Cereals market situation

Committee for the Common Organisation

of Agricultural Markets

25 October 2017

Exchange Rates

2

Euro – US Dollar exchange rate

3

1.1787

1.1818

1.17

1.18

1.19

26/09 30/09 04/10 08/10 12/10 16/10 20/10

From the last Committee

1.00

1.05

1.10

1.15

1.20

1.25

01/17 03/17 05/17 07/17 09/17

Spot, ECB reference

+13%

02/01/20171.0437

Euro and US Dollar – Russian Rouble exchange rate

4

RUB/USD

57.48

RUB/EUR

67.73

25

35

45

55

65

75

85

95

Source: Thomson Reuters

Euro and US Dollar - Ukraine Hryvnia exchange rate

5

UAH/USD

26.53

UAH/EUR 31.26

7

12

17

22

27

32

37

42

Source: Thomson Reuters

6

Crude oil price ($/barrel)

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CRUDE OIL FUTURES PRICE ($ PER BARREL), 1 MONTH FORWARD (FOB): BRENT BLEND (NORTH SEA) - UK

20/10/2017: 58

7

Baltic Dry Index

0

2000

4000

6000

8000

10000

12000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

20/10/2017: 1578Baltic Dry Index

Cereals Forecasts

8

USDA 2017/18 Supply and Demand Estimates (WASDE – 570 of 12 October 2017)

Wheat: world output is projected at 751.2m t (+6.3m t m/m; -3m t or -0.4% y/y) from last year's record. Demand estimated at 739.6m t (+2m t m/m; +0.1% y/y) incl. 141.5m t of feed use (-3.9%), while stocks to reach a new record at 268.1m t (+5m t m/m; +11.6m t or +4.5% y/y) mainly due to larger Chinese stocks (127.3m t, +14.6%) and RUS stocks (17.3m t, +60%).

Production: RUS estimate was raised further, to a new record of 82m t (+1m t m/m; +13% y/y). Turkish output forecast also up by 1m t to 21m t (+22% y/y) with record yields of 2.7 t/ha. Favourable weather boosted yields to record level also in India with production seen at 98.4m t (+2.4m t m/m; +13% y/y), a new peak. EU forecast up by 2.2m t to 151m t (+3.8%). Due to dry conditions and soil moisture deficit wheat yield estimated at 2nd lowest in a decade in AUS with forecast down by 1m t to 21.5m t (-36%).

Export forecasts mostly unchanged from last month

9

10

World wheat: USDA

World Production

World Consumption

167

203 199 199176

194218

241257

268

6078 75 70

51 54 65 63 73 69 (67)

682 686

652

697

659

715

728735

754 751

641

650

655697

680

698705

712

739 740

550

600

650

700

750

0

100

200

300

400

500

600

2008 2009 2010 2011 2012 2013 2014 2015 2016 est. 2017 proj.

M tM t

Source: USDA October report

World

Ending Stocks

of which

8 major exporters

11

USDA: Wheat production forecast

151

82

47

27 2722

14 18

0

20

40

60

80

100

120

140

160

180

EU Russia USA Canada Ukraine Australia Kazakhstan Argentina

M t

All wheat

Source: USDA October report

2013 2014 2015 2016 est. 2017 proj.

Wheat import forecasts for selected

countries and regions

• Source: USDA (data in million tonnes, incl. flour); *forecast

• North Africa = Algeria, Egypt, Libya, Morocco and Tunisia

• South East Asia = Indonesia, Malaysia, Philippines, Thailand and Vietnam

12

2013/14 2014/15 2015/16 2016/17 2017/18*

Algeria 7.484 7.257 8.153 8.414 8.200

Egypt 10.150 11.300 11.925 11.236 12.000

Morocco 3.928 4.086 4.503 5.191 4.800

North Africa 25.246 25.430 27.873 28.334 28.350

Saudi Arabia 3.441 3.499 2.931 3.716 3.800

Vietnam 2.157 2.292 3.070 5.548 4.800

SE Asia 17.176 20.576 25.483 27.763 26.710

U.S. Wheat by Class: Supply and Use - 2016/17 (June/May)

