WelcomeParis – 3rd July 2019

Anne-Laure DelaplaceCustomer Success Manager, Refinitiv

3

• 09:15 Session 1 - Shipping

Capt. Amrit Singh, Lead Shipping Analyst, Refinitiv, “Shipping Trends and Challenges”

• 09:45 Session 2 - Oil

Alex Pearce, Lead Analyst - Oil Research, Refinitiv, "European Refined Product Trends and Outlook”

• 10:30 Break

• 10:45 Session 3 – Agriculture

Jose Clavijo, Lead Analyst - Agriculture, Refinitiv, "Global Production & Weather Outlook”

• 11:45 Event End

Agenda

4 Commodities Outlook Series 2019

5 Commodities Outlook Series 2019

No Giveaways Here

6

No Giveaways Here

Capt. Amrit SinghLead Shipping Analyst, Refinitiv

The Financial and

Risk business of

Thomson Reuters

is now Refinitiv.

Shipping Trends and ChallengesCAPT. AMRIT SINGH

July 3, 2019

9

• Sanctions Impact

• Regulatory Issues

• Trade and Supply Outlook

• Challenges

Shipping Trends and ChallengesAGENDA

10

Sanctions ImpactDecreasing VLCC Tonne-mile

400

450

500

550

600

650

700

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

Bil

lio

ns

2016 (E) 2017 (E) 2018 (E) 2019 (E)

11

Sanctions ImpactIranian Floating Storage Building-up

0

10

20

30

40

50

60

70

01-Jan-15 01-Jul-15 01-Jan-16 01-Jul-16 01-Jan-17 01-Jul-17 01-Jan-18 01-Jul-18 01-Jan-19

Ba

rre

ls (

m)

Global VLCC Floating Storage Iran VLCC Floating Storage

12

Sanctions ImpactFreight rates driven by crude price

0

10

20

30

40

50

60

70

80

90

100

-20,000

0

20,000

40,000

60,000

80,000

100,000

Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19

Baltic VLCC-TCE (U$/day) Ice Brent Crude (US$/b) (RH axis)

13

Fleet Speed SignalsHigh correlation between freight rate and vessel speed

11.0

11.5

12.0

12.5

13.0

13.5

14.0

0

20

40

60

80

100

120

140

Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

Baltic TD3C ME Gulf to China (WS) VLCC Unladen Speed (Knots)

14

Cumulative ImpactDecreasing Capesize Tonne-mile

500

550

600

650

700

750

800

850

900

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

Bil

lio

ns

2016 (E) 2017 (E) 2018 (E) 2019 (E)

15

Cumulative ImpactPeak in Laid-up Capesize Bulkers

0

10

20

30

40

50

60

70

80

90

100

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

Baltic Capesize Index Capesize Laid Up (Units) (RH axis)

16

Regulatory Issues

2017Ballast Water Management Convention

(BWM)

All ships must have:

- Ballast water management plan

- Ballast water record book

- International Ballast Water Mgmt. Certificate

- Existing ships < 8 Sep.2017 to meet D1

- New ships > 8 Sep.2017 to meet D2

2019- Existing ships with

renewal survey 8 Sep. 2017 – 8 Sep. 2019

D1 standard- Exchange ballast water in open

seas

D2 standard– Involves ballast water mgmt.

system

2020Global sulphur oxides in Fuel Oil capped at 0.5%

m/m (mass by mass) from 1 Jan. 2020 against the current

3.5% limit

Choices – Install scrubbers, use Low Sulphur Fuel Oil (LSFO) or

alternative fuel (LNG)

2024All ships must

meet D2 standard by 8 Sep. 2024

Source: International Maritime Organization (IMO)

Ballast Water Management and Sulphur Cap

17

Scrubbers MarketGrowing demand for scrubbers, Open-Loop Type popular

Source: DNV-GL

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

>2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total ships with scrubber units

