Australian Crop – Outlook & Trade Flows Storey Head, NZX Agribusiness Australia ... PRICE? - AT...

Australian Crop – Outlook & Trade Flows

Ron Storey Head, NZX Agribusiness Australia March 2015

1 © Copyright NZX Ltd. 2014

1. Key Crop and Trade Metrics 2. Australian Export Infrastructure 3. The Quality Question 4. Industry Organisation “Architecture” 5. 2014/15 Balance Sheet 6. FOB Transparency

© Copyright NZX Ltd. 2013 2

AGENDA

Who is NZX Australia?

7 August 2013 © Copyright NZX Ltd. 2013 3

Capital Markets Funds Management Agri Information Soft Commodities Market Operations

1. KEY CROP & TRADE METRICS


A LOT OF CHARTS – LOOK FOR THE IMAGERY!

PRODUCTION

PRICE

EXPORTS

EXPORTER MARKET SHARE

0

5

10

15

20

25

30

35

40

45

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Canola Barley Wheat

Australian Grain Production by Commodity (Mmt) – 5 Good Years!!


Source: Australian Crop Forecasters

Australian Pulse Production 2010-11 to 2014-15


0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010/11 2011/12 2012/13 2013/14 2014/15

Australian Pulse Produc0on by Crop

Faba Beans Len>ls Chickpeas Field Peas Lupins

BETTER YIELDS DESPITE < AVERAGE RAINFALL


0

50

100

150

200

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

Queensland (weighted by produc1on region)

2012 2013 2014 2015 10 Yr Ave

Rarely above the red line!



0

50

100

150

200


New South Wales (weighted by produc1on region)

2012 2013 2014 2015 10 Yr Ave



0

25

50

75

100

125

150


Victoria (weighted by produc1on region)

2012 2013 2014 2015 10 Yr Ave



0

25

50

75

100


South Australia (weighted by produc1on region)

2012 2013 2014 2015 10 Yr Ave



0

25

50

75

100


Western Australia (weighted by produc1on region)

2012 2013 2014 2015 10 Yr Ave

MORE WITH LESS

• Rainfall rarely above 10-year average, yet crops have been large (Wheat 20+MMT)

• 10 years ago, the crop would have been well below 20 MMT

>> Australian farmers, through best practice and new technology, are producing more with less


PRICE? - AT US$5/BUSHEL, Australian Farmers will grow wheat….Just!

13

© Copyright NZX Ltd. 2013

Source: Thomson Reuters Eikon

ETHANOL

2006

$3/bu

2015

$5/bu

PRICE? - AT US$5/BUSHEL, Australian Farmers will grow wheat….Just!

In A$/t – Last 6 Months – UP 20%!!!


Source: Thomson Reuters Eikon

AUD +20%

A$/t – Last 6 Months – UP 20%!!!

Australian Market Share - World Wheat (2013-14) – Asian Focus



Australian Exports – Wheat / Barley / Canola / Sorghum (2011-2014)



WHEAT – BY REGION – 2011-12 to 2014-15 ytd


SE Asia

Nth Asia

M-East

Africa

NZPac

Other

BARLEY – BY REGION – 2011-12 to 2014-15 ytd


China??

CANOLA – BY REGION – 2011-12 to 2014-15 ytd


SORGHUM – BY REGION – 2011-12 to 2013-14 ytd


EXPORTER MARKET SHARE – WHEAT – Big 5 ++


12/13 13/14

14/15 YTD

Emerald

Graincorp

Cargill

Glencore

CBH

Other

Plumgrove

EXPORTER MARKET SHARE – BARLEY – Big 5 ++


12/13 13/14

14/15 YTD

Cargill

ADM

Glencore

CBH Graincorp

Bunge

Other

EXPORTER MARKET SHARE – CANOLA – Big 4 ++


12/13 13/14

14/15 YTD

Cargill

ADM

Glencore

CBH

Graincorp Emerald

EXPORTER MARKET SHARE – SORGHUM – Pentag +3


12/13 13/14

14/15 YTD

Glencore

Cargill

Pentag

Graincorp

FULL EXPORTER PROFILE

2012-13 2013-14 2014-15 YTD Glencore CBH CBH CBH Glencore Glencore Cargill Cargill Cargill Graincorp Graincorp Graincorp Emerald/Sumitomo Emerald/Sumitomo Plumgrove Olam Vitol Emerald/Sumitomo ADM Bunge Mitsui Mitsui ADM ADM Bunge Mitsui Vitol Plumgrove Plumgrove Noble L-Dreyfus Mitsubishi - Riverina Bunge Noble Noble Quadra Mitsubishi - Riverina Quadra CHS Pentag Pentag Mitsubishi-Riverina Gavilon Aust Grain Exports Centre State Exp

L-Dreyfus Pentag CHS Agrex


70-80%

1. KEY CROP & TRADE METRICS - SUMMARY


PRODUCTION More with less Droughts less catastrophic Production Upside?