USDA WASDE Report – 12 10 2017

13

2016/17 million tonnes HRW Share (%) HRS Share (%) SRW Share (%) White Share (%) Durum Share (%) TOTAL

Beginning stocks 12,14 45,7% 7,40 27,9% 4,27 16,1% 2,01 7,6% 0,76 2,9% 26,56

PRODUCTION 29,45 46,9% 13,36 21,3% 9,39 14,9% 7,78 12,4% 2,83 4,5% 62,84

Total supply (incl imp) 41,72 45,1% 21,91 23,7% 14,56 15,7% 10,02 10,8% 4,41 4,8% 92,59

Domestic use 13,28 41,8% 6,78 21,3% 6,21 19,5% 2,69 8,5% 2,75 8,7% 31,76

Exports 12,38 43,1% 8,74 30,4% 2,50 8,7% 4,44 15,5% 0,65 2,3% 28,71

Use total 25,66 42,4% 15,51 25,7% 8,71 14,4% 7,16 11,8% 3,43 5,7% 60,47

Ending stocks 16,03 49,9% 6,40 19,9% 5,85 18,2% 2,86 8,9% 0,98 3,0% 32,14

U.S. Wheat by Class: Supply and Use - 2017/18 (June/May)

USDA WASDE Report – 12 10 2017

14

2017/18 million tonnes HRW Share (%) HRS Share (%) SRW Share (%) White Share (%) Durum Share (%) TOTAL

Beginning stocks 16,03 49,9% 6,40 19,9% 5,85 18,2% 2,86 8,9% 0,98 3,0% 32,14

PRODUCTION 20,41 43,1% 10,48 22,1% 7,95 16,8% 7,02 14,8% 1,50 3,2% 47,38

Total supply (incl imp) 36,66 43,9% 18,86 22,6% 14,23 17,0% 10,15 12,1% 3,67 4,4% 83,58

Domestic use 12,79 41,4% 7,24 23,4% 5,77 18,7% 2,72 8,8% 2,40 7,7% 30,92

Exports 10,61 40,0% 7,21 27,2% 2,45 9,2% 5,72 21,5% 0,54 2,1% 26,54

Use total 23,41 40,7% 14,45 25,2% 8,22 14,3% 8,44 14,7% 2,94 5,1% 57,45

Ending stocks 13,25 50,7% 4,41 16,9% 6,01 23,0% 1,71 6,6% 0,73 2,8% 26,13

USDA 2017/18 Supply and Demand Estimates (WASDE – 570 of 12 October 2017)

Maize: estimate for world production was increased by 6.2m t m/m to 1,038.8m t (-36.5m t y/y; -3.4% y/y), demand boosted by 7.7m t to 1,064.8m t (+2.5m t from last year's record, incl. 650.5mt for feed), while stocks lowered by 1.5m t to 201m t (-11.5% or -26m t y/y).

Due to further increased yield forecast (10.78 t/ha) the US crop was raised to 362.7m t (-5.7% y/y). Nigerian maize crop was raised by 3.6m t m/m to 10.5m t following histrocial revision of production estimates. Based on reported harvest results projected yields in RUS and UKR were lowered leading to reduced production estimates (RUS: -0.7m t to 15.3m t and UKR: -0.5m t to 27m t).

UKR exports cut back to 21.5m t (= y/y) and RUS exports lowered by 0.5m t to 5.5m t (= y/y). ARG exp increased by 0.5m t to 29m t.

Chinese stocks decreased by 2m t to 79.2m t (-22% y/y), 39% of world total.

15

16

World maize: USDA

World Production

World Consumption

149 144128 133 135

175

210 214227

201

43 4329 25 21

3144 44

58 59

799

819832

887868

990

1016

972

1075

1039

782

823

850

883 865

949

981968

1062

1065

550

650

750

850

950

1050

0

100

200

300

400

500

2008 2009 2010 2011 2012 2013 2014 2015 2016 est. 2017 proj.

