the world grain market and future expectations
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Volatility in Agri-
commodities
Frank Rijkers Agrifood and Agri commodities
Economist
ABN AMRO Group Economics
November 2014
Programme
Introduction
History of the grains market
Grains market drivers
The future and beyond
Time for discussion / questions
Introduction
Frank Rijkers MSc.
sector economist – Agrifood & Agri-commodities
ABN AMRO Group Economics
tel: +31 20 628 64 37
e-mail: frank.rijkers@nl.abnamro.com
Visit also ABN AMRO Group Economics on the internet:
/
Your keynote speaker:
Information available at:
Group Economics
insights.abnamro.nl/en
Introduction: About ABN AMRO Bank NV
4
ABN AMRO Bank N.V.
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customer database
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Capital Markets Solutions
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ABN AMRO
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Economy
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Banking
YourBusiness
Banking
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Servies
ABN AMRO
Private Banking
MeesPierson
History of the grains
market
6
Price development since mid 13th century
Grain prices in the 21st century
7
0
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Stable or not?
Grain prices in the 21st century
Decreasing stocks
Food crisis
Economic and population growth
Development of grain stocks
9
0
100
200
300
400
500
600
700
1990/91 1994/95 1998/99 2002/03 2006/07 2010/11 2014/15
(mill
ion tonnes)
Food Crisis
10
Higher oil prices
Use of biofuel
Demand for variety in diet (Asia)
Drought in production areas
Food crisis
11
Oil price Usage of Renewable energy
Food crisis
12
Is this the way we look at food?
Food crisis
13
Variety in diet
Food crisis
14
Extreme drought in production areas
Export bans and restrictions
Less availability
Food crisis
15
Emotion and rationale lead to price increase
Grains market drivers
Grain market drivers
17
0
500
1000
1500
2000
2500
production consumption
Supply vs. demand
Supply potential coming years
18
Chinese growth in arable land
Arable land in other regions (Latin Americas, Africa)
New production techniques
World politics
others……(e.g.: geo-politics)
Supply potential coming years
But the most important production factor is…..
19
The weather
20
The future and beyond
The future and beyond
22
Higher volatility through:
Supply/Demand
Technical analysis
Sentiment
Broker trading
The future and beyond
Volatility is not new
23
The future and beyond
Availability of water
24
The future and beyond
25
0
1
2
3
4
5
6
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Avera
ge a
nnual yie
ld g
row
th
per
hecta
re (
%)
Wheat Corn
Weakening in worldwide production growth per hectare
The future and beyond
26
But there is still growth in total production
0
0,5
1
1,5
2
2,5
3
3,5
4
OESO BRIC Developingcountries
Others World
Annual gro
wth
in
agricultura
l pro
ductio
n (
%)
2002-11 2012-21
The future and beyond
27
Population growth
World population
% living in cities
The future and beyond
28
Growing world population:
More need for food and feed
Increasing demand for protein
Less arable land
The future and beyond
29
Economic growth:
Higher incomes
Increasing demand for protein
Changing variety in diet
The future and beyond
30
Change in Economic growth in BRIC-countries
-6,00
-5,00
-4,00
-3,00
-2,00
-1,00
0,00
-2,00
-1,80
-1,60
-1,40
-1,20
-1,00
-0,80
-0,60
-0,40
-0,20
0,00
Change o
f price (
%)
Decre
ase in
pro
ductio
n o
r use (
%)
Production Consumption Price (rha)
The future and beyond
31
The future and beyond
Worldwide wheat supply will fit the increasing demand
32
-
5
10
15
20
25
30
35
40
0
100
200
300
400
500
600
700
800
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
sto
cks-t
o-u
se
(%
)
x m
illio
n to
nn
es
United States India China EU Russia Others Stocks (rha)
The future and beyond
Worldwide corn and other grains supply will fit the increasing demand, but stocks
are slightly decreasing
33
-
5
10
15
20
25
30
35
0
200
400
600
800
1000
1200
1400
1600
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
sto
ck
s-t
o-u
se
(%
)
X m
ilio
n t
on
nes
United States India China EU Russia others Stocks (rha)
The future and beyond
Price forecasts
34
0
100
200
300
400
500
600
700
Wheat Corn Sugar
Further information
Frank Rijkers MSc.
sector economist – Agrifood & Agri-commodities
ABN AMRO Group Economics
tel: +31 20 628 64 37
e-mail: frank.rijkers@nl.abnamro.com
Visit also ABN AMRO Group Economics on the internet:
/
Your keynote speaker:
Information available at:
Group Economics
insights.abnamro.nl/en
Questions?
Thanks for your attention!
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