PRICE At US$5/bu and A$0.75 … just!

EXPORTS Strong Asian focus Responsive to demand

EXPORTER MARKET SHARE Big 4-5, but VERY competitive Containers – SUPER competitive!

2. Australian Export Infrastructure

PORTS

SHIPPING PACE

SOURCE STATES

BULK/CONTAINERS


Grain Port Infrastructure 2008


Grain Port Infrastructure 2016

© Copyright NZX Ltd. 2013

Quattro

Bunge

HLJ

Cargill

Pre 2008 2010-14 2016 ++

WHEAT EXPORTS 2012/13, 2013/14, 2014/15 YTD


BARLEY EXPORTS 2012/13, 2013/14, 2014/15 YTD


CANOLA EXPORTS 2012/13, 2013/14, 2014/15 YTD


SORGHUM EXPORTS 2012/13, 2013/14, 2014/15 YTD


HOW VARIABLE IS THE SOURCE PORT FOR EACH CUSTOMER?


VIETNAM – SOURCE STATES – 12/13 & 13/14

CHINA – SOURCE STATES – 12/13 & 13/14

JAPAN – SOURCE STATES - 12/13 & 13/14

REPUBLIC OF KOREA – SOURCE STATES – 12/13 & 13/14

BULK vs CONTAINERS – South-East Asia


Indonesia

Philippines

Thailand

Malaysia

Vietnam

Singapore

BULK vs CONTAINERS – North Asia


China

Japan

Taiwan

Sth Korea

2. Australian Export Infrastructure - Summary

PORTS - Aust has added capacity - More capacity to come

SHIPPING PACE

- “Front end” shipping program

SOURCE STATES

- Supplied by multi traders and multi ports

BULK vs CONTAINERS

- Wide diversity - Lower bulk freight (Oil?)


These factors driving a natural question about

quality consistency

3. The Quality T-E-N-S-I-O-N ? – Price vs Consistency

COMMODITISED >>> CUSTOMISED Optional Origin >>> Origin specific Any Load Port >>> Port/Quality specific Grain Specs >>> Flour specs No Carryover >>> Supply continuity Basic service >>> Technical service Low loyalty >>> Relationship based

Price Dominant >>> Price & Service


Exporters are responding to buyer behaviour – so there is a natural T-E-N-S-I-O-N between price and quality consistency. The solution is communication between Australia and its customers… ….AGIC ASIA 2014 & 2015 are steps along that journey

4. Industry Organisational Architecture

Industry Feature 2008 2015/16 S/Chain Assets 4 x Terminal owners 8 x Terminal owners

-  New Assets -  Foreign owners -  Rail owners

Exporters AWB - solo Big 5-6, + further 20 Super competitive

Industry Infrastructure -Contracts/Standards -Research & Devt -Market Access, AQIS -Wheat Classification -Industry Promo/Info -Quality Development

AWB GRDC AWB-Govt AWB AWB AWB

>> GTA >> GRDC >> GIMAF-Govt >> WQA-WCC >> AGIC Asia 2014-2015 ???


5. 2014/15 BALANCE SHEET

Wht Bly Can Sor CARRY-IN 5.4 0.2 0.3 - PRODUCTION 23.6 7.9 3.3 2.0 TOTAL SUPPLY 29.0 8.1 3.6 2.0 DOM USAGE 7.0 3.3 0.9 1.2 EXPORTS 17.0+ 4.6 2.4 0.8 CARRY-OUT 5.0 0.2 0.3 -

44

MESSAGE: -  East coast Australia remains tight -  Sorghum export demand strong

-  Barley exports strong

6. FOB PRICE TRANSPARENCY - NEW SERVICE!!

•  Profarmer collects daily track price bids on all grains at every port

•  Converts them to FOB USD flat price and USc/bu BASIS

•  For indicative replacement cost, every grade, every port

•  For comparison with FOB exporter/broker quotes •  Sample ……


Australian FOB replacement APW Wheat - USD FLAT PRICE


220

230

240

250

260

270

280

290

300

310

Sep Oct Nov Dec Jan Feb Mar

Kwinana Port Adelaide Geelong

US$/mt Kwinana – Pt Adel

Spread?

Australian FOB replacement APW Wheat - BASIS USc/bu


50

100

150

200

250

300

Sep Oct Nov Dec Jan Feb Mar

Kwinana Port Adelaide Geelong

USc/bu Kwinana Basis over

Chicago?

SUMMARY


1. Key Metrics

Future is in Asia

2. Export Infrastructure

Rapidly changing to meet demand

3.The Quality Question

Natural tension – requires communication (AGIC Asia)

4. Industry Architecture

Evolving well – want to engage on Quality Devt (long term)

5. 2014/15 Balance Sheet

Remains tight – front end

6. FOB Transparency New Profarmer service

Thank you

[email protected] www.profarmer.com.au

www.cropforecasters.com.au

Questions? © Copyright NZX Ltd. 2013 49

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