Black Sea Grain Hofstad, INTL FC STONE 2014.pdftaken as a recommendation to buy or sell these...
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Page 1 Commodity Risk Management Daniel Hofstad Commodity Risk Management Consultant- CIS and Black Sea Region INTL FCStone Ltd Black Sea Grain Asia’s Next Supplier www.intlfcstone.com
Transcript of Black Sea Grain Hofstad, INTL FC STONE 2014.pdftaken as a recommendation to buy or sell these...
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Commodity Risk Management
Daniel Hofstad Commodity Risk Management Consultant- CIS and Black Sea Region
INTL FCStone Ltd
Black Sea Grain Asia’s Next Supplier
www.intlfcstone.com
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Current Black Sea Exports To Asia & China, and Future Trends
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Asia’s Black Sea Imports
All Wheat Feed Barley Corn
2,074,100 51,060 3,787,000
Marketing YTD
2.4 MMT Corn
960k MT Corn
5.9 MMT All Grain
Jul-Dec
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Asia’s Black Sea Imports YTD
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Asia’s Black Sea Corn Imports YTD
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Asia’s Black Sea Wheat Imports YTD
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China’s Black Sea Imports
MY 2012/2013: 250 MT of Corn
(test batch)
YTD 2013/2014: 300,000 MT of
UKR Corn
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• Large BS crop this year for both corn and wheat
– Led to price competitiveness, particularly with US wheat – Higher proportion of BS milling wheat to feed wheat TY
• Government to Government trade agreements
– China’s 3 billion USD deal with Ukraine opened door for corn imports (nearly 1 million MT potential this year??)
• Increased consistency in quality of BS wheat and corn exports – Logistics and handling efficiencies of BS ports improving
• Segregation, storage and drying allowing for higher quality wheat/corn
Contributing Growth Factors
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• Corn shipments to China should continue, but
slow – Logistics and handling efficiencies of BS ports improved – Delay in SA crop would increase potential shipments
• Old crop wheat shipments nearly done, though new crop… – price competitiveness should remain – Protein quality for new crop??
• Logistical issues with SA new crop could create further demand for BS corn – $275 US Gulf corn delivered April-July ($53 freight) – $265 SA corn delivered Jul soonest ($47 freight) – $280 cash FOB BS March-May ($55 freight)
Forecast for Remainder of MY 13/14
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Black Sea Export Forecast
CORN 2013/2014 2012/2013
Planted Area 10,400,000 9,745,000
Yield (Weighted) 5.11 4.36
Harvested Area 10,119,875 9,218,745
Production 51,727,788 40,455,800
Carryover Stocks 4,296,800 3,840,000
Imports 255,000 585,000
Total Supply 56,279,588 44,880,800
Domestic Demand 24,300,000 22,630,000
Export 26,750,000 18,150,000
Total Demand 51,050,000 40,780,000
Carryout 5,229,588 4,100,800
CO/USE 10.2% 10.1%
MILLING WHEAT 2013/2014 2012/2013
Planted Area 48,325,000 48,350,000
Yield (Weighted) 2.12 1.75
Harvested Area 46,818,500 41,667,820
Production 99,312,685 71,705,000
Carryover Stocks 13,717,750 23,818,560
Imports 827,000 2,032,000
Total Supply 113,857,435 97,555,560
Domestic Demand 61,000,000 60,480,000
Export 36,100,000 25,950,000
Total Demand 97,100,000 86,430,000
Carryout 16,757,435 11,125,560
CO/USE 17.3% 12.9%
Production +27.8% Production +38.5% Exports +47.4% Exports +39.1%
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Black Sea Production 2014/2015
CORN 2014/2015 2013/2014
Planted Area 11,500,000 10,400,000
Yield (Weighted) 5.10 5.14
Harvested Area 11,261,250 10,179,875
Production 57,419,250 52,356,708
Carryover Stocks 4,408,508 4,246,800
Imports 255,000 255,000
Total Supply 62,082,758 56,858,508
Domestic Demand 25,400,000 24,200,000
Export 32,100,000 28,250,000
Total Demand 57,500,000 52,450,000
Carryout 4,582,758 4,408,508
CO/USE 8.0% 8.4%
MILLING WHEAT 2014/2015 2013/2014
Planted Area 47,525,000 48,325,000
Yield (Weighted) 2.07 2.12
Harvested Area 46,352,750 47,076,500
Production 96,000,913 99,600,550
Carryover Stocks 13,470,310 11,942,760
Imports 727,000 827,000
Total Supply 110,198,223 112,370,310
Domestic Demand 62,550,000 61,000,000
Export 35,950,000 37,900,000
Total Demand 98,500,000 98,900,000
Carryout 11,698,223 13,470,310
CO/USE 11.9% 13.6%
Production +9.67% Production -3.6% Exports +13.6% Exports -5%
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Barriers / Issues to Black Sea – Asian Grain Trade
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• Political and or Administrative Barriers
– Only recently has China approved corn • RISE Plc, RISE-Maximco, PJSC “SFGCU” (3 approved UKR corn suppliers)
• Quality Issues
– Though improving, consistency remains an issue due to handling and storage (Japan only last year started buying BS wheat)
– Year to year, wheat crop protein levels fluctuate, FW to MW – Corn quality (broken kernels) has also been an issue
• Economic barriers – Demand is influenced heavily by price
• BS grains must compete most directly with US and SA, (AUS for wheat)
• India as an exporter
Contributing Growth Factors
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Flat Price (Corn FOB)
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Delivered Price China (Corn)
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Current Prices (Corn to China)
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Corn Prices
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Wheat Prices
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Basis Pricing for Corn Imports
• Corn forward price of cash contract determined
as pre-agreed premium (basis) to CME futures – Basis = spot or forward cash price – futures price – Basis determined / agreed upon at time of contract execution – CME price established by buyer at anytime during life of contract
• Current system for imports from South America and United States, including Canada. – Allows for seamless basis position trading and comparison – Buyers/sellers can initiate longer term purchases/sales – Easily hedged (CME price risk)
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Black Sea Basis (Corn)
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New Routes / Markets (Russia)
• Russian Far East Grain Corridor
– Port development at Zarubino, 10 MMT/year – Targeting China, Japan, Korea – UGC, Summa Group primary developers – Would source grain for Far East, Siberia, Kazakhstan – Thus far limited to a few vessels of FB to Japan via
Vladivostok
• Economics tricky – Logistics/Infrastructure costs high (+$35/MT) – When Russian crop large and cheap, grain flows east – Siberian vs. Southern Basis needs to be +$20 or less
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Thank You!
Matt Ammermann INTL FCStone Limited
+44 (0) 20 3580 6087 Office
+44 (0) 20 7626 6030 Fax
+44 (0) 77 8561 0551 Mobile
Yahoo I.M: m_ammermann
Skype: matt.ammermann
Daniel R. Hofstad INTL FCStone Limited
+44 (0) 20 3580 6076 Office
+44 (0) 20 7626 6030 Fax
+44 (0) 77 8561 0558Mobile
Yahoo I.M: danhfcstone
Skype: daniel.hofstad
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Disclaimer
Disclaimer
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