Post on 08-Mar-2018
transcript
1
February 2017
Company Presentation
2
Scorpio Bulkers Inc. (“Scorpio” or the “Company”) is a NYSE-listed Marshall Islands
corporation, founded in March 2013 by the senior management team of the Scorpio
Group
Company currently owns 48 dry bulk ‘Eco’ vessels
• 28 Ultramax and 19 Kamsarmax delivered to date
• 1 Kamsarmax delivering in 2Q-2017
Scorpio’s strategy is to:
• Own and operate the latest generation of fuel efficient drybulk vessels
purchased from quality shipyards
• Operate vessels in the spot market through the Scorpio Ultramax and Scorpio
Kamsarmax pools under short term or long term time charters
• Maintain a strong balance sheet in the current difficult operating environment
Scorpio has access to Scorpio Group’s customer and supplier relationships as well as
technical, commercial and managerial expertise
About Scorpio Bulkers
3
Experienced Management Team
Years in industry Prior experience
Emanuele A. LauroFounder, Chairman, Director
& Chief Executive Officer
Robert BugbeeFounder, President and
Director
Cameron MackeyChief Operating Officer
Hugh BakerChief Financial Officer
13 years
30 years
22 years
6 years
Member of the Lolli-Ghetti family, involved in shipping since the 1950s
Joined Scorpio Group in 2003, part of senior management since 2004
Founder of several tanker pools including: Scorpio Aframax Tanker Pool, Panamax Tanker Pool and Handymax tanker pool
Degree in International Business from the European Business School in London
Mr. Bugbee, Co-Founder of Scorpio Bulkers, has served as President since July 2013, he also serves as President and Director of Scorpio Tankers since its IPO in April 2010
Joined Scorpio Group in February 2009. Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management LLP, and held President, Executive Vice President, Chief Operating Officer positions in OMI Corporation
Holds an MBA from the Norwegian School of Economics (NHH)
Mr. Mackey has served as Chief Operating Officer of Scorpio Bulkers since July 2013, also serves as Chief Operating Officer of Scorpio Tankers since its IPO in April 2010
Previous experience includes equity and commodity analyst at Ospraie Management LLC, Senior Vice President and in Business Development at OMI Corporation
M.B.A. from the Sloan School of Management at MIT, a B.S. from the Massachusetts Maritime Academy, B.A. from Princeton University and Master Mariner
Filippo A. LauroVice President
24 years
Joined Scorpio in July 2012, initially focusing on business development in Scorpio Tankers before taking on role as CFO in Scorpio Bulkers in July 2013
Previous experience as Managing Director of Evercore Partners in New York, Head of Shipping at HSH Nordbank in New York and Managing Director of ING Bank in London
Mr. Baker has a BA from the London School of Economics and a MSc in Shipping, Trade & Finance from Cass Business School
Mr. Baker is a Fellow of the Institute of Chartered Shipbrokers
Member of the Lolli-Ghetti family, involved in shipping since the 1950s
Joined Scorpio Group in 2010 as part of senior management
Founder of and held senior executive roles in several private companies both in his native Italy and abroad
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Higher Revenues as a result of Scorpio Pools Outperformance
• 95% of the Clarksons Average of the 6/TC Routes for Baltic Supramax Index & 4/T/C Routes for Baltic Panamax Index
• Q1-17 earnings for Ultramax pool represent 73% of the days • Q1-17 earnings for Kamsarmax pool represent 75% of the days
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
Scorpio Kamsarmax Pool Performance Baltic Panamax Index*
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
Scorpio Ultramax Pool Performance Baltic Supramax Index*
5
Dec-2014Sold 1
Kamsarmax NB for ~ $31m
2H 14
Nov-2014$150m equity
private placement
offering
Dec-2014
Modified 6 Capesize NBs for LR2 NBs.
