Weather, Supply and the Turkish Flour Miller - The Outlook for World Wheat Prices 2018/19 v Daniel W Basse President AgResource Chicago, IL January 2016 Daniel W Basse Daniel Basse Daniel President W Basse AgResource President March 2016 President Chicago, IL AgResource 60606 Chicago, March 2017 IL 60606 November basse@agresource.com 2016 Daniel Basse President AgResource Daniel W Basse Chicago, IL 60606 President AgResource Company January 2017 Copyright Copyright 2013 2018 AgResource AgResource Company. Company. All All Rights Rights Reserved. Reserved. Daniel W Basse President AgResource Chicago, IL 60606 March 2018 basse@agresource.com
2018 World Wheat Themes World Political/Economic Order is Changing to Disorder! Central Banks were accommodative for the past decade with $23 Trillion of QE, low interest rates as they all worked in concert. Central Banks are now unwinding prior policies and ending their working relationships. And politically, we have Brexit, North Korea, Donald and regional protectionism on trade. The markets is state of transition that will produce greater financial risk and volatility into 2019. Last year s Black Swan was record large Russian grain yields. Logistics and infrastructure investment is needed to absorb the growing supply! World wheat prices are now determined in the Black Sea Not Chicago! The US is the world s high cost wheat/corn producer. US wheat exports will continue to decline in coming years with lows projected at just 20-22 MMTs. China to build new ethanol giga-factories. China s only chance to use all of its off grade corn is to burn it as fuel. It will take China 3-5 years to use its corn stocks. 2018 World Wheat Production Likely to be Record Large in 2018. Today s, the market s focus on the US Plains drought and record export demand for Black Sea wheat along with cold weather. 2018/19 world wheat export demand looks to be static amid favorable growing weather for North Africa. Iran and India look to be larger wheat importers, with EU/Russia wheat supplies to be massive. v Copyright Copyright 2013 2018 AgResource AgResource Company. Company. All All Rights Rights Reserved. Reserved.
2018 World Wheat Themes Adverse weather or a 20% drop in the value of the USD are needed to spark a lasting recovery in world wheat prices. Key resistance is offered at $210-215/MTs basis Black Sea wheat in the period from late March/April. The world is producing record amounts of food, the key question going forward is whether future economic growth (outside of the US) can sustain larger demand? NEW DEMAND DRIVERS are needed to alter the oversupplied Ag Landscape! For now, adverse weather is driving wheat prices upwards. v Copyright Copyright 2013 2018 AgResource AgResource Company. Company. All All Rights Rights Reserved. Reserved.
World Wheat Prices Rise to 2.5 Year Highs at $20/MT Black Sea
World Barley and Feed Wheat Prices Even More Bullish!
Fob Wheat Prices in Turkish Lira Values at 6 Year Highs! Lira/MT ex France ex Russia ex US Gulf 900 850 800 750 700 650 600 550 500 450 400 Oca 18 Eki 17 Tem 17 Nis 17 Oca 17 Eki 16 Tem 16 Nis 16 Oca 16 Eki 15 Tem 15 Nis 15 Oca 15 Eki 14 Tem 14 Nis 14 Oca 14
MMTs World Flour Exports- Turkey Pushes to 3.6 MMTs 4,0 3,5 3,0 2,5 2,0 1,5 1,0 Turkey US Europe Argentina Kazakhstan Pakistan 0,5 0,0 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
MMTs 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 2000 World Flour Exports- Turkey Pushes to 3.9 MMTs in 2018/19 2001 2002 2003 2004 2005 2006 2007 2008 Turkey 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
IMF and World Bank Forecasts Are Improving
Emerging Market Import Volume Soars in 2017! Helping Food Commodity Demand
World Inflation 1 st Up Tick Since 11 Annual % Change in Avg. Consumer Prices
One has to be Careful About being Too Bearish Commodities!
Can China Keep Managing the Risk of Credit?
China Consumption of Meat is Flattening!
Can China and India Drive Improved World Food Demand?
For Now Its Excessive Supplies that Depress World Grain Values
US Dollar has been Tame Since President Trump Elected in 2016!
Exchange Rates Highly Important to Markets Weaker USD!
Grain Price Changes in Local Currencies Since mid-2014
World Wheat Market Share By Exporter 35% Black Sea EU US 30% 25% 20% 15% 10% 5% 0% 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
World Farmers To Expand Wheat Seeding, With Above Trendline Yield
World Wheat Stocks Abundant Over 1,020 MMT s to Start 2018/19
World Exporters Hold Extra 6 MMTs Wheat, But Stocks/Use Declines
Russian Wheat Yields Up 80% in just 5 Years.. Astounding!
Ukraine is Similar to Russia with 100% Gain in Yield Since 2000!
World Wheat Yield vs. Trend The Black Sea Influence on World Yield 8% 6% 4% 2% 0% -2% -4% -6% -8% 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980
World Wheat Trade To Expand 3% in 2018/19 on Milling Demand
World Wheat Trade Up Slightly From a Year Ago; World Demand Tails Off!
2018/19 Feed Wheat Trade In Retreat Just 8% of World Wheat Trade!
There Are Large Swings in Monthly Global Wheat Trade
North American Wheat Exports Suffer
Black Sea Exports Soar; Russia to Export 36.5-37 MMTs of Wheat
Southern Hemisphere Wheat Exports- Australian Drought Bites!
EU Wheat Exports Declining Aggressive Sellers April-July?
New World Wheat Demand Drivers
Sub-Sahara African Wheat Production & Consumption 35 30 25 20 15 10 5 0 Production Consumption 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Sub-Sahara African Wheat Imports 30 25 MMTs 25 26 20 15 10 5 0 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
India GDP Growth 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% India China World 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Indian Domestic Wheat Consumption MMTs 120 100 102 80 60 40 20 0 ARC 18 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Indian Monsoon 2016 (left) & 2017 - Dryness Hits Irrigation Supplies
Indian Cash Wheat Price
Indian Wheat Balance Sheet Mil Hectares, MTs 2015/16 2016/17 2017/18 AgResource 2018/19 Beg. Stocks 17.2 14.5 9.8 9.7 Harvested 31.5 30.2 30.6 30.5 Yield 2.75 2.88 3.22 3.15 Production 86.5 87.0 98.4 96.1 Imports 0.5 5.9 2.0 7.0 Total Supply 104.2 107.4 110.2 112.8 Feed 4.2 4.7 5.0 5.2 Food/Seed/In dus. 84.4 92.4 95.0 97.0 Exports 1.1 0.5 0.5 0.5 Total Demand 89.7 97.7 100.5 102.7 End Stocks 14.5 9.8 9.7 10.1
Indian Wheat Net Trade MMTs 8 6 4 2 0-2 -4-6 -8 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Iranian Wheat Stocks MMTs Stocks Stocks/Use 9 8 7 6 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Stocks/Use 2017 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Iranian Wheat Imports MMTs 8 7 6 5 4 2.5 3 2 [VALUE].3 1 0 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Egypt s GASC Pays Highest CIF Wheat Price in 3 Years! 47
World Wheat Prices Peak; $210-215/ MT with Normal Black Sea Weather!
Black Sea Wheat Yield Trends 40% 5 Years 6 Years 5 Years 30% 20% 10% 0% -10% -20% -30% 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980
There Are Some World Weather Problems!
Deepening Drought in the Wheat Areas of the US Plains
US Wheat Overpriced via World Marketplace - Diminished Trade!
US Wheat Seeding Lowest Since 1890!
The Worsening 2017/18 Argentine Drought Daniel W Basse President AgResource Chicago, IL January 2016 Daniel Basse President March 2016 Daniel W Basse President AgResource Company
Driest December- February Period Since 1980!
2018 Argentine Soybean Crop of; 39-42 MMTs including Abandonment
Big Moves in Soymeal and Cash/ Board Crush - $350-425/Ton
World Corn Supplies Reach Peak? v Copyright Copyright 2013 2018 AgResource AgResource Company. Company. All All Rights Rights Reserved. Reserved.
World Corn Reflects No World Trade Growth! Limits Rally Potential v Copyright Copyright 2013 2018 AgResource AgResource Company. Company. All All Rights Rights Reserved. Reserved.
Ag Tech Landscape Expansion!
The Move to Electrification of the world Auto Fleet!
Memphis Meats; The Arrival of Cellular Agriculture? 110 TL/KG
Much To Do Yet with Hunger Killing 9 Mil/Year!
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