34%

21%

14%13%

6%4%

2%

2%2%

1%

79%

18%2%

1%

74%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Bulk Carriers

Container Ships

Oil/Chemical Tankers

Crude Oil Tankers

Cruise Ships

Ro-Ro Carriers

Gas Tankers

General Cargo Ships

Ro-Passenger Ships

Car CarriersFerries & Others

Open-Loop Scrubbers

Hybrid Scrubbers

Closed-Loop Scrubbers

Unknown

Retrofits

Newbuilds

18

• Look at SECA Implementation

• Past industry response to high fuel prices

• Challenges – Technical, operational, financial

IMO 2020 ScenarioThoughts on Implementation

19

Bunker Fuel SensitivityVessel speed sensitive to bunker fuel pricing

11.6

11.8

12.0

12.2

12.4

12.6

12.8

13.0

13.2

0

100

200

300

400

500

600

700

Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

ClearLynx Bunker Fuel Oil 380 cst-3.5% (US$) VLCC Speed Laden (Knots) (RH axis)

20

VLSFO PricingNymex Futures

500

502

504

506

508

510

512

514

516

Oct-19 Dec-19 Jan-20 Mar-20 Apr-20 Jun-20 Aug-20 Sep-20 Nov-20

Nymex Singapore FOB Marine Fuel 0.5% (Platts) Futures (US$/t)

21

Headwinds for ShippingDeceleration in Global Trade Growth

-15

-10

-5

0

5

10

15

World Trade volume of goods and services, % change Y/Y

Source: Eikon

22

Fleet Supply GrowthRegulatory Requirements to ease some supply side pressure

5.7%

4.7%

2.5%2.3%

2.6%

3.0% 3.1%

3.9%

2.1%

1.5%

3.3%

5.8%

3.4%

1.1%

3.0%

1.9%

0

100

200

300

400

500

600

700

800

900

0%

1%

2%

3%

4%

5%

6%

7%

2013 2014 2015 2016 2017 2018 2019e 2020e

DW

T (

Mill

ion)

Capaci

ty G

row

th

Bulker (DWT) Oil Tanker (DWT) Bulker (Capacity Growth) Oil Tanker (Capacity Growth)

23

An Option from Jan. 2020Slow steaming!

11.8

12

12.2

12.4

12.6

12.8

13

13.2

0

100

200

300

400

500

600

700

800

900

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

ClearLynx LSMGO Singapore (US$) ClearLynx IFO 380 cst-3.5% (US$) VLCC Speed Laden (Knots) (RH axis)

24

• September 2019 – IMO Ballast Water Convention

• January 2020 – Global Sulphur Cap

• Trade Wars and Sanctions - Decelerating trade growth, decreasing tonne-miles

• Pressure on freight rates

• GHG Emissions Targets – 50% reduction in CO2 by 2050, compared to 2008

• Poseidon Principles Initiative by Banks

Challenges AheadShipping set to face headwinds

Thank Youanalyst.freight@refinitiv.com

NYK Super Eco Ship 2030

Source: NYK

Alex PearceLead Analyst - Oil Research, Refinitiv

European Refined Product Trends & OutlookAlex Pearce – Lead Analyst, Oil Research

Jul 3, 2019

28 European Refined Product Outlook

Agenda

Overview for Crude

Refinitiv Trade Flows

European Gasoline Outlook

– US outages create European opportunities

– West African stocks spell trouble for summer demand

European Jet Outlook

– Increasing flow from Arab Gulf & Asia

– Global slowdown could impact aviation demand

European Diesel Outlook

– Russian supplies compete with the East

– Diesel balanced in near term, but IMO 2020 looms

Refining Outlook

IMO 2020

Conclusions & Questions

29

20

30

40

50

60

70

80

90

Jan-16 Sep-16 May-17 Jan-18 Sep-18 May-19

$/b

bl

Brent

WTI

20

21

22

23

24

25

26

mill

ion b

bls

European Refined Product Outlook

Refinitiv Crude OutlookSupply cuts expected to keep floor prices falling despite lingering demand concerns

Supply Outlook Demand Outlook

2 million bbls of OPEC supply cuts

since Nov-18

We estimate only 1 million bpd of

additional demand in 2019

Price Forecast

Supply pressure expected to result

in 2019 avg. $69.20/bbl

Source: Refinitiv Oil Research Source: Refinitiv Oil Research Source: Refinitiv Oil Research

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

US China Europe Japan India MiddleEast

mill

ion b

pd

30 European Refined Product Outlook

Refinitiv Trade Flows

Tracking Vessels Making Assessments

Model-based assimilation of data on vessel locations and cargoes combined with systematic analyst review of

outputs across clean, dirty, LNG, LPG and bulk tankers.