Agreed to sell 4 LR2 to Scorpio Tankers
Inc for $204m
Feb-2015Modified 3 existing
Capesize NB contracts for
construction of 3 LR1 product tankers
Apr-2015Sold 1 Kamsarmax
and 3 Capesize NBs as well as 3
LR1 NBs for ~$290m
Apr-2015Sold 2 Capesize NBs and 1 Ultramax NB
for ~ $111m
Sep-2014Raised $65m 7.5%
Sr. Unsecured Notes due 2019
Oct-2014
UW option exercised, raised
add. $8.6m 7.5% Sr. Unsecured Notes
Jun-2015Sold 3 Capesize NBs and 2 LR2 product
tankers for ~ $236m
Jun-2015$200m public offering of common shares +
$30m greenshoe exercise a week later
Capital raises OtherVessel sales
Company Timeline: Raise and Preserve Liquidity (1/2)
Sep-2015/Oct-2015Interest Coverage
Ratio covenant waived/amended through 4Q 2017
Nov-2015Sold 2 Capesize and 4 Capesize
NBs for ~$227m
1H 15 2H 15
Dec-2015Sold 5 Capesize
for ~$167m
Dec-2015Executed a one-for-twelve reverse stock
split to facilitate further equity issuance and
ensure NYSE compliance
6
Company Timeline: Raise and Preserve Liquidity (2/2)
Capital raises OtherVessel sales
2H 16
Feb-2016Agreement
reached to defer delivery of 8
newbuildings by ca. 6 months per
vessel
Feb-2016Termination of 4 TC-In
contracts for $10 million
Mar-2016
$63m public offering of
common shares
Apr-2016Agreement to cancel a
Kamsarmax newbuilding
1H 16
Feb-2016Reached agreement with
lenders to: (i) prepay $41.2m in exchange for deferment of principal
payments of $67.9m and (ii) reduce minimum
liquidity clause to >$25m and $700k per vessel
May-2016Reached agreement with lenders to: (i) amend the "interest coverage ratio"
covenant under the relevant credit facilities, and (ii)
reduce the "value-to-loan ratio" covenant under all of
its credit facilities
Jun-2016
$70m public offering of
common shares
Sep-Dec 2016Reached agreements to: (i) receive a reduction in delivery price on 8 vessels by $18m in aggregate, (ii)
defer delivery of 6 newbuildings by ca. 2-3 months per vessel, and (iii)
eliminate management fees payable upon any future vessel purchases/disposals and reduce
notice period upon vessel disposal
Oct-2016Reached agreement with
lenders to: (i) prepay $24.4m in exchange for deferment of principal payments of $48.8m and (ii) amend the "interest
coverage ratio" covenant under the relevant credit
facilities
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Recent Charter Employment During 2H-16 and Q1-17
Vessel TypeDuration (Months)
Daily Rate
SBI Bravo Ultramax 4 – 7 $7,500
SBI Zeus Ultramax 7 – 9 $7,300
MV Geneva Queen Kamsarmax 7 – 10 $6,500
SBI Bolero Kamsarmax 5 – 8 $8,000
SBI Electra Kamsarmax 5 – 8 $8,000
SBI Lyra Ultramax 5 – 8 $9,500
SBI Poseidon Ultramax 5 – 7 $8,750
SBI Antares Ultramax 5 – 7 $8,900
SBI Cronos Ultramax 5 $9,000
SBI Capoeira Kamsarmax 5 – 7 $9,350
SBI Thalia Ultramax 5 – 8 $7,350
SBI Reggae Kamsarmax 5 – 8 $9,500
SBI Athena Ultramax 4 – 6 $10,000
SBI Echo Ultramax 4 – 6 $10,000
SBI Zumba Kamsarmax 5 – 7 $10,500
SBI Leo Ultramax 5 – 7 $9,000
SBI Cakewalk Kamsarmax 5 – 8 $9,000
SBI Achilles Ultramax 6 – 8 $11,000
SBI Pegasus Ultramax 5 – 7 $10,250
SBI Hermes Ultramax 6 – 8 $8,500
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Owned Fleet List
Vessel size 60,200-64,000 DWT Vessel size 82,000-84,000 DWT
Delivered Vessels Vessels to be delivered
Ultramax Newbuildings
# Name Year Yard
1 SBI Athena Q1-15 Chengxi
2 SBI Bravo Q1-15 Nacks
3 SBI Antares Q1-15 Nacks
4 SBI Leo Q1-15 Dacks
5 SBI Echo Q3-15 Imabari
6 SBI Lyra Q3-15 Dacks
7 SBI Subaru Q3-15 Dacks
8 SBI Tango Q3-15 Imabari
9 SBI Maia Q3-15 Nacks
10 SBI Hydra Q3-15 Nacks
11 SBI Pegasus Q3-15 Chengxi
12 SBI Ursa Q4-15 Dacks
13 SBI Thalia Q4-15 Chengxi
14 SBI Cronos Q4-15 Imabari
15 SBI Orion Q4-15 Chengxi
16 SBI Achilles Q1-16 Imabari
17 SBI Hercules Q1-16 Chengxi
