BUYERS VS SUPPLIERS: CHANGING PREFERENCES OF ONE OF THE MAIN GRAIN IMPORTERS
MACROECONOMICS
GLOBAL GROWTH: DEVELOPED AND EMERGING MARKETS MARCH 2008 MARCH 2017 5,5 % 2 % Emerging Markets Real GDP YoY % Average 2000-2007 Developed Markets Real GDP YoY % Average 2000-2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP % THE CRISIS IN EMERGING MARKETS: CHINA -7,5% 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
QUANTITATIVE EASING
INCREASED DEBT EU USA CHINA rising from 2007 to 2016 in billion USD
GRAINS AND ENERGY DOWNFALL S&P Commodities Index (01/01/2007=100) Agriculture Energy China GDP 2010 2011 2012 2013 2014 2015 2016
CONCLUSIONS low but steady growth, some signs of recovery very high debts low prices for grains and a very high liquidity
FUNDAMENTALS
Mln Tons TOTAL WORLD GRAINS production vs ending stocks 1.760 Production Ending Stocks 2.106 2.050 364 513 + 149 484-29 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Mln Tons TOTAL WORLD CORN production vs ending stocks Production Ending Stocks 835 1.053 1.024 128 225 + 97 205-20 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Mln Tons TOTAL WORLD WHEAT production vs ending stocks Production Ending Stocks 735 654 754 193 239 + 46 234-5 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Mln Tons TOTAL WORLD SOYBEANS production vs ending stocks Production 400 Ending Stocks 345 240 341 300 200 100 25 38 + 13 tm + 31 % 35-3 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
WHY ALL THIS HAPPENED? favorable wheater increased yields crop increased resistance to climatic adversity
NEW ACTORS IN THE WORLD EXPORTS UKRAINE and RUSSIA Wheat export forecast for 2016/2017 45 mln ton 13% more than previous record in 2015/16 (39 mln ton)
Mln Tons WORLD EXPORT CORN/SOYBEANS 2001/02 2016/17 200 180 160 140 120 50% 27% 100 80 60 40 20 USA Rest of the World 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Days CORN, SOY, WHEAT STOCKPILES at 30 year average despite higher output 140 130 120 110 100 90 30 year average 95,5823 80 70 Global production of corn, soybeans and wheat has surged over the past four 60 years, creating surpluses. Despite that, worldwide inventories of the three crops, measured in days of consumption, have reverted to the 30 years average. 1990 1995 2000 2005 2010 2015 2020
FINANCIAL MARKET
FINANCE IN FINANCIAL MARKETS 1999 vs today TRL USD 37,9 74,6 32,9 69,9 33,5 61,4 109 218 +100 % 1999 today Fonte: Schroders
MLN TM WHEAT MARKETS IN COMPARISON Crop and Futures (in million ton 2016) Crop and Futures (in million ton 2013) + 44% 4.450 3.100 15,8 27,3 156 160 733 717 Ukranian Production EU Production World Production Futures CBOT
THE S&P 500 INDEX 1085 2050 2361-26% 800 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Price USD Price USD PRICES INVERSELY PROPORTIONAL TO THE POWER OF THE DOLLAR TRJCBR DXY 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
mb/d mb/d CRUDE OIL 100 99 98 97 Total Stock Ch. E Misc. Demand Supply 3.0 2.0 96 95 1.0 94 93 0.0 92-1.0 91 90-2.0 2Q13 2Q14 2Q15 2Q16 2Q17
EUROPEAN UNION
Mln Tons GRAINS PRODUCTION VS IMPORT 400 Production Import 18,7 300 200 100 13,2 + 5,5 mtm + 42 % 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Mln Tons CORN PRODUCTION VS IMPORT 100 Production Import 11,7 75 Ukraine 1st exporter with 3,31 mlm ton (31/01/2017) 50 7,5 25 + 4,2mtm + 56% 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Mln Tons WHEAT PRODUCTION VS IMPORT 200 Production Import 150 Ukraine 1st exporter with 510 kton (31/01/2017) 100 50 4,7 6,2 + 1,5 mtm + 32 % 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Mln Tons SOYBEANS PRODUCTION VS IMPORT 20 Production Import 12,2 13,6 15 10 5 + 1,4 mtm + 11,5% Ukraine 6th exporter with 292 kton (31/01/2017) 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Kton SUNFLOWER SEED 700 600 2014/15 2015/16 2016/17 631 500 400 461 300 200 253 100 0 1 5 9 13 17 21 25 29 33 37 41 45 49 53
