global beef marketstatic.contextoganadero.com.s3.amazonaws.com/publicaci... · 2015-11-27 ·...
TRANSCRIPT
Outlook and China Effect
Adolfo Fontes
November 2015
Global Beef Market
2
Agenda
Beef market overview
China Effect
Exchange rate impacts
Latin America comparative advantages
Challenges
3
Rabobank is a premier bank to the leading companies across the food, beverage and agribusiness industry
Leading Global Bank
Relationship-Focused
Financial solutions to more than 10 million clients in 46 countries
Rabobank International global presence
Rabobank Netherlands
Rabobank International
Over 100 years of banking history rooted in the Food & Agri sector
Safest privately-owned bank, more than USD1 trillion in Assets
Wholesale Banking
F&A Research
Corporate Banking Global Financial Markets
Mergers & Acquisitions
Focus on Food & Agribusiness
International Retail Banking
Professional Products/ AF
Asset management
Mortgage
Leasing
Commercial Real Estate Insurance
Corporates
All industries
Corporate and Retail banking
4
Rabobank global research team
5
World population
Source: US Department of Commerce, 2014
Bil
hõ
es
2014 7.2 More food will be needed in
the first half of this century,
than it was consumed in the
last 7,000 years
6
Globally, poultry is the fastest growing meat and should replace pork as the most consumed animal protein by 2022
Global consumption of meat [ MM tons]
Note 1: Compound annual growth rate Source: Rabobank, OECD, FAO
+1,4%
CAGR¹
2013-2022
+1,3%
+1,9%
+1,5%
Pork
Poultry
Sheep
Beef
+1,6%
+2,6%
2022p
346
16 (4,6%)
128 (37,0%)
126 (36,4%)
76 (22,0%)
2013
301
2005
254
12 (4,7%)
83 (32,7%)
98 (38,6%)
61 (24,0%)
1995
189
9 (4,8%)
46 (24,3%)
78 (41,3%)
56 (29,6%)
112 (37,2%)
108 (35,9%)
14 (4,7%)
67 (22,3%)
7
Latin America represents almost 1/3 of the global beef production
Beef production of selected Latin American countries (2014-MMt) Beef production in 2014 (MMt)
Source: USDA, Rabobank Analysis
Others
23%
India 7%
China 10%
EU
13%
USA
19%
Latin America
28%
Total 59 MMt
0,9
1,8
2,8
9,9
8
Meat per capita consumption per region per year
28 32
49
28 3622 37
34
13
33 1428
191621615
41
Central America and Caribbean
7
World
53
110
10 10
5
12
North America South America
6
81
12
15
Africa
31
Asia
68
Europe
84
Oceania
Beef
Poultry
Pork
39 34 28
2017 45
38
51
31
13
39 60
35
16
1514200
13
25
16
5
5
62
Mexico
57
USA
114
1
Argentina
107
9
Brazil
98
South Korea
64
Japan
50 10
4
China
2
India Colombia
46
Fonte: USDA, FAO, Rabobank
Per capita consumption (kg/year) – 2013
Per capita consumption (kg/year)
9
10
Rising.....
Population
Urbanization
And per capita income
11
Self-sufficiency in animal protein and GDP per capita (1980-2014)
Source: USDA, FAO
As China grows economically, it will not only import grain but also meat
40%
50%
60%
70%
80%
90%
100%
$0 $10.000 $20.000 $30.000 $40.000 $50.000
Pe
rce
nt
self
-su
ffic
ien
t in
an
ima
l pro
tein
GDP per capita (current prices, US$)
Japan
Korea
China (including Hong Kong)
12
Major importers – Export opportunities (Beef - MMt)
Source: USDA, Rabobank Analysis
2024 9.1 1.8 0.3 1.2 0.6 0.6 1.3 0.5 0.8 0.8 1.1
2014 6.5 1.8 0.2 1.0 0.4 0.3 1.0 0.2 0.5 0.4 0.7
Middle East and North of Africa China Hong Kong Mexico USA Other Asians South Korea Russia Egypt Others
Additional 2.6 million tons of Beef will be imported
annually through 2024. China, together with Hong Kong will be responsible for 740 thousand tons per year
China will play a key role in the increase of beef imports
Additional volume imported annually by 2024
MENA + 608
China ‘
Hong Kong +461
Mexico +218
USA + 197
401
384
356
309
300
13 Sources: China National Bureau of Statistics, IMF April 2015
0%
2%
4%
6%
8%
10%
12%