18 SBI Perseus Q1-16 Chengxi
19 SBI Hermes Q1-16 Imabari
20 SBI Zeus Q2-16 Mitsui
21 SBI Hera Q2-16 Mitsui
22 SBI Hyperion Q2-16 Nacks
23 SBI Tethys Q3-16 Nacks
24 SBI Phoebe Q3-16 Chengxi
25 SBI Poseidon Q3-16 Mitsui
26 SBI Apollo Q4-16 Mitsui
27 SBI Samson Q1-17 Chengxi
28 SBI Phoenix Q1-17 Chengxi
Kamsarmax Newbuildings
# Name Year Yard
1 SBI Cakewalk Q3-14 SWS
2 SBI Charleston Q3-14 SWS
3 SBI Samba Q1-15 Imabari
4 SBI Rumba Q3-15 Imabari
5 SBI Capoeira Q3-15 Hudong
6 SBI Electra Q3-15 Yangzijiang
7 SBI Carioca Q4-15 Hudong
8 SBI Conga Q4-15 Hudong
9 SBI Flamenco Q4-15 Hudong
10 SBI Bolero Q4-15 Hudong
11 SBI Sousta Q1-16 Yangzijiang
12 SBI Rock Q1-16 Yangzijiang
13 SBI Lambada Q1-16 Hudong
14 SBI Reggae Q1-16 Hudong
15 SBI Zumba Q4-16 Hudong
16 SBI Macarena Q4-16 Hudong
17 SBI Parapara Q1-17 Hudong
18 SBI Mazurka Q1-17 Hudong
19 SBI Swing Q1-17 Hudong
20 SBI Jive Q2-17 Hudong
(1) As of January 31, 2017
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Overview of Lenders
Financial InstitutionCommitment (1)
($ in millions)
CEXIM $158.5
SEB $117.8
Nordea $89.7
Deutsche Bank $60.1
Credit Suisse $40.5
Credit Agricole $38.4
BNPP $28.0
NIBC $20.1
ABN AMRO $19.4
Total Committed $572.5
SALT Current Lenders
• Our debt is held by the original lenders and remains priced between L+2.925% and L+3.00%
(1) As of February 3, 2017
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Remaining Capex & Delivery Obligations
• Agreed with the shipyard to reduce the price by approximately $2.5 million in Q4 2016
Dollars in millions
Vessel Type Country Built Delivery Date Q1-17 Q2-17Total
InstallmentsExtra
Costs*
Total Remaining
Capex
SBI Jive Kamsarmax China Q2-17 1.4 17.2 18.6 0.1 18.7
* Equipment and other technicalupgrades
Installments 1.4 17.2 18.6
Extra Costs* 0.0 0.1 0.1
Total CapEx $1.4 $17.3 $18.7
11
Projected Quarterly Principal Repayment Schedule 2017 – 2019
($ in
mill
ions
)
$1.0
$2.7
$6.1 $6.1 $6.1 $6.1 $6.1 $6.3 $6.3 $6.3 $6.3 $6.3
$-
$5.0
$10.0
$15.0
$20.0
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Year Principal Repayments
2017 $16.0m
2018 $24.7m
2019 $25.3m
Total $66.0m
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In compliance with all Value-to-Loan covenants
Secured Credit Facilities # of delivered
vesselsVTL Compliance (1)
VTL Ratio VTL Test Compliance
20 165% 140% PASS
15 182% 140% PASS
4 205% 115% PASS
3 182% 140% PASS
2 237% 140% PASS
2 191% 140% PASS
1 212% 140% PASS
Total 47
(1) Includes the recent drawdowns for 3 vessels in January 2017 (with average vessel values from two brokers as of January 2017), and based on loans outstanding for the other 44 vessels as of December 31, 2016 (with average vessel values from two brokers as of December 31, 2016)
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Coal/iron ore
Iron ore/coal
Iron ore/coal
Handysize 10,000 – 40,000
40,000 – 60,000
60,000 – 80,000
Steel/fertilizers/forest/grains/soybeans/alumina/coal/other minor bulks
Steel/fertilizers/forest/grains/soybeans/alumina/coal/other minor bulks
Coal/grains/soybeans/bauxite
Vessel type DWT Cargo carried
Handymax/Supramax
Panamax/Kamsarmax
Post-Panamax
Capesize
VLOC
80,000 – 110,000
110,000 – 200,000
Over 200,000
Overview of Dry Bulk Segments
14
Overview of Dry Bulk Commodity Cargoes
• Iron ore: primary ingredient in the
production of steel, along with limestone &
coking coal and is the largest single
commodity shipped on dry bulk vessels.
• Coal: seaborne coal trade is comprised of
two different types of coal; steam coal
(which is used for electricity generation
and industrial uses), and coking coal (which
is the key ingredient for steel making).
• Grains: consists primarily of wheat, coarse
grains (such as corn, barley, oats, and rye)
and soya bean/meal.