SUNFLOWER MEAL (31/01/2017) Ukraine Export 1,2 mtm 66,6 % Total Import 1,8 mln/t Others Country Export 0,6 mtm 33,3 % Ukraine 1st Exporter
ITALY
TOTAL IMPORT VS PRODUCTION 2016 Import 2016 51,35 % 18,4 mln/t Domestic crop 2016 48,65 % 19,45 mln/t Total 37,85 mln tons
mln tons TOTAL GRAIN IMPORT 16 14 EU Extra EU 12 10 8 0,6 7,5 + 6,9 6 4 2 6,5 7 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
mln tons TOTAL WHEAT IMPORT 8 7 EU Extra EU 6 5 4 0,8 5,5 + 4,7 3 2 1 4 4,2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
mln tons TOTAL DURUM IMPORT 2,8 EU Extra EU 2,4 2 0,1 2 + 1,9 1,6 1,2 0,8 1,5 0,4 0,4 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
mln tons TOTAL MAIZE IMPORT 5 EU Extra EU 4 + 1,8 3 2 0,2 2 1 0,5 2,4 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
OILSEED AND MEALS IMPORT 2016 Of which: 1,94 mtm oilseed +500 k/ton Of which: 2,8 mtm meals 4.768 mln/t +7% vs 2015
k/tons DURUM IMPORT IN 2016 By Country 1500 1200 900 1.202 600 300 0 Canada USA Mexico Greece France Australia Kazakhstan Argentina Austria Germany Turkey
k/tons WHEAT IMPORT IN 2016 By Country 1000 962 800 621 600 400 200 0 France Hungary Ukraina Austria Germany USA Canada Romania Croatia Slovakia Russia Slovenia Moldova
k/tons MAIZE IMPORT IN 2016 By Country 1500 1.323 1200 900 600 300 0 Ukraine Hungary France Austria Romania Slovenia Russia Croatia Bulgaria
MAIZE IMPORT 2 mtm come to Italy by rail or truck from the Balkan Danube area 2 mtm come to Ravenna, Venice or south Italy by ship
MAIZE The quality/health aspect has become the key element of our market. EU rules do not satisfy the Italian market since the EU standards have been exceeded by livestock/industrial ones EU regulations: 20ppb aflatoxin max corn standard quality is with 5ppb aflatoxin max and 4000ppb Don max This demand has greatly limited the Italian corn production which reduced investment by 1m/h to 600k/h in favor of other cultures The soils are exhausted and there will not be an investment recovery
Spending Power THE SOCIETY IS CHANGED 70s 80s and 90s today Fundamental values in life Houses, cars, family Large middle class Hourglass effect The middle class disappears Increasingly poor Increasingly rich Consumers' Density
THE UPPER PART OF THE HOURGLASS The richest 20% of households in Italy receives 61% of total income At world level it shows that 1% of the population has seen its share of wealth grow by 44% in 2009 to 48% in 2014 It will exceed 50% in 2017
FOOD SUPPLY The food supply is a key factor to get better and live longer. 63% say they are attentive to food to prevent certain chronic diseases ORGANIC EXPORT ORGANIC INTERNAL MARKET +408 % +94 % OVER 2008 OVER 2008
TOTAL SALES 2016 TOTAL SALES: +2,1% Quota Value Trend Value PREMIUM SEGMENT 18,1 +5,1 MAINSTREAM SEGMENT 77,4 +1,6 FIRST PRICE SEGMENT 4,5-2,4
GROWTH OF THE ORGANIC MARKET Total Food Organic 16% 2013 2014 2015 2016 2017
Mln Euro ORGANIC WEIGHT IMPOSED PRODUCTS 1000 ORGANIC Sell ORGANIC on Total % 4% 4 3,5 800 3 2,5 600 2 400 1,5 200 1 0,5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0
CONSUMPTION OF PRODUCTS FROM ORGANIC CEREALS VAR. % 14/15 VAR. % JAN-NOV 2016 JAN-NOV 2015 CEREAL DERIVATIVES 18,9 25,9 FRESH VEGETABLES AND TRASFORMED FRESH FRUIT AND TRANSFORMED 14,3 20,0 1,4 14,8 DAIRY 4,1 7,0 EGGS 4,6 5,7
PROTEIN-FREE GLUTEN-FREE PRODUCTS Sweets 25,4 % Bread 41,9 % Pasta 19,5 % 6,01 % 2015 quota over category
GLUTEN-FREE/ORGANIC IN THE WORLD It is one of the fastest growing global food sectors Gluten-free grows 10% per year and this trend is estimated up to 2020, for a turnover of over $ 7 billion Australia patented the first gluten-free barley (approved by the WHO) and sold it in Germany for gluten-free beer. US Consumption of organic/gluten-free: 27%
FINAL CONCLUSIONS
MORE MARGINS INTERNATIONAL MARKETS NEW PRODUCTS FINANCIAL MARKETS
THANK YOU FOR THE ATTENTION Sources: Nielsen Sinab Anacer Federbio Assobio Reuters USDA RaboBank IGC Bloomberg Speaker: Andrea Cagnolati General Manager Grain Services S.r.l