Singular Sensation or Thrilling Combination. MFS Nimmitabel

Transcription

1 Singular Sensation or Thrilling Combination MFS Nimmitabel Georgia Twomey September 2017

2 Rabobank F&A Research: Knowledge Driven Banking Global network, sector coverage 80 research analysts across the globe Fresno Chicago St. Louis New York Mexico City London Utrecht New Delhi Mumbai Beijing Shanghai Hong Kong Animal Protein Dar es Salaam Singapore Beverages Buenos Aires São Paulo Melbourne Sydney Consumer Foods Dairy F&A Supply Chains Farm Inputs Grains and Oilseeds Sugar Wool

3 Australia New Zealand Sector specialists RaboResearch Sector specialists across all major F&A sectors in Australia and New Zealand Part of global teams Across a number of locations in Australia and New Zealand Engage throughout the supply chain 3

4 Singular Sensation to Thrilling Combination Wool and lamb market performance riding high Speedbumps ahead for wool? Discussion: Where to next for the Australian Merino

5 Report Card 5

6 AUD c/kg Australian wool prices surge through records Australian Eastern Market Indicator / / / / /18 5 Year Average 10 Year Average Source: Bloomberg, Rabobank 2017

7 Micron Supply did remain fairly steady and rebalance of micron profile began % -5% 0% 5% 10% 15% 20% 25% 30% YOY Change Source: AWTA,

8 Price relativities certainly responded 1400 Micron Premiums premium premium premium Source: Bloomberg, Rabobank 2017

9 USD Currency was due to be supportive which it was - for a month AUD/USD Source: Bloomberg, Rabobank 2017

10 What did we miss? MC 32 (S) 28 (S) China s buying shift out of the broad into the fine % -20% 0% 20% 40% 60% Source: AWIS, Rabobank 2017

11 c/kg cwt c/kg cwt The lamb market also outperformed on expectation Restocker/feeder lamb Export lamb 22kg yr ave yr ave Source: MLA, Rabobank

12 On the surface Australian supply to remain steady in 2017/18 Source: Bloomberg, Rabobank 2017

13 c/kg clean Lack of currency support has seen USD prices rise strongly through the last 12 months Source: Bloomberg, Rabobank 2017 EMI AUD v USD Merino Prices USD 17 Micron 18 Micron 19 Micron 21 Micron EMI AUD EMI USD EMI USD 5 year Average EMI AUD 5 year average Currency strength lifting wool price in USD terms - Historically high prices in USD terms - Currency forecast still for depreciation in next 12 months?

14 This strengthening has contributed to a widening gap with competing fibres AWOLRIE Index (USD) COTLOOKA Index AWOLN18 Index Source: Bloomberg, Rabobank 2017

15 USc / pound Which are expected to remain under some pressure Bearish outlook on ICE #2 Cotton, but only once US weather risk dissipates and yields are confirmed 55 ICE NY No. 2 Cotton Previous forecast Rabobank forecast Brent crude to range trade but remain subdued Source: Bloomberg, Rabobank

16 Million kg Million kg Can China s demand for fine wool be sustained at current levels? <19m % 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% China s share of fine wool imports has risen from 63% - 88% in the last decade exports to China wool tested export share to China 20-23m Mid micron wool has tracked closer to supply changes % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: AWIS, AWTA Rabobank 2017 exports to China wool tested export share to China

17 When key product segment exports have weakened YOY? -7% -3% 29% -15% -6% Source: UN Comtrade, Rabobank 2017

18 Market Outlook Beyond the EMI - Fine wool price levels high in USD terms - Competitiveness a risk factor and outlook for other fibres not supportive - Supply balance in Australia will continue to play an important role in price relativity of the various types - Some upside potential for broader wool although not expected to be a sharp turnaround

19 Singular Sensation to Thrilling Combination Discussion: Where to next for the Australian Merino?

20 Slaughter (million head) Inventory (million head) Changing flock dynamics over a sustained period poised for change? Still Lamb slaughtered Sheep slaughtered Sheep inventory 20

21 '000 tonnes 000 tonnes Both sheepmeat and wool small players in big fields getting production right is important World textile fibre demand World meat demand % of major global textile fibre consumption % of global meat consumption Wool Cotton Synthetic 0 Beef and veal Pork Poultry meat Sheepmeat Source: ICAC, Rabobank 2016 Source: OECD, Rabobank 2016

22 Building the case for change? Dollars and cents Technology Customer oversight

23 Jan-00 Oct-00 Jul-01 Apr-02 Jan-03 Oct-03 Jul-04 Apr-05 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 Apr-17 Kg cwt Making cents of the demand NZ carcase weights lamb average carcase weight Sheep average carcase weight 12 per. Mov. Avg. (lamb average carcase weight) 12 per. Mov. Avg. (Sheep average carcase weight) 23

24 Decisions Decisions Decisions

25 Thank you!!! Georgia Twomey Commodity Analyst Food & Agribusiness Research and Advisory Australia and New Zealand t e. Georgia.twomey@rabobank.com Meet the FAR Australia & New Zealand research team Tim Hunt, General Manager Food & Agri Research Australia and New Zealand Angus Gidley-Baird, Senior Analyst (Beef) Blake Holgate, Analyst (Animal Proteins) Michael Harvey, Senior Analyst (Dairy/Farm Inputs) Cheryl Kalisch-Gordon, Senior Analyst (Grains & Oilseeds) Wesley Lefroy, Analyst (Grains & Oilseeds) Emma Higgins, Analyst (New Zealand Dairy) Catherine Keo, Business Coordinator

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