• Minor bulks: include several other dry bulk
goods such as phosphate rock, fertilizers,
bauxite, steel products, forest products,
nickel, ore, sugar, salt, and others.
Breakdown of Major Bulks
Breakdown of Minor Bulks
Breakdown of Major Bulks
Minor Bulks38%
Iron ore29%
Grains10%
Coal23%
Total Sugar3% Total Agribulks
9%
Fertiliser8%
Metals and Minerals
40%
Manufactures40%
15
One Year Time Charter Rates
Source: Clarksons Research Services, February 2017
Time charter rates and BDI have recovered from record low in February 2016
Historical Data 2002-2017
Class/Index Current Avg Max Min Feb 16 to Jan 17
Ultramax $7,563 $18,865 $66,300 $4,875 36%
Panamax/Kamsarmax $8,781 $21,318 $79,375 $5,363 39%
Baltic Dry Index 907 2,657 10,844 307 66%
0
2,000
4,000
6,000
8,000
10,000
12,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Bal
ticx
Dry
Ind
ex
($/D
ay)
Ultramax Panamax/Kamsarmax BDI
16
Dry Bulk Asset Values
Q1-2002Ultramax: $18.3Kamsarmax: $20.5
Q3-2008Ultramax: $48.0Kamsarmax: $53.7
Jan-2017Ultramax: $22.25Kamsarmax: $24.5
Avg 2002-2017Ultramax: $28.8Kamsarmax: $32.4
Source: Clarksons Research Services, February 2017
$0
$10
$20
$30
$40
$50
$60
$70
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
($ M
illio
ns)
Panamax/Kamsarmax Ultramax
17
Dry Bulk Seaborne Demand
Source: Clarksons Research Services, February 2017
2009-2017
Iron Ore Coal Grains Minor Bulks Total Dry Bulk
CAGR 6.4% 4.3% 5.3% 3.8% 4.8%
3,428
3,854
4,101
4,340
4,584
4,819 4,820 4,884 4,979
0
1,000
2,000
3,000
4,000
5,000
2009 2010 2011 2012 2013 2014 2015 2016 2017(f)
Mill
ion
To
nn
es
Iron Ore Coal Grain Minor Bulks
18
Ton Mile Demand
Iron Ore
Grain Total Dry Bulk
Ton
Mile
s (B
illio
ns)
Coal
Ton
Mile
s (B
illio
ns)
To
n M
iles
(Bill
ion
s)
Source: Clarksons Research Services, February 2017
Ton
Mile
s (B
illio
ns)
5,365 5,852
6,336 6,718 6,931
7,531 7,576 8,035
8,359
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)
3,440
4,047 4,315
4,833 5,033
5,223 4,934 4,903 4,910
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)
2,221 2,460 2,404
2,594 2,794
3,002
3,301 3,376 3,512
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)
18,611
21,098 22,435
23,768 24,933
26,314 26,557 27,133 27,735
0
5,000
10,000
15,000
20,000
25,000
30,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)
19
Dry Bulk Fleet Growth Before Scrapping
.Assumes no slippage, cancellation or scrappingIncludes VLOC Newbuildings on orderSource: Clarksons Research Services, February 2017
111.2 123.2 135.6 141.9
205.4 211.3 211.9 211.9
198.3208.5 211.1 211.4
191.0204.7
207.0 207.5
94.7
101.2103.0 103.7800.5
849.0868.6 876.3
0
200
400
600
800
1000
Current 2017 2018 2019
DW
T (M
illio
ns)
VLOC Capesize Panamax Handymax Handysize
20
Bulker Fleet Age Profile
Source: Clarksons Research Services, February 2017
36%39% 38%
30%
41%
27%33%
36%
12%
15%
13%
10%
5%
13% 9%
10%
6% 6% 7%15%
0%
20%
40%
60%
80%
100%
Capesize Panamax Handymax Handysize
0-4 yrs 5-9 yrs 10-14 yrs 15-19 yrs 20+ yrs
21
Scrapping Increasing, Average Age Scrapped Decreasing
Source: Clarksons Research Services, February 2017
8.2
6.1
4.2
0.4 1.01.8
0.5
5.6
10.6
6.5
23.3
33.4
23.2
16.3
30.529.1
2.2
0.0
10.0
20.0
30.0
40.0
0.0
10.0
20.0
30.0
40.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
(Avg
Scr
ap A
ge)
DW
T (M
illio
ns)
Capesize Panamax Handymax Handysize Avg Scrap Age
Scrapped (mDWT) Avg Age
2014 16.3 27.3
2015 30.5 25.2
2016 28.9 23.3
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Ballast Water Treatment Systems
• The IMO’s Ballast Water Convention is due to enter force on September 8, 2017.
