MARKET WIRETIME TO PLAN

GM CANOLA DATA DASHBOARD

EU-CHINA PRICES (A$ TRACK EQ.) KWINANA GM SPREAD ($AUD)

2020/21 EXPORT MATRIX (‘000 t) GEELONG/KWINANA PRICE ($AUD/t)

PRODUCTION MATRIX TOTAL CANOLA ESTIMATES

GM CANOLA MARKET REPORT

GM CANOLA BID SHEETS

Information provided in this document have been sourced from Lachstock Consulting along with current advertised company bids. Lachstock Consulting Pty Ltd ABN 70 127 367 784 is the holder of an AFSL 320 562. The information and opinions within this document are of a general nature only and do not take into account the particular needs or individual circumstances of investors. Neither Lachstock Consulting Pty Ltd nor its subsidiaries give any warranty, whether express or implied, as to the accuracy, reliability or otherwise of the information and opinions contained herein and to the maximum extent permissible by law, accepts no liability in contract, tort (including negligence) or otherwise for any loss or damagessuffered as a result of reliance on such information or opinions.

NB* Riverina 2019/20 bids for February to September 2020 pickup2020/21 bids for January to April 2021 pickup

LOCAL MARKET UPDATERain across much of the east coast has changed the mood amongst farmers, bringing optimism for a more positive season ahead, especially in NSW.

WA: WA prices remain in the $615 range for both old season and the new season ahead. Planting intentions show a mix of results in this early planning window. The Geraldton zone looks to be headed for a reduction in acres while the Lower Great Southern zone might see higher areas as farmers look to catch up on the rotation after the late break last year. For the rest of the state we can expect an unchanged area (give or take).

NSW/VIC: Little changes this week on east coast markets. We have another export cargo on the stem in Portland and farmer selling continues to be benign. Planting intentions in NSW are generