Trends in B Black S Sea Wheat Markets Agenda T Trends Romania - - PowerPoint PPT Presentation

Trends in B Black S Sea Wheat Markets

GLOBAL GRAINS

Kiev April 2019 thomas.deevy@Cerealcom.com

Agenda T Trends

Romania Demand Target Wheat Trade Flows Supply Side / Price Driver 2019

Romania Prod

• ducti

ction

• n T

Tren end

3 5 8 10 13 15 18 20 23 25 28 30 5 10 15 20 25 30

Grain & Oilseed Production (MMT)

Grain & Oilseed Production (MMT)

Romania Grain and Oilseed Production (MMT)

Soft Wheat Maize Sunseed Barley Rapeseed Soybean Линейная (Trend)

Roman ania A a Area ea (Static) c) Ho How t to e explain t the c e chan ange? e?

1 2 3 4 5 6 7 8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Grain & Oilseed Harvest Area ( MHA)

Romania Grain and Oilseed Harvest Area (MHA)

Soft Wheat Maize Sunseed Barley Rapeseed Soybean

Roma mani nia Y Yield T Trend nd

0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 Grain & Oilseed Yield ( T/HA) Grain & Oilseed Yield ( T/HA)

Romania Grain and Oilseed Yield ( T/HA )

Maize Sunseed Barley Rapeseed Soybean Soft Wheat

Roma mani nia Evolut ution T n Trend nd

Romania Ag Ag signifi

ficant transformations

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Romania Farm Size ( % of total Farm Area)

Romanian Farm Size Evolution (size in %)

Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA

Rom

• mania 1990

1990’s s

Ce Central Fa Farm Sys ystem

4.6 Million farms Ave farm size 2.85ha Wheat Yields ~2.5 t/ha Rural Exodus Demographic Subsistence farming

Rom

• mania (

(201 2010)

+40 40% R Romanian F Farmer ers s +65 Years of Age ~72% of Romanian Farms les ess t s tha han 2 2 Hec Hectares! s!

Roma mani nia a an ev evolving ma market

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Romania Farm Size ( % of total Farm Area)

Romanian Farm Size Evolution (size in %)

Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA

Exa xample

Family Business Innovation / Technology Concentrated Cultivate +25 KHA 200kt – EU Origin & NON GMO

CEREALCOM Production

Advanta tage

Cerea ealcom

• m Qu

Qualit ity

600kt Silos Road Rail Danube

CEREALCOM Origination

Innovation / technology Logistic Adv Export 1MMT Potential

CEREALCOM Trading

Roma mani nia an an e evolving m mark arket

• est. 2028

2028

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Title

Romanian Farm Size Evolution (size in %)

Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA

Romania Poten ential N National

Romanian G Grain & & Oilseed P Production ~35MMT

5 10 15 20 25 30 35 40

Romanian Production Forecast 2028 (MMT)

Wheat Corn Barley Sunseed Soybeans Rapeseed

Romania Poten ential N National

Romanian G Grain & & Oilseed Ex Exports ~27MMT

5 10 15 20 25 30

Romanian Export Forecast 2028 (MMT)

Wheat Corn Barley Sunseed Soybeans Rapeseed

Product ction P Poten ential al Demand S Side T e Tren end

Global W Whea eat Imp mport T Trends nds

68% 68%

• 40%
• 20%

0% 20% 40% 60% 80% 100% 20 40 60 80 100 120 140 160

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Top 25 importers as a % of Total Global Wheat Imports Wheat I Impor

• rts (

(MMT MT)

Top 2 25 Global W l Whe heat I Import C Countrie ies (MMT)

Top 25 importers (+1MMT) Top 25 importers VS. Global (%)

Global wheat imports ~175MMT Top 25 importers 68-70% + 40% on past 10 Years

Target get Ma Market et Whe heat I t Impo port T t Trends

Global wheat imports ~175MMT Top 35 importers 66 - 68% + 44% on past 10 Years (static)

66% 66%

• 40%
• 20%

0% 20% 40% 60% 80% 100% 20 40 60 80 100 120 140 160

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019

Top 35 importers as a % of Total Global Wheat Importers

Whea eat I Imports (MMT)

Top 3 35 Global W l Whe heat I Importin ing C Countries ( (MMT)

Top 35 importers (+1MMT) Top 35 importers VS. Global (%)

Logistic A Adv dvantage Freight A Advanta tage ge

~40 40-50 U 50 U$D ~30 30-40 U 40 U$D 10 10-15 U 15 U$D

Trade F Flow T Trends

Gl Global W Whea heat Export T Trends

Top 4 account for 60% of total global exports EU / Black Sea eroding US mkt share Improved production / Planting trend

EU Exp xport T Trends

EU Black Sea eroding French mkt share Cost of production Improved Quality / Milling standard

Wheat Expor

• rts

Russia ia Expor

• rts

53% 53% Uk Ukraine Expor

• rts

29% 29% Romania ia Expor

• rts

11% 11% Bulgaria Expor

• rts

7% 7%

Black S Sea W Wheat E Exporter ers (5 5 Year A Ave.)

France 34% 34% Germany ny 18% 18% Pola land 8% 8% Bul Bulgaria 4% 4%

Ro Romania 21% 21%

Other members rs 15% 15%

EU Wheat E Exporter ers (Aver erage, e, E Ex - EU ex exports)

Ro Rom / / Bul ~18 18-20 20% B Black S Sea Ro Rom / / Bul ~ 2 ~ 25-27% E 27% EU

Time A e Advan antag age

Typical Expo port P Program

12% 18%

12% 12% 30% 30% 41% 41% 47% 47% 56% 56% 64% 64% 71% 71% 78% 78% 86% 86% 92% 92% 97% 97% 100 100%

0% 20% 40% 60% 80% 100% 120% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

July August Sept October Nov December Jan February March April May June

5 Year A

• Ave. C

Cum umulativ ive P Pace (%)

5 Year A r Ave. Mo . Monthly P Pace ce (%)

Monthly Pace left Axis Cumulativ ive P Pace Ri Right A Axis Typi pical l Romania W Whe heat E Export Program ( (5.5 M MMT A Ave.)

5 Year Ave. Monthly Pace (%) 5 Year Ave. Cumulative Pace (%)

Trends i in Markets Supply

Gl Global Supp upply T Tren ends

First production decline in 5 years

• 30MMT Yr. on Yr.
• 39MMT on Average
• 14

14

• 14

14 71 71

• 8
• 22

22 16 16 73 73 3

• 38

38 48 48

• 38

38 56 56 14 14 8 18 18 7

• 30

30

9

• 60

60

• 40

40

• 20

20 20 20 40 40 60 60 80 80

Year o

• n Y

Year ar C Chan ange i in Production (MMT)

Globa bal W Wheat P Produc duction ( n (MMT)

Year o

• n Y

n Yea ear C Cha hange ge 15 Y Yea ear a aver erage

Black Sea S Supply T Trends

First production decline in 5 years

• 17MMT Yr. on Yr.
• 22MMT on Average

Typical production rebound?

29 29 4

• 6

5 28 28

• 5
• 31

31 35 35

• 40

40 28 28 9 5 14 14 13 13

• 17

17

5

• 45

45

• 35

35

• 25

25

• 15

15

• 5
• 5

5 15 15 25 25 35 35 45 45

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year o

• n Y

Year C Change in Production (MMT)

Black S Sea ea W Whea eat P Production Y Yea ear o

• n Y

Yea ear C Change ( (MMT)

Year on Year Change (MMT) 15 Year Average

Price Dr e Driver er 201 019

First production decline in 5 years

• 7MMT Yr. on Yr.

Could we repeat 2004 or 2008?

• 3
• 33

33

• 26

26 21 21 3

• 22

22

• 2

48 48 37 37

• 4

7

• 28

28 25 25 30 30 25 25 21 21 21 21

• 7
• 40

40

• 30

30

• 20

20

• 10

10 10 10 20 20 30 30 40 40 50 50 60 60

Year on Year Change in Production minus Consumption (MMT)

Globa bal W Wheat P Produc duction m n minus nus C Cons nsum umption ( n (MMT)

Price Dr e Driver er 201 019

Funds Short Chicago Funds short Kansas

• 66

66

• 51

51

• 43
• 62

62

170 170

150 150 170 170 190 190 210 210 230 230 250 250 270 270 290 290 310 310

• 175

175

• 125

125

• 75

75

• 25

25 25 25 75 75 125 125

CME Wheat Sep Futures Contract USD / MT

Fund Position (*1000 Contracts) Chi & KC Wheat

US Fund Fund P Posit itio ion i in n Whe heat a and C nd CME W Whe heat ( (Sep) Fut Futures U$D/MT

Fund Wheat Position Chi Fund Wheat Position KC 10 Year Ave Fund position 5 Year Ave Fund position CME in U$D /MT

Su Summary

Romania P Poten ential

5 10 15 20 25 30

Romanian Export Forecast 2028 (MMT)

Corn Barley Sunseed Soybeans Rapeseed

12% 18%

12% 12% 30% 30% 41% 41% 47% 47% 56% 56% 64% 64% 71% 71% 78% 78% 86% 86% 92% 92% 97% 97% 100 100%

0% 20% 40% 60% 80% 100% 120% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

July August Sept October Nov December Jan February March April May June

5 Year A

• Ave. C

Cum umulativ ive P Pace (%)

5 Year A r Ave. Mo . Monthly P Pace ce (%)

Monthly Pace left Axis Cumulativ ive P Pace Ri Right A Axis Typi pical l Romania W Whe heat E Export Program ( (5.5 M MMT A Ave.)

5 Year Ave. Monthly Pace (%) 5 Year Ave. Cumulative Pace (%)

Target get Ma Market et Whe heat I t Impo port T t Trends

+ 44% on past 10 Years (static)

66% 66%

• 40%
• 20%

0% 20% 40% 60% 80% 100% 20 40 60 80 100 120 140 160

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019

Top 35 importers as a % of Total Global Wheat Importers

Whea eat I Imports (MMT)

Top 3 35 Global W l Whe heat I Importin ing C Countries ( (MMT)

Top 35 importers (+1MMT) Top 35 importers VS. Global (%)

Price Dr e Driver er 201 019

First production decline in 5 years

• 7MMT Yr. on Yr.

Could we repeat 2004 or 2008?

• 3
• 33

33

• 26

26 21 21 3

• 22

22

• 2

48 48 37 37

• 4

7

• 28

28 25 25 30 30 25 25 21 21 21 21

• 7
• 40

40

• 30

30

• 20

20

• 10

10 10 10 20 20 30 30 40 40 50 50 60 60

Year on Year Change in Production minus Consumption (MMT)

Globa bal W Wheat P Produc duction m n minus nus C Cons nsum umption ( n (MMT)

• 66

66

• 51

51

• 43
• 62

62

170 170

150 150 170 170 190 190 210 210 230 230 250 250 270 270 290 290 310 310

• 175

175

• 125

125

• 75

75

• 25

25 25 25 75 75 125 125

CME Wheat Sep Futures Contract USD / MT

Fund Position (*1000 Contracts) Chi & KC Wheat

US Fund Fund P Posit itio ion i in n Whe heat a and C nd CME W Whe heat ( (Sep) Fut Futures U$D/MT

Fund Wheat Position Chi Fund Wheat Position KC 10 Year Ave Fund position 5 Year Ave Fund position CME in U$D /MT