M tM t

Source: USDA October report

World

Ending Stocks

of which US

17

USDA: maize production forecast

363

95

59

2742

0

50

100

150

200

250

300

350

400

450

USA Brazil EU Ukraine Argentine

M t

Maize

Source: USDA October report

2011 2012 2013 2014 2015 2016 est. 2017 proj.

Cereals Market News and Prices

18

Market News 1. (25-10-2017) Black Sea region

- RUS: (SovEcon): 2017/18 grain output estimate steady from before, at 133m t (120.7m t last year), however wheat put higher to 82.9m t (73.3), while maize cut by 1.5m t to 13.7m t (15.2).

- RUS: (Customs): as of 18/10/2017 grain exports in 2017/18 reached 14.4m t (+22% y/y), incl. 11.2m t wheat (+16%), 2.2m t barley (+160%) and 1.0m t maize (+40%).

- UKR: in an annual agreement between government and traders 2017/18 wheat exports set at 16.5m t (17.4m t previous year). This is split to 10.7m t of milling and 5.8m t of feed wheat.

- UKR: (SCPS) as of 13/10/2017 wheat exports reached 7m t (-8%)

- UKR: (as of 20/Oct) 2017/18 maize harvest yielded 9.2m t from 44% of sown area, with average yields at 4.6t/ha (5.7t/ha same period of previous year).

19

Market News 2. (25-10-2017) U.S. Grain export inspections w/e 19/10/2017

20

• Marketing Year = June/May for wheat and September/August for maize, sorghum

and soybeans; www.ams.usda.gov/mnreports/wa_gr101.txt

US maize exports remain very slow in 2017/18, weekly exports at 0.3 - 0.6m t

Commodity MY 2017/18 MY 2016/17 Change

Maize 4 526 385 8 366 778 - 46 %

Sorghum 444 601 576 086 - 23 %

Soybeans 9 812 520 10 652 279 - 8 %

Wheat 10 796 552 11 307 961 - 5 %

Market News 3. (25-10-2017)

- USA: USDA Crop Progress report w/e 22 October:

Maize conditions: 66% good/excellent (74% last year)

Sorghum conditions: 65% good/excellent (65% last year)

Maize harvest: 38% complete (59% last year; 59% 5-Y average)

Soybeans harvest: 70% complete (74% last year; 73% 5-Y average)

Winter wheat sowing: 75% complete (78% last year; 80% 5-Y average)

Maize harvest progress remains slow

21

Market News 4. (25-10-2017) Canada: Outlook for Principle Field Crops in 2017/18

(source: AAFC; crop year = Aug/July)

13-10-2017 2015/16 2016/17 2017/18 f' y/y

Durum prod' (m t) 5.39 7.76 4.30 -45%

exports (m t) 4.51 4.53 4.60 +1.5%

All wheat prod'(m t) 27.59 31.73 27.13 -14%

exports (m t) 21.71 20.16 20.90 +3.7%

Barley prod' (m t) 8.23 8.78 7.31 -17%

exports (m t) 1.99 2.32 2.15 -7%

Oats prod' (m t) 3.43 3.20 3.80 +19%

exports (m t) 2.23 2.30 2.35 +2%

Canola prod' (m t) 18.38 19.60 19.71 +0.5%

Exports (m t) 10.30 11.02 11.00 -0.1%

22

Market News 5. (25-10-2017) Brazil

• CONAB October report incl. first estimate for 2017/18 S&D:

• - Maize production to decrease on lower area and yields (5.4 t/ha; -2%). Maize exports seen steady y/y at 30m t, while demand to grow by 3% to 57.9m t.

• - Soybeans output to decrease as lower yields (3.1 t/ha; -9%) offset larger area. Exports put at 64m t (-1m t y/y).