• After September 2017, ship operators will need to install type-approved ballast water treatment systems by the time the International Oil Pollution Prevention (IOPP) certificate falls due for renewal, typically at Special Survey.
• Ballast water is used to stabilize vessels and ensure structural integrity. It is typically pumped in while cargo is being unloaded, and discharged while cargo is being loaded.
• Water taken on in one ecological zone and released into another can result in the introduction and spread of aquatic invasive species, many of which can have serious ecological, economic and public health effects if transferred to regions where they are not native
• Ballast water treatment systems actively remove, kill and/or inactivate organisms in the ballast water prior to discharge.
• Ballast water treatment systems are expected to cost $500,000 to $1.5 million and depends on the type and size of vessel.
• Retrofits on older, existing ships, can be more challenging and expensive as they were designed without the space in the engine room.
BWTS Filtering Unit
BWTS Piping in Engine Room
23
New Sulfur Emission Regulations
Source: Ocean Connect, February 2017
MARPOL Annex VI SOx Emission Timeline
Historical FO & MGO Prices ($/MT)1
• On October 27, 2016 the International Maritime Organization's (IMO) announced the results from a vote to ratify and formalize regulations mandating a reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020.
• Ship owners will have to decide between:
1. Installing a scrubber so the vessel can continue to burn HFSO; or
2. Paying the premium to consume MGO with a sulfur content < 0.5%
• The cost of the scrubber depends on the size and type of ship but is estimated to cost $4-$10 million.
• Refineries that currently produce traditional fuel oil in areas such as Russia, Mexico, Venezuela, Iraq, and Iran are unlikely to have enough capital to upgrade refineries, resulting in the need to more blended fuel.
• Increase in scrap rate as the cost to equip older tonnage with scrubbers can exceed the scrap value of the vessel.
• Modern fuel efficient ships have a competitive advantage over older tonnage through lower fuel consumption.
$0
$200
$400
$600
$800
$1,000
$1,200
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Rotterdam Singapore Houston
24
Recent Growth in Industrial Production
Source: Commodore Research & Consultancy: January 2017
record electricity production; steel production strength
manufacturing surge, steel production strength
manufacturing surge, electricity production rebound
steel production rebound
steel production rebound
25
January’s Estimated Change in Chartering Demand
Source: Commodore Research & Consultancy: January 2017
26
Short Term Negative Global Headwinds
Source: Commodore Research & Consultancy: January 2017
27
Seaborne Coal Trade through 2018
1190mt
1120mt1110mt
1000mt
950mt
1190mt
1170mt
* Projection (high and low scenarios shown)
Source: Commodore Research & Consultancy: January 2017
28
Seaborne Grain Trade through 2018
510mt
535mt545mt
535mt
520mt
575mt
595mt
* Projection (high and low scenarios shown)
Source: Commodore Research & Consultancy: January 2017
29
Chinese Coal Market Analysis
• Domestic coal output fell in 2016 by 8%; there still has yet to be a month since Dec 2014 that has
seen y-o-y growth in coal output
• Domestic coal is of inferior quality with lower energy content and creates more air pollution for less
benefit
• Accidents continue to limit mining due to stoppages / inspections
Recent Coal Mining FatalitiesQitaihe mine
(Nov 29, 2016)
Baoma mine
(Dec 3, 2016)
Shuozhou mine
(Jan 17, 2017)
Xingyu mine
(Jan 4, 2017)
Xinja mine
(Dec 5, 2016)
Source: Commodore Research & Consultancy: January 2017
30
Chinese Electricity Production & Thermal Coal Demand
• The rebound in China’s electricity production is being driven by thermal coal-derived
electricity generation
Chinese Electricity Production 16’ Chinese Coal Derived Electricity Generation 16’
(Yr/
Yr G
row
th)
(Yr/
Yr G
row
th)
Source: Commodore Research & Consultancy: January 2017
31
South American Grain Cargoes
• South American spot grain cargo volume last month jumped by 120% from December’s
volume
• Compared to January 2016, last month’s volume rose by 100%
Weekly South American Spot Grain Cargoes
Source: Commodore Research & Consultancy: January 2017
32
South American Grain Exports
2016/2017 ProjectionsSource: Commodore Research & Consultancy: January 2017
• Brazilian soybean exports are expected to be particularly robust going forward
• 2016/17 exports are expected to total a record 72.5 million tons
Brazil Soybean Exports (Incl Soybean meal)