorus.ch Jonathan Grange 25 Sep 2015
Geo Politics
China – slowdown / S China sea
India - next motor
Industrial Commodity producers - price hit
Russia – punching above weight
M East – non functioning states, except Iran
www.vicorus.ch Jonathan Grange 25 Sep 2015
Interest Rates
Global growth• China – hard landing / transformation• US – energy dividend• India - future motor• EU – deflation risk like Japan, immigrants?
Fed Policy• Employment measure
Inflation / deflation
Ag industry risk
www.vicorus.ch Jonathan Grange 25 Sep 2015
35 years Interest Rates – US T Bond (10y)
www.vicorus.ch Jonathan Grange 25 Sep 2015
FX
Mega Trend
Producer / Consumer effect
US$ / CRB
www.vicorus.ch Jonathan Grange 25 Sep 2015
US$ Index – 40 years
www.vicorus.ch Jonathan Grange 25 Sep 2015
FX
Mega Trend
Producer / Consumer effect
US$ / CRB
www.vicorus.ch Jonathan Grange 25 Sep 2015
US$ / Brazil Real
www.vicorus.ch Jonathan Grange 18 June 2015
FX
Mega Trend
Producer / Consumer effect
US$ / CRB
www.vicorus.ch Jonathan Grange 25 Sep 2015
US$ Index / CRB
www.vicorus.ch Jonathan Grange 18 June 2015
Energy Prices
Changing world flows
Fracking – US exports
OPEC - Saudi
Efficiency / alternatives
www.vicorus.ch Jonathan Grange 25 Sep 2015
WTI Crude Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
US Natural Gas
www.vicorus.ch Jonathan Grange 25 Sep 2015
Fund Activity
Mass of money – US$ 350 bln
Asset class
Macro driven - CTA
Market volatility
www.vicorus.ch Jonathan Grange 25 Sep 2015
Fund Activity
www.vicorus.ch Jonathan Grange 25 Sep 2015
Fund Returns
www.vicorus.ch Jonathan Grange 25 Sep 2015
Supply
Weather
Crops - Area / Growing conditions
Farmer selling
Origin competition
www.vicorus.ch Jonathan Grange 25 Sep 2015
Supply – Weather
N Hemisphere
El Nino• Forecast• So Far• Possibilities
www.vicorus.ch Jonathan Grange 25 Sep 2015
Weather – El Nino
www.vicorus.ch Jonathan Grange 25 Sep 2015
Supply
Crops - Area / Growing conditions Profitability Switching
Devaluation Logistics, Rent, Labour, Admin
Oil price• Fuel, fertilizer,
www.vicorus.ch Jonathan Grange 25 Sep 2015
Matif Wheat Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
Soybean / Corn Chicago Monthly (2nd month)
www.vicorus.ch Jonathan Grange 25 Sep 2015
Supply
Farmer selling• Farm is ‘rich’• Local currency values• Technology moving fast
Origin competition• Multi origins with good availabilities
www.vicorus.ch Jonathan Grange 25 Sep 2015
Logistics
Freight rates
US Transport & Elevation capacity - full
Black Sea • Floating Elevators • Domestic transport
S. America - Strikes / Elevation Capacity
www.vicorus.ch Jonathan Grange 25 Sep 2015
Baltic Tanker Clean Index Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
Demand
Calorific intake
Biofuels
India
Consumer behaviour / Pipeline effect
www.vicorus.ch Jonathan Grange 25 Sep 2015
World Grain Demand
www.vicorus.ch Jonathan Grange 25 Sep 2015
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16500
600
700
800
900
1,000
GLOBAL CORN & WHEAT USE
Wheat Corn
'000
MT
Global Corn Use Growth: 22.48 mln mt/pa. Average 18-Y growth: 3.9%
Global Wheat Use Growth: 7.66 mln mt/pa. Average 18-Y growth: 1.3%
US Biofuels
www.vicorus.ch Jonathan Grange 25 Sep 2015
Technology
EU / China / Turkey GMO acceptance – France
Euro Fracking
China / Turkey Testing
Quality management – complexity• Sustainability• Traceability
www.vicorus.ch Jonathan Grange 25 Sep 2015
Conclusion
‘Normal’ weather except El Nino
Consistent crops
‘Normal’ Demand - slowing
Growing stocks - Stocks Use ratios• Govt stocks vs Just in time
Role of the market
Price outlookwww.vicorus.ch Jonathan Grange 25 Sep 2015
Global Stocks – Wheat, Corn, Soybeans (mln mt)
www.vicorus.ch Jonathan Grange 25 Sep 2015
96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/160
50
100
150
200
Wheat Corn Soybeans
Stocks / Use Ratios – Global Wheat & Corn (%)
www.vicorus.ch Jonathan Grange 25 Sep 2015
96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/1612
17
22
27
32
37
Wheat Corn
Stocks / Use Ratios – Global Soybean & Palm (%)
www.vicorus.ch Jonathan Grange 25 Sep 2015
96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/165
10
15
20
25
30
Soybeans Palm Oil
CBOT Corn Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
CBOT Wheat Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
CBOT Soybeans Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
Crude Palm oil - Monthly
www.vicorus.ch Jonathan Grange 25 Sep 2015
Thank you for your attention
www.vicorus.ch Jonathan Grange 25 Sep 2015