Collect Data

Vessel characteristics, historic and

current positions, fixtures, port

inspections, customs data

Create best view of current and

historic tracks using AIS and

algorithms, route profiling

Underway or discharged, single or

multiload, cargo and volumes,

mitigating missing data using analyst

expertise

Flow Creation Flow Updated Throughout Lifecycle Flow Discharge

31 European Refined Product Outlook

Gasoline Trade FlowsEurope is a key exporter to the US and West Africa

Source: Eurostat

8.7 mmt

(+28%)

10.5 mmt

(+17%)

1.1 mmt

(+15%)

1.2 mmt

(-77%)

32 European Refined Product Outlook

US Refinery Outages Opens Transatlantic ArbCapitalising on export opportunities

United States FCC Outages

Source: Reuters

Gasoline margins were languishing in Europe and

Asia for most of Q1 on oversupply and weaker

demand, plunging margins to 7-year lows.

Sellers were thrown a lifeline as a string of refinery

issues in the US opened the arbitrage, causing a

resurgence in prices and margins.

FCC outages (gasoline producing refinery units)

dropped sharply in April.

The issues have now largely been resolved which has

begun to curb import demand.

33

-$5

$0

$5

$10

$15

$20

30Nov18

14Dec18

28Dec18

11Jan19

25Jan19

08Feb19

22Feb19

08Mar19

22Mar19

05Apr19

19Apr19

03May19

17May19

31May19

-10

-8

-6

-4

-2

0

2

4

6

8

10

$/b

bl

mill

ion b

bls

US Gasoline Inventory Change NWE EBOB Crack

European Refined Product Outlook

Europe Gasoline Margins Tied to US Inventory ChangesCapitalising on export opportunities

US Gasoline Inventory Net Change vs. NWE EBOB Crack

Source: EIA, Refinitiv

US stocks drew down sharply in the wake of the

outages, European stocks meanwhile were

burgeoning from an abundance of cheap sweet crude.

Cracks rose steadily across March and April on the

arbitrage, before slowing as inventory drawdowns

slowed.

US refiners now gearing up to produce more gasoline

following completion of turnarounds.

Recent inventory data already shows a steep rebuild

of stocks, as domestic production and imports reverse

losses.

34

Unplanned US outages push April gasoline exports

from NWE to record highs.

Physical flows correlate with EBOB-RBOB spread

when accounting for 1 month lag as traders fix arbs.

Exports slow in May and June as US capacity comes

back online forcing European sellers to look

elsewhere for supply.

Shutdown of PES refinery after a fire likely to boost

exports in the near term, however gasoline prices

were already falling in NWE due to glut.

European Refined Product Outlook

Northwest European Gasoline to USCapitalising on export opportunities

NWE to US Gasoline Trade Flows

Source: Refinitiv Oil Research

-10

-5

0

5

10

15

20

25

0

200

400

600

800

1000

1200

1400

1600

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

Nov-1

8

Dec-

18

Jan-1

9

Feb-1

9

Mar-

19

Apr-

19

May-1

9

cts/

gal

kt

ARA Scandinavia

United Kingdom France

Others EBOB-RBOB Spread +1M

35

West African demand more sporadic as purchasing

mainly price driven.

NWE gasoline cargoes routed to West Africa increase

when demand from the US tapers off and vice versa.

Fewer barrels headed to WAF from NWE during April

as rising US prices diverted supplies across Atlantic.

Flows from ARA storage make up the bulk of exports

to West Africa as spot demand and larger vessels

more frequent.

European Refined Product Outlook

West African Gasoline DemandCapitalising on export opportunities

NWE to West Africa Gasoline Trade Flows

Source: Refinitiv Oil Research

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

Nov-1

8

Dec-

18

Jan-1

9

Feb-1

9

Mar-

19

Apr-

19

May-1

9

kt

ARA Scandinavia United Kingdom

France Others US Exports

36 Edit presentation title on Slide Master using Insert > Header & Footer

West African DemandWAF stocks lower but NWE losing import share

West Africa Imports by Origin

Source: Refinitiv Oil Research

Nigeria Demand

Source: JODI

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

Nov-1

8

Dec-

18

Jan-1

9

Feb-1

9

Mar-

19

Apr-

19

May-1

9

Jun-1

9

NWE Others

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Imports Demand Closing stocks

37 European Refined Product Outlook

European Gasoline OutlookCautious outlook for European gasoline

ARA Gasoline Inventories Gasoline Cracks

ARA stocks have now rebounded

above 5-yr avg.

Cracks still supportive over

summer, resurgence in Jan 20 (IMO

2020 effect?)

Cumulative US Gasoline Imports

US gasoline imports are below

seasonal average so far

Source: Insights Global

Source: Refinitiv Oil Research

Source: EIA400

600

800

1000

1200

1400

1600

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

k m

t

Week

5Y Range 2019 2018

$0

$2

$4

$6

$8

$10

$12

$14Gasoline Crack NWE Curve

Gasoline Crack Sing Curve

Gasoline Crack US Curve

0

2000

4000

6000

8000

10000

12000

1 4 7 101316192225283134374043464952

2019 2018 2017

38 European Refined Product Outlook

Jet Trade FlowsEurope is a major importer of jet from the East

Source: Eurostat

14.6 mmt

(+18%)

2.7 mmt

(+37%)

811 kt

(-73%)

39

Europe a key destination for jet produced in the Arab

Gulf, India and North Asia and is steadily increasing.

Typically Asia draws in jet for kerosene heating

demand during winter months, while air travel

demand in Europe pulls more barrels West.

Diesel margins have outperformed jet which has kept

focus on refiners to maximise road fuel production,

tightening prompt supplies.

More spot vessels heading around the Cape instead

of Suez due to market in contango.

China also exporting more jet to Europe on increased

export quotas.European Refined Product Outlook

Jet Arbitrage From East of SuezSwing supply from East increasing

AG/Asia to NWE Jet Trade Flows

Source: Refinitiv Oil Research

600

800

1000

1200

1400

1600

1800

kt

East of Suez Jet To NWE

40

However, demand outlook for jet fuel growth this year

wavering in the face of global economic slowdown.

March revenue per passenger kilometer (RPK) rose

just 3.1% year-on-year, the slowest growth of any

month in the last nine years (IATA).

Europe second largest market (26.7%) after Asia-

Pacific (34.4%) in terms of passenger airline revenue,

but concerns over GDP growth, Brexit weighing on

growth.

High profile airline closures also reflective of capacity

versus demand, which may impact jet fuel demand for

rest of year.

European Refined Product Outlook

Air Travel Demand Growth SlowingGlobal economic slowdown dragging on jet demand

Air Travel Demand Growth by Region

Source: IATA

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015 2016 2017 2018 2019F

RPK %

Y-O

-Y

Global North America Europe Asia-Pacific

41 European Refined Product Outlook

European Jet OutlookBearish outlook for European jet

ARA Jet Kero Inventories Jet Cracks

Open arb sees counter seasonal

stock build, now above 5-yr average

Supplies keep pressure on front of

cracks curve (contango)

Total East Exports

Flows from AG/Asia declining

despite summer approaching

Source: Insights Global

200

300

400

500

600

700

800

900

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

k m

t

Week

5Y Range 2019 2018

$14

$15

$15

$16

$16

$17

$17

$18

$18

$19

$19Jet Crack NWE CurveJet Crack Sing Curve

0

1

2

3

4

5

6

Jan Feb Mar Apr May Jun Jul

mill

ion t

ons

2018 2019

42 European Refined Product Outlook

Diesel Trade FlowsEurope is a major importer of diesel from Russia, East and US

Source: IIRSource: Eurostat

22.3 mmt

(-3%)

5.4 mmt

(-30%)11.4 mmt

(+31%)

1.1 mmt

(-42%)

43

Russian dominance to supply majority of diesel to

NWE is under threat from increasing capacity in Arab

Gulf/Asia.

