the global market challenges Sergey Feofilov UkrAgroConsult 16 Th - - PowerPoint PPT Presentation

Black Sea region facing the global market challenges

Sergey Feofilov

UkrAgroConsult 16Th International Black Sea Grain Conference April 10-11, 2019 – Кyiv

Disclaimer

Past performance is no guarantee of future results. The opinions expressed in this presentation are the opinions

• f the writer and do not represent the official position of

UkrAgroConsult.

Black Sea Region: Ambitious Outlook

• Low Farm Production Costs - Key Factor of High

Competitiveness - FOR HOW LONG?

• Production/Supply Slice

Crop Margin Evolution

Key Factor of High Competitiveness - Low Farm Production Costs – FOR HOW LONG?

The 2018 Margins are UkrAgroConsult Estimation

7,9 11,3 32,7 19,6 16,9 26,7 32,3 22,3 11,1 29,2 50,9 46 25,3 32 5 5 5 5 8 8 8 8 8 12 22 25,6 26,6 27,2

5 10 15 20 25 30 10 20 30 40 50 60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

UAH/USD %

Source: State Statistic Committee

Ukraine: Production Costs Evolution, $/MT

50 100 150 200 250 300 350 400 450

2013 2018 2013 2018 2013 2018 wheat corn sunseed

Black Sea: Key Factor of High Competitiveness - Low Farm Production Costs – FOR HOW LONG?

Ukraine: Production Costs Evolution

UkrAgroConsult calculations on basis of official Statistics of Ukraine

Ukraine: Production Costs Evolution

Derzhgeocadastr of Ukraine, by Jan 1, 2019

Key Factor of High Competitiveness - Low Farm Production Costs – FOR HOW LONG?

Ukraine: Prices of Plough Land Urea Prices: FOB Black Sea vs CPT Ukraine

Ukraine: Farmers’ Incomes as Key Source of Financing of Grain Production

Source: State Committee on Statistics of Ukraine

2018

Ukraine: Farmers’ Incomes as Key Source of Financing of Grain Production

Ukraine: Macroeconomic Stability for 2016-21

Ukraine: Macroeconomic Stability for 2016-21

Ukraine: Macroeconomic Stability for 2016-21

Ukraine: IMF Group Forecast, 2019-2021

IMF Group Ukraine Forecast, 2019-20 GDP and Wages, Forecast 2019-20

GDP $B Real GDP,% Inflation FX Rate Wages $ GDP $B

Black Sea Region: Ambitious Outlook

Black Sea Region: Ambitious Outlook COFCO Int'l aims to double grain purchases in Black Sea region

Source

Black Sea Region: Ambitious Outlook

Consumption/ Demand Slice

Global Economic Prospects: Darkening Skies

Washington, DC: World Bank. January 2019

Source

Source

Percent (%) 2019 2020 2021 Change in real GDP 2.1 1.9 1.8

• Dec. projection

2.3 2.0 1.8

US Economy Growth Rates: Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents March 2019

individual assessments of projected appropriate monetary policy

Global Economic Prospects: Darkening Skies

Washington, DC: World Bank. January 2019

Global Trade Growth, volumes

Scenario 1

• Political?
• Economy?
• Political Economy?

The importance of being supported by Government

Trade Wars: The Pain and the Gain

February 2019 UNCTAD Report

Source

Trade Wars: The Pain and the Gain

February 2019 UNCTAD report

• 82% captured by firms in other countries
• Europe to profit the most
• But negative global effects likely to dominate
• Tit for tat could escalate to global level

Source

• PARIS, March 25 (Reuters) - Agricultural commodity merchant Louis

Dreyfus Company reported higher annual profits as it managed to capitalise on trading opportunities created by a U.S.-Chinese trade dispute, giving a boost to its oilseed business.

Source

Political? Economy? Political Economy?

Soy Appeared to be the Most Political Commodity

US Farmers great Puzzles of 2019

• What to Plant – SOY or CORN?
• 2019: Will US Farmers be compensated again for the Trade War?
• Will China Buy Rapeseed from Canada?

Political? Economy? Political Economy?

European Union answers to the challenges:

• Increased State Support to Farming Sector
• Creating Germany's and European “national champions”

Source

• Europe Ready to Help With WTO Reform

Source

Scenario 2

Looking for margins: Increase Your Competitiveness thru Specialization?

Ukraine: Tendency to Specialization by Crop

Russia: Tendency to Specialization by Crop

Brazil: Tendency to Specialization by Crop

Greg Stone: GOODBYE, KANSAS WHEAT?

IS WHEAT GOING THE WAY OF OAT PRODUCTION IN THE U.S.?

CORN IS KING? “I used to hear in the Corn Belt that wheat was a dirty word,” he says. “Now it’s getting that way out here, too.”

3/26/2018 By Tony Dreibus Source

HOW TO FIGHT FAKE NEWS – THE NEXT SCENARIO ?

NEXT SCENARIO: FIGHTING FAKE NEWS?

Challenge Reality of Commodity Analysts and Traders is as follows:

• You are overwhelmed with information - too many sources,

too little analysis, too little time HOW TO THINK OF TOMORROW?

• Answer - Real global advantage now - how

effectively the information is processed

Rumors about Wheat Export Restrictions and CME Quotations: Russia and Ukraine

• Ukr. milling wheat

export restrictions

• Rus. export

restrictions

• Rus. export

restrictions

• Rus. export

restrictions

FAKE NEWS – THE NEXT SCENARIO?

UkrAgroConsult Forecasts Accuracy

Ukraine Grain Production, March release, 10Y average – 91%

Ukraine: Corn Production Forecasts

UkrAgroConsult Numbers vs USDA Numbers

% to final production

NEXT SCENARIO: FIGHTING FAKE NEWS

• Does USDA still matter? One-month gridlock allowed agri-tech start-

ups to step in and fill the information void

• RISKS:
• USDA Wasde Repots During the Shutdown were Missed
• About 15% Decrease in the USDA2020 Budget Expenditures
• New Players in the Global Analytics – Could They Fill the

Gap?

• Anyway - Stronger Competition is Easily Predicted in the

Commodity Analysis Market

• Agricultural data providers cash in on US federal shutdown

FT, Mar 8, 2019 GREGORY MEYER — NEW YORK EMIKO TERAZONO — LONDON

Контакты

call: +38044 364 5585 www.ukragroconsult.com uac2015@ukragroconsuit.org

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THANKS FOR YOUR ATTENTION!

Sergey Feofilov