australian crop – outlook & trade flows storey head, nzx agribusiness australia ... price? -...
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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
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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
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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!!
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Source: Australian Crop Forecasters
Australian Pulse Production 2010-11 to 2014-15
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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
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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!
BETTER YIELDS DESPITE < AVERAGE RAINFALL
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0
50
100
150
200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
New South Wales (weighted by produc1on region)
2012 2013 2014 2015 10 Yr Ave
BETTER YIELDS DESPITE < AVERAGE RAINFALL
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0
25
50
75
100
125
150
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Victoria (weighted by produc1on region)
2012 2013 2014 2015 10 Yr Ave
BETTER YIELDS DESPITE < AVERAGE RAINFALL
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0
25
50
75
100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
South Australia (weighted by produc1on region)
2012 2013 2014 2015 10 Yr Ave
BETTER YIELDS DESPITE < AVERAGE RAINFALL
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0
25
50
75
100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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
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PRICE? - AT US$5/BUSHEL, Australian Farmers will grow wheat….Just!
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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%!!!
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Source: Thomson Reuters Eikon
AUD +20%
A$/t – Last 6 Months – UP 20%!!!
Australian Market Share - World Wheat (2013-14) – Asian Focus
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Source: Australian Crop Forecasters
Australian Exports – Wheat / Barley / Canola / Sorghum (2011-2014)
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Source: Australian Crop Forecasters
WHEAT – BY REGION – 2011-12 to 2014-15 ytd
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SE Asia
Nth Asia
M-East
Africa
NZPac
Other
EXPORTER MARKET SHARE – WHEAT – Big 5 ++
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12/13 13/14
14/15 YTD
Emerald
Graincorp
Cargill
Glencore
CBH
Other
Plumgrove
EXPORTER MARKET SHARE – BARLEY – Big 5 ++
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12/13 13/14
14/15 YTD
Cargill
ADM
Glencore
CBH Graincorp
Bunge
Other
EXPORTER MARKET SHARE – CANOLA – Big 4 ++
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12/13 13/14
14/15 YTD
Cargill
ADM
Glencore
CBH
Graincorp Emerald
EXPORTER MARKET SHARE – SORGHUM – Pentag +3
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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
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70-80%
1. KEY CROP & TRADE METRICS - SUMMARY
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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
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Grain Port Infrastructure 2016
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Quattro
Bunge
HLJ
Cargill
Pre 2008 2010-14 2016 ++
BULK vs CONTAINERS – South-East Asia
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Indonesia
Philippines
Thailand
Malaysia
Vietnam
Singapore
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?)
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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
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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 ???
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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 -
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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 ……
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Australian FOB replacement APW Wheat - USD FLAT PRICE
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220
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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
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50
100
150
200
250
300
Sep Oct Nov Dec Jan Feb Mar
Kwinana Port Adelaide Geelong
USc/bu Kwinana Basis over
Chicago?
SUMMARY
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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