the world grain market and future expectations

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


tel: +31 20 628 64 37

e-mail: [email protected]

Visit also ABN AMRO Group Economics on the internet:

/

Your keynote speaker:

Information available at:

Group Economics

insights.abnamro.nl/en

mailto:[email protected]

Introduction: About ABN AMRO Bank NV

4

ABN AMRO Bank N.V.

Corporate Banking Focus on Medium and large enterprises with a worldwide

customer database

Commercial Clients

Capital Markets Solutions

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ABN AMRO

Commercial Finance ABN AMRO Lease

Retail & Private Banking Focus on consumers and small enterprises within the Dutch

Economy

Retail

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


22

Higher volatility through:

Supply/Demand

Technical analysis

Sentiment

Broker trading


Volatility is not new

23


Availability of water

24


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


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


27

Population growth

World population

% living in cities


28

Growing world population:

More need for food and feed

Increasing demand for protein

Less arable land


29

Economic growth:

Higher incomes

Increasing demand for protein

Changing variety in diet


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)


31


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)


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)


Price forecasts

34

0

100

200

300

400

500

600

700

Wheat Corn Sugar

Further information

Frank Rijkers MSc.

sector economist – Agrifood & Agri-commodities


tel: +31 20 628 64 37

e-mail: [email protected]

Visit also ABN AMRO Group Economics on the internet:

/

Your keynote speaker:

Information available at:

Group Economics

insights.abnamro.nl/en

mailto:[email protected]

Questions?

Thanks for your attention!