14%
16%
200
7
20
08
200
9
2010
2011
20
12
2013
2014
2015
E
2016
E
2017
E
20
18E
2019
E
2020
E
China GDP Growth 2007-2020E
GDP per capita
> US$ 10,000
US$ 5000 – 10000
< US$ 5000
China’s GDP per capita at US$7,500 US$13,500 (PPP)
China’s eventual “New Normal” of richer and slower growth
14
China’s continuing urbanization and “urbanized” rural migrant
Source: China Statistics Yearbook, Rabobank Source: United Nations, Rabobank
Urbanization rate by province
China’s population forecast
China’s cities will gain 182+ million consumers in the next 10 years bringing the urban share to ~70%
Millions of inhabitants
48.0% 38.3%
30.7%
15.8%
14.8% 13.9%
36.2% 47.0% 55.4%
0
200
400
600
800
1.000
1.200
1.400
1.600
2000 2010 2020
Rural Unclassified urban Urban
Henan Gansu
Heilongjiang
Jilin
Liaoning
Hebei
Shandong
Fujian
Jiangxi
Hubei
Hunan
Guangdong Guangxi
Shanxi
Inner Mongolia
Shaanxi
Ningxia Qinghai
Guizhou
Yunnan
Tibet
Xinjiang
Jiangsu
Tianjin
Beijing
Anhui Shanghai
Sichuan Zhejiang Chongqing
Hainan
<40%
40-50%
50-60%
>60%
Urbanization Rate
Next phase of regional urbanization and
15
Income growth drives proteinization and safety demands
Urban per capita consumption difference by income (kg)
Urban per capita expenditure on food (RMB)
Source: China Statistics Yearbook, Rabobank
0 5 10 15 20 25
Tea
Beer
Fruit Wine
Liquor
Yogurt
Milk Powder
Milk
Eggs
Mutton
Beef
Pork
Top 10% Bottom 10%
5.000
10.000
15.000
20.000
25.000
30.000
0
200
400
600
800
1.000
1.200
1.400
1.600
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13*
Urban disposable income per capita Eating out
Animal protein Fruits&vegetables
Food Aquatic product
Grease Dairy
16
Key Themes for China beef
• Highly consolidated in major production countries
• Tight supply in foreseen future
• Rising income and Westernization drive up demand
• Market segmentation is emerging
• Rising reliance on imports
• Price volatile and determined by suppliers
• Low female cattle stock
• Long production cycle
• Agricultural land and grassland constraints
• Environment law Supply Trade
Global market
Markets
17
China beef consumption remains low and is dominated by eating out
Source: China National Bureau of Statistics, IMF, China Food Service Report, 2015
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
foo
d s
ervi
ce in
tota
l
hig
h e
nd
res
tau
ran
t
mid
dle
en
d r
esta
ura
nts
ho
t p
ot
Qu
ick
Ser
vice
Res
tau
ran
ts
Wes
tern
rest
aura
nts
Hot pot led food service growth 2014 2014 Beef per capita consumption
kg
0
10
20
30
40
50
60
70
Arg
enti
na
Bra
zil
U.S
.
Au
stra
lia
Can
ada
New
Zea
lan
d
Ru
ssia
Eu
rop
ean
U
nio
n
So
uth
Ko
rea
Jap
an
Sin
ga
po
re
Tai
wan
Ch
ina
18
Declining cattle herd despite government support
50
60
70
80
90
100
110
120
130
140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
China Cattle Inventory 1995-2013
Inventory (million)
95-05 Average=119.0
2006-2014 Average
19 Source: China Customs, Rabobank, 2014
Beef Imports from Major Countries
‘000 Tons
Beef will increasingly rely on imports
0
20
40
60
80
100
120
140
160
180
2009 2010 2011 2012 2013 2014
Australia Uruguay New Zealand Argentina Canada
Source: China National Bureau of Statistics, IMF, China Food Service Report, 2015
20
Import will take up 20% by 2018
0
1
2
3
4
5
6
7
8
9
10
200
8
200
9
2010
2011
2012
2013
20
14(E
)
2015
(E)
2016
(E)
2017
(E)
2018
(E)
Domestic Production Smuggling Imports Official Imports
Imported beef will account for 20% by 2018
Million Tons
21
Official import continues to grow in 2015
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
Beef imports by countries
Australia Uruguay New Zealand Brazil
Argentina Canada Costa Rica Namibia
tonnes
22
Exchange rate impacts...