Flows tracking indicates that imports East of Suez

exceeded Russian arrivals during May.

Maintenance and Russian pipeline issues has opened

up opportunity to supply more diesel from the East as

softer demand in Asia keeps focus on Europe.

US flow has remained weak on poor arbitrage

economics but increased gasoline output could push

more barrels across Atlantic over summer.

European Refined Product Outlook

Diesel Supply CompetitionCompetition intensifies as Russian output dips

Russia/East Diesel Flows to NWE

Source: Refinitiv Oil Research

0

200

400

600

800

1000

1200

1400

1600

1800

2000

kt

Arab Gulf India Russia

44 European Refined Product Outlook

European Diesel OutlookBalanced outlook for diesel

ARA Diesel/Gasoil Inventories Diesel Cracks

Stocks fairly balanced in ARA as

tepid demand meets steady inflows

Cracks under pressure although

effect of IMO2020 clearly priced in

$13

$14

$15

$16

$17

$18

$19

$20

$/b

bl

NWE Diesel Crk MED Diesel Crk

ARA Diesel Crk

Arbitrage

-$13

-$12

-$11

-$10

-$9

-$8

-$7

-$6

$/t

on

Diesel EW Spr

Arb Closing

Arb Opening

East Arb more workable towards

year end, slumps in 2020

Source: Refinitiv Oil ResearchSource: Refinitiv Oil Research

Source: Insights Global

1000

1500

2000

2500

3000

3500

4000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

k m

t

Week

5Y Range 2019 2018

45 Edit presentation title on Slide Master using Insert > Header & Footer

Refining OutlookEuropean margins losing support, Asia remains weak

NWE Margins US PADD3 MarginsSingapore Margins

NWE slate margins slipped below

2018 levels as gasoline loses

support on weak US arb

Asia margins remain pressured

by glut of light distillate

production from Chinese teapot

refineries

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

US margins pressured by

higher heavy oil prices for

coking

Source: Refinitiv Oil Research

-2

0

2

4

6

8

10

12

14

16

18

1

12

23

34

45

56

67

78

89

100

111

122

133

144

155

166

177

188

199

210

221

232

243

254

2019 2018 2017

0

2

4

6

8

10

12

1

12

23

34

45

56

67

78

89

100

111

122

133

144

155

166

177

188

199

210

221

232

243

254

2019 2018 2017

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

Source: Refinitiv Oil Research-5

0

5

10

15

20

25

1

12

23

34

45

56

67

78

89

100

111

122

133

144

155

166

177

188

199

210

221

232

243

2019 2018 2017

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

Source: Refinitiv Oil Research

46 European Refined Product Outlook

IMO2020To Scrub Or Not To Scrub?

HSFO vs 0.5% Scrubber Payback

HSFO

0.5%

Spread

$/ton SpreadC

on

su

mp

tio

n

0

1

2

3

4

5

6

Year

s

40 tons/day 80 tons/day

($3.5m Scrubber)

Source: Refinitiv Oil Research

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

Jul-19

Sep-1

9

Nov-1

9

Jan-2

0

Mar-

20

May-2

0

Jul-20

Sep-2

0

Nov-2

0

Jan-2

1

Mar-

21

May-2

1

Jul-21

$/t

on

HSFO vs LSFO (Hi-Lo)

$480

$482

$484

$486

$488

$490

$492

$494

$/t

on

$275$280$285$290$295$300$305$310$315$320$325

$/t

on

$150

$160

$170

$180

$190

$200

$/t

on

47

• OPEC cuts and sanctions on Iran and Venezuela have been effective at cutting supply despite rising

US output, however this is against a background of reducing global demand. We maintain that

supply side factors will provide a floor to prices this year.

• Gasoline outlook for European refiners has become more challenging over the summer, with recent

rally in cracks losing steam, which appears to be tipping NWE into oversupply without sufficient US

and WAF demand to support.