23

10-10-2017 Forecast +/- previous f'cast

Previous year

+/- y/y

Wheat prod (m t) 4.9 n/a 6.7 - 27%

Wheat area (m ha) 1.9 n/a 1.9 +0%

Soybeans prod (m t) 107.1 n/a 114.1 - 6%

Soy area (m ha) 34.8 33.9 +3%

Maize prod (m t) 92.9 n/a 97.7 - 5%

Maize 1st crop 25.7 n/a 30.5 - 16%

Maize 2nd crop 67.1 n/a 67.4 - 0%

Market News 6. (25-10-2017)

China

China Agricultural Supply and Demand Estimates

for 2017/18

Due to lower area production forecast was reduced, while demand lifted leading to an estimated deficit of 5.5m t in 2017/18.

24

Market News 7. (25-10-2017)

• - China: in order to encourage purchasing of new crop maize tenders to be suspended for selling maize from state reserves

• - China: (NDRC) government intends to link state grain purchasing prices to production costs, demand, international prices and industry development

• - China: (customs): cumulative 2017 wheat imports (Jan/Sept) reached 3.6m t (+25% y/y), barley at 7.0m t (+80%), maize at 2.3m t (-24%) and soybeans at 71.5m t (+15%).

• - AUS: (USDA Post in Canberra) wheat production forecast in 2017/18 (Oct/Sept) was reduced further to 20m t (-43% y/y), while barley seen at 8m t (-40%).

25

Market News 8. (25-10-2017)

• - Argentina: (BAGE) wheat harvest started in the North. 60% of the 5.45m ha planted is seen in good/excellent conditions. Maize sowing 28% complete with area projected at 5.4m ha (+5% y/y)

• - Saudi Arabia: aims reducing 2017/18 barley imports to 8m t and substitue its demand by maize and soybeans

- Morocco: as from 1 December 2017 common wheat import duties will be reduced from 135% to 30%

- Algeria: 2017 grain output reached 3.5m t (3.4m t last year), incl. 2m t of durum and about 1mt of barley

26

27

World cereal prices ($/t)

140

160

180

200

220

240

260

280

300

$ /

to

nn

e

Wheat - Black Sea Milling $ 195

Wheat - US SRW Gulf $ 191

Wheat - FR Cl. 1 Rouen $ 191

Maize - FR Bordeaux $ 171

Maize - US 3YC Gulf $ 157

Barley-FR Dlvd Rouen feed $ 179

28

CME wheat: open interest and net position of traders

- 200

- 150

- 100

- 50

0

50

100

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Th

ou

sa

nd

s o

f c

on

tra

cts

(o

f 1

36

me

tric

to

nn

es

)

Millio

ns

of

co

ntr

ac

ts (

13

6 m

etr

ic t

on

ne

s)

WHEAT - CHICAGO BOARD OF TRADE

Open Interest Managed money - Net position

Last value from: 2017-10-17

29

US CME SRW wheat futures

157

169

186

155

170

185

200

0

50

100

150

07/10/17 11/10/17 15/10/17 19/10/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 136 to

nnes)

Chicago (CME) SRW futures

Last 14 days

120

170

220

270

320

0

50

100

150

200

250

300

350

400

07/15 01/16 07/16 01/17 07/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 136 to

nnes)

Chicago (CME) SRW futures

Daily volume

DEC 2017 (R)

MAY 2018 (R)

DEC 2018 (R)

30

US KCBT HRW wheat futures

155

167

190

150

160

170

180

190

200

0

10

20

30

40

50

07/10/17 11/10/17 15/10/17 19/10/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 136 to

nnes) Last 14 days

120

140

160

180

200

220

240

260

280

300

0

20

40

60

80

100

120

07/15 01/16 07/16 01/17 07/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 136 to

nnes)

Kansas (KCBT) HRW Futures

Daily Volume

DEC 2017 (R)

MAY 2018 (R)

DEC 2018 (R)

31

EU Milling Wheat Futures

161

171

177

160

165

170

175

180

185

0

5

10

15

20

25

30

35

07/10/17 13/10/17 19/10/17

€/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 50 to

nnes)

Last 14 days

150

170

190

210

230

0

20

40

60

80

100

120

03/14 09/14 03/15 09/15 03/16 09/16 03/17 09/17

€/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 50 to

nnes)

Euronext - NYSE (MATIF Paris) milling w heat futures

Daily Volume

DEC 2017 (R)

MAY 2018 (R)

DEC 2018 (R)

32

CME maize: open interest and positions of traders

- 300

- 200

- 100

0

100

200

300

400

500

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Th

ou

sa

nd

s o

f c

on

tra

cts

(o

f 1

27

me

tric

to

nn

es

)

Millio

ns

of

co

ntr

ac

ts (

12

7 m

etr

ic t

on

ne

s)

CORN - CHICAGO BOARD OF TRADE

Open Interest Managed money - Net position

Last value: 2017-10-17

33

CME maize futures

136

145

154

125

135

145

155

165

0

100

200

300

400

500

600

07/10/17 11/10/17 15/10/17 19/10/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 127 to

nnes)

Chicago (CME) Maize futures

Last 14 days

100

125

150

175

200

225

250

0

160

320

480

640

800

960

1 120

12/13 06/14 12/14 06/15 12/15 06/16 12/16 06/17

$/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 127 to

nnes)

Chicago (CME) Maize futures

Daily volume

DEC 2017 (R)

MAY 2018 (R)

DEC 2018 (R)

34

EU maize futures

145

160

167

140

145

150

155

160

165

170

175

0

2

4

6

8

10

12

07/10/17 13/10/17 19/10/17

€/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 50 to

nnes)

Euronext - NYSE (MATIF, Paris) maize futures

Last 14 days

140

160

180

200

0

2

4

6

8

10

12

11/15 02/16 05/16 08/16 11/16 02/17 05/17 08/17

€/t

Daily

tra

ded v

olu

me (

1000 c

ontr

acts

of 50 to

nnes)

Euronext - NYSE (MATIF, Paris) maize futures

Daily Volume

NOV 2017 (R)

MAR 2018 (R)

NOV 2018 (R)

Trade

35

36

Selected cereals trade for the past 4 weeks Country

Crop Quantity (in t)

Price

($/t)

Origins Delivery

Algeria Wheat 480 000 211-212 c&f - Optional Dec

Algeria Wheat 660 000 210-212.5 c&f - Possibly mainly FR and ARG

Jan

Egypt Wheat 170 000 198-200 fob Freight: 14.7-15.7

RUS: 170 000 Nov

Egypt Wheat 180 000 198-200 fob Freight: 13-14.8

RUS: 180 000 Nov

Egypt Wheat 230 000 198.4-198.9 fob

Freight: 14.6-15.9

RUS: 230 000 Dec

Saudi A. Barley 540 000 212-221.7 c&f optional Nov-Dec

37

(update of Situation at 18/10/2017)

● Imports: 6.1m t (4m t last year; 4.5m t two years ago)

0.9m t soft wheat

0.6m t durum wheat

4.3m t maize 

0.27m t barley

● Exports: 8.9m t (12.1m t last year; 13m t two years ago)

5.9m t soft wheat

1.5m t barley

0.24m t durum wheat

0.21m t maize

●

EU cereals trade 2017/18

So far, the EU is a net cereal exporter of 2.8m t, against 8.1m t last

year and 8.5m t two years ago.

38 Source: AMIS - Market Monitor

Conclusions

- Wheat export prices mixed while futures decreasing

- Maize prices broadly stable under seasonal harvest pressure

- AUS wheat forecasts reduced again on dry conditions

- MOR cut wheat import tariff effective 1st December

- On fob basis US SRW, EU wheat and Black Sea quoted closely

- On fob basis ARG maize remains most competitive

- USDA October report: record RUS wheat increased again, while UKR and RUS maize forecasts reduced.

39

Thank you for your attention!

Presentations & Balance sheets

available at:

http://ec.europa.eu/agriculture/cereals/index_en.htm