Global price USD
80
100
120
140
USD BRL Índice de exportadores
Global price index
in local currency
for exporters
Global price index
in local currency
for importers
60
80
100
120
140
160
USD Índice de importadores
1
2
2
3
3
23
Exchange rate in Brazil
Source: Bloomberg, 2015
0,80
1,20
1,60
2,00
2,40
2,80
3,20
3,60
4,00
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
BRL/USD
Jul/10 Oct/15
0,57 USD/BRL 0,26 USD/BRL Devaluation ~55%
24
Exchange rate in Colombia
Source: Bloomberg, 2015
1.400
1.500
1.600
1.700
1.800
1.900
2.000
2.100
2.200
2.300
2.400
2.500
2.600
2.700
2.800
2.900
3.000
3.100
Jan-16 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06
COP/USD
Jul/10 Oct/15
Devaluation ~34%
25
Exchange rate in China
Source: Bloomberg, 2015
Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06
8,0
Jan-16 Jan-15
6,4
7,2
Jan-14 Jan-13
7,6
6,8
8,4
CNY/USD
Jul/10
Oct/15
Valuation ~7%
26
80
100
120
140
160
180
200
220
240
USD Imports index
80
100
120
140
160
180
200
220
USD BRL Exports index
Global price index in USD
Global price index in local currency for
exporters / importers
Global price index in local currency for Brazil
Range min – max
Exporters
Importers
Ind
ex: Jan
14 =
100
Beef
Source: Rabobank, 2015
Ind
ex: Jan
14 =
100
27
80
100
120
140
160
180
200
220
240
USD Imports index
Beef
Source: Rabobank, 2015
80
100
120
140
160
180
200
220
USD BRL Exports index
28
Latin America Comparative Advantages
29 Source: World Bank, 2010
World: new land available for rain-fed agriculture
LA has considerable scope to expand food and feed production
[million hectares]
95
94
44
25
107
29
7
11
28
ME/N Africa 0
E Europe/C Asia
Sub-Saharan Africa
Latam/Caribbean
RoW
3
S & E Asia 3
Good logistics
Bad logistics
Global demand for agricultural commodities is rising
as a result of increasing population and rising real
incomes
Although part of the need for greater output can be
achieved by raising productivity, new land will
nevertheless be required for agriculture in the future
The distribution of such resources is hard to evaluate,
but it is certainly uneven around the world.
Nevertheless, it is clear that Latin America, and
specifically Brazil, holds a substantial part of the world’s
unused agricultural land
30
Water availability
Source: Harvard Business School
and availability Use of water
31
Global beef costs and productivity – Agri benchmark
Beef production cost in select countries¹
Source: Agri benchmark, 2015 Note 1: Cost in USD per 100 kgs of carcass weight
Brazil 407
Uruguay 425
Argentina 458
Colombia 480
India 534
Australia 578
UK 1,090
Brazil 336
Colombia 337
Mexico 341
Australia 381
Argentina 375
USA 435
China 788
Other costs
Land costs
Feed related costs
Animal purchase
Fee
dlo
t P
astu
re
2013 beef cattle slaughter rate
12%
20%
21%
22%
22%
23%
24%
26%
27%
32%
32%
33%
36%
40%
India
Brazil
Venezuela
Egypt
New Zealand
Mexico
Argentina
Uruguay
Australia
Russia
EU
Canada
U.S.
China
[heads slaughtered per year on a percentage of the total]
33
Integrated Livestock/cropping/forestry systems…
Source: Rabobank, 2014
Example of crop rotation focusing on recovering degraded pastures
Year 1 Year 2 Year 3
Winter
Imp
lan
tati
on
in
a
deg
rad
ed a
rea
Rice Corn
Exa
mp
le
Eucalyptus plantation simultaneously *
•Planting lines in the east / west**Considering 80% pasture and 20% of forest
Summer Winter
Soybeans Corn
Planting maize intercropped with grass
Soil recovery
Summer Winter
Pasture with rotational system
40 days after the corn harvest, cattle grazing can begin
Summer
Due to shading by the forest, grass suffers less from moisture stress
2,4 a 4,8 AU/ha 1,2 a 2,4 AU/ha**
34
Degraded pastures = unrealized potential
35
Price forecast: CBOT Corn
Source: Bloomberg, Rabobank, 2015
300
350
400
450
500
550
600
650
700
750
800
USc /
bushel
CBOT Corn Previous forecast Rabobank forecast
Corn price forecast almost unchanged with harvest progressing and farmers storing crops.
unit Q1'15 Q2'15 Q3'15 Q4'15(f) Q1'16(f) Q2'16(f) Q3'16(f) Q4'16(f)
Corn USc/bu 385 365 382 380 410 420 410 390
36 Source: Bloomberg, Rabobank, 2015
Price forecast: CBOT Soybeans
Price forecast for soybeans maintained.
unit Q1'15 Q2'15 Q3'15 Q4'15(f) Q1'16(f) Q2'16(f) Q3'16(f) Q4'16(f)
Soybeans USc/bu 990 963 947 890 905 920 925 900
850
950
1,050
1,150
1,250
1,350
1,450
1,550
1,650
USc /
bushel
CBOT Soybeans Previous forecast Rabobank forecast
37
Updates
38
Challenges