• Jet arbitrage has been open for some time resulting in a bearish outlook for the summer, global

demand for jet fuel also looking uncertain.

• Diesel more balanced with steady imports from the East offsetting reduced Russian flows, however

tepid demand could threaten fundamentals if Middle East exports pick up and/or Asian demand

weakens.

European Refined Product Outlook

Conclusions

Thank You

Alex.Pearce@refinitiv.com

Jose ClavijoLead Analyst - Agriculture, Refinitiv

The Financial and

Risk business of

Thomson Reuters

is now Refinitiv.

Global Production & Weather Outlook

José Clavijo, Ph.D.

Lead Analyst - Agriculture Research

51

Where have we been?

State of the Grains &

Oilseeds Markets

Where are we now?

Current Status & Outlooks

Where are we going?

Forward Weather

Where are the

biggest risks ahead?

52

• Formerly known as Lanworth/Thomson Reuters

• 18 specialists in Chicago, Dubai, Hamburg, Kiev, London, Moscow, Oslo, Rotterdam, Singapore

• Mission is to provide customers with:

✓timely, accurate crop production forecasts

✓short and long-term weather data and insight

✓detailed and complete flows of imports/exports

✓cash price collection and market analysis

✓Data feed solutions

Refinitiv Agriculture & Weather Research

53

Where have we been?

State of the Grains &

Oilseeds Markets

54

Global Production(2009/10 to 2018/19)

Global Ending Stocks(2009/10 to 2018/19)

Corn Soy Wheat RapeseedSource: USDA PSD

All values are in million metric tons

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

0

100

200

300

400

500

600

700

+286

+101

+44

+12

+443

+194

+50

+72

-1

+315

55

U.S. CBoT Wheat Composite

Front Month ContinuationSource: Refinitiv Eikon

In the last decade…

✓ Global production increased by nearly 20%, adding more than 100 MMT,

despite stable area

✓ Russian production more than doubles following greater investment in

inputs (e.g., seeds and technology)

✓ EU produced on average 13 MMT more soft wheat compared to previous

decade, much of it attributable to yield increases in the east and south

✓ U.S. ending stocks balloon despite declining area

✓ Argentina production reaches record high following end of export quotas

✓ Right weather, right time

$7.00/bushel

$5.00/bushel

$9.00/bushel

56

U.S. CBoT Corn Composite Source: Refinitiv Eikon

In the last decade…

✓ Globally, more than 10 million hectares and 100 MMT have

been added to the balance sheet

✓ Ending stocks more than doubled

✓ Production out of the U.S. grows more than 30% compared to

previous decade following increases to area and yield

✓ Removal of corn export quotas in Argentina cause area to

nearly double

✓ Second crop corn area in Brazil also reaches new highs with

total production now exceeding 100 MMT

✓ Production in China breaks multiple records

✓ Right weather, right time $6.00/bushel

$4.00/bushel

$8.00/bushel

57

U.S. CBoT Soybean Composite

Front Month ContinuationSource: Refinitiv Eikon

In the last decade…

✓ 20 million more hectares planted globally

✓ Global ending stocks more than doubled

✓ Brazil ramps up planted area surpassing U.S.

production for the first time

✓ Soybean area and yield in the U.S. breaks multiple

records

✓ In Argentina, removal of export quotas for corn and

wheat lead to less soybean area, but high yields

keep production levels at or near record

✓ U.S.-China Trade War shifts China’s import market

almost entirely to South America, causing U.S.

ending stocks to triple in only three years

✓ Right weather, right time

$14.00/bushel

$11.00/bushel

$17.00/bushel

$8.00/bushel

58

Where have we been?

State of the Grains &

Oilseeds Markets

Where are we now?

Current Status & Outlooks

59

✓ Once an area of huge concern,

the return of rainfall in early

spring stabilized outlooks, with

the key exception of rapeseed

✓ However, heat and dryness is

now returning

✓ Slowest spring planting pace

in more than 40 years

✓ Corn planted area down at

least 8 million acres from

USDA March outlooks

✓ Producers grappling with lower

canola plantings following bans

by China

✓ Low soil moisture and poor

emergence in some areas

3rd straight season

of drought following

plantings of winter

crops

✓ Lower corn area following

government policies

promoting soybeans and

maintaining food crops, but

weather has been

favorable to-date

✓ Fall armyworm causing

damage to crops

Favorable weather,

higher plantings led

to record corn, wheat

and rice production

Favorable winter and early

spring weather led to ever

increasing production

estimates, but a shift to

warmth and dryness is

garnering attention

Massive inventory of corn

and soy this season as

weather remained largely

favorable throughout the

growing season

Winter and spring

wheat conditions

rated very highly

60

Crops in good

condition, in

flowering to early

ripening, but heat

and dryness impacts

evidentGood to excellent

conditions, some

abiotic/biotic stress

Crops in excellent

condition, in

early/mid-ripening,

minor stress

observed

Crops in excellent

condition, in

early/mid ripening,

minor stress

observedKrasnodar City

Rostov-on-Don

Azov Sea

Ukraine

Krasnodar

Krai

Rostov

28 May – 02 June

61

62

63

64

✓ Total wheat area at a record 27.8 million

hectares

✓ Winter wheat production at 51.4 MMT with

total wheat at 71.7 MMT, third highest on

record

✓ Late winter precipitation, lack of damaging

cold, and adequate early spring weather kept

conditions relatively good

✓ However, a shift warmth and dryness in late

May and early June in the west/south has

drawn down yield potential

Russia Wheat

34

47

51

34

45

48

45

49

64

62

42

56

38

52

5961

73

85

72 72

Production (MMT)Source: USDA PSD & Refinitiv Ag Research

65

✓Winter crops in overall good condition

following a mild winter and spring to-

date, but heat and dryness have been

the theme in June

✓Wheat production at 25.5 MMT, near

historical highs

✓Corn production at 31.0 MMT, 2nd

highest production on record

Ukraine Wheat & Corn

10

21 21

4

1819

14 14

26

21

17

22

16

22

25

27 27 2725 25

0

5

10

15

20

25

30

4 4 47

97 6 7

11 1012

2321

3128

23

28

24

36

31

0

5

10

15

20

25

30

35

40 Corn Production (MMT)Source: USDA PSD & Refinitiv Ag Research

Wheat Production (MMT)Source: USDA PSD & Refinitiv Ag Research

66

Crops showing

signs of persistent

dryness and heat

Good conditions,

but late-season

dryness impacts

evident

Crops developing

rapidly, only minor

late-season heat

stress

High vegetation

density, only minor

late-season heat

stress

17 Jun – 21 June

Paris

Berlin

Hamburg

Brussels

Munich

Düsseldorf

Reims

Cologne

Metz

67

68

69

✓Wheat production highest in 4 years

✓Soft wheat = 146.1 MMT

✓Durum wheat = 8.7 MMT

✓ Rapeseed production down to a

decadal low at just 18.9 MMT

✓Corn production now down to 60.4

MMT

European Wheat, Rapeseed & Corn

Rainfall

deviation

last 60 daysSource:

Refinitiv Eikon

70

Burst grain silos in Fremont County, IowaMay 17, 2019Source: Reuters Pictures

71Source: USDA, Refinitiv Eikon

✓ What did farmers plant?

✓ How are yields affected?

U.S. Corn Planting Pace

72

To Plant or Not Plant?

Farmers basically had/have (!) 3 options:

1. Not Plant. Accept a known return for Prevent Plant (PP) payment, likely resulting in

negative farm incomes✓ Still have to pay to plant cover crops to keep erosion down

✓ Unclear if PP acres qualify for Disaster Relief

✓ Do not qualify for MFP (though payment for cover crop is being considered)

2. Plant. Hope for higher prices. Likely more downside income risks than taking PP

payments.– Qualify for MFP

3. Do Both. Hedge income risks by planting corn/soy on best yielding farmland (if

possible) and take PP payments on lower yielding farmland

73 Can grain production meet demand?

USDA shocked the markets in the June Acreage ReportBut, are the findings conclusive?

16% still to

be sown at

survey time

40% still to

be sown at

survey time

74

• USDA will re-interview farmers in most of the

Corn and Soy Belt in July

• USDA can access FSA data, which gives an

idea of extent of prevent plantings

• USDA will also utilize other information, such

as satellite imagery

• Findings published in August 12th Crop

Production, which won’t contain objective

yield survey.

• WAOB will likely incorporate new number in

the July WASDE.

Can grain production meet demand?

Revisions will come in August… but how big will they be?USDA will keep the market on edge until the August Crop Production report.

75

United States Corn & SoybeansYields will be impacted as well… but how much?

✓ Late planting does not necessarily equate to dismal yields (e.g., 2009)

✓ Nor does early planting equate to high yields (e.g., 2012)

✓ Why? Because other subsequent factors influence yield

Shortened growth cycles Pollination coinciding with

warmer temperaturesHigher disease and

insect pressure

Frost risk as grain fill

extended later into season

76

United States Corn & Soybeans

82.4

75.1

USDA Refinitiv

83.8

82.7

USDA Refinitiv

166

160

USDA Refinitiv

49.5

48.6

USDA Refinitiv

13.7

12.0

USDA Refinitiv

4.15

4.02

USDA Refinitiv

347

306

USDA Refinitiv

113

109

USDA Refinitiv

Harvested Area

(million acres)

Yield

(bushels per acre)

Production

(billion bushels)

Production

(million metric tons)

-7.3 -1.7 -41

-1.1 -0.9

-6.0

-.13-4

77

Where have we been?

State of the Grains &

Oilseeds Markets

Where are we now?

Current Status & Outlooks

Where are we going?

Forward Weather

78

North America: weather going forward in Jul-Aug Will spring crops get any relief?

79

Europe & Black Sea: weather going forward in Jul-Aug How much will crops bounce back from last season?

PrecipitationTemperature

80

Australia: weather going forward in Jul-Aug Drought remains a major concern.

Temperature Precipitation

81

China: weather going forward in Jul-Aug Mixed weather, mixed impacts.

Temperature Precipitation

82

Where have we been?

State of the Grains &

Oilseeds Markets

Where are we now?

Current Status & Outlooks

Where are we going?

Forward Weather

Where are the

biggest risks ahead?

83

✓ Biggest downside watch area

for corn and soy

✓ Further cuts to area will

automatically result in less

production

✓ Yield potential could also be

very low if forward weather

proves unfavorable

✓ Wheat, both winter and spring,

also at risk

Record low soil moisture

coupled with dry forward

weather forecasts in the east

✓ Armyworm likely to have

already reached Northeast

putting corn and soy at risk

✓ Forward weather may turn hot

and dry, but can current soil

moisture levels offset?

Continuation of drought on the

Canadian Prairie putting spring

crops at downside risk, but cool

and wet forecast could

normalize the situation

✓ Warm and dry weather staying entrenched over much

of southern Russia and Ukraine drawing down

production putting later planted wheat at risk as well as

spring crops

✓ Heat and dry weather potentially spreading eastward

into spring wheat growing regions

✓ Too early to make a call on yield

✓ Risk to upside as planted area

likely to increase as South

America benefits from US-China

Trade War

Forecasts indicate potential

for failed monsoon

Heat and dryness

returning with a

vengeance over the

next 6-10 placing

spring crops at risk

84

Global Production (2018/19 to 2019/20)

Global Ending Stocks(2018/19 to 2019/20)

Corn Soy Wheat RapeseedSource: USDA PSD & Refinitiv

All values are in million metric tons

-71

-11

+36

-1

-46

-89

-6

+4

0

-90

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

0

100

200

300

400

500

600

700

Research Analysis Home page:

Click on “Analysis” tab in Agriculture App

Agriculture Weather Dashboard:

Click on “Weather” tab in Agriculture App or search “AWD”

Twitter:

twitter.com/RefinitivAgri

LinkedIn (Refinitiv Commodities):

https://www.linkedin.com/groups/3908202

Thank YouJose.Clavijo@refinitiv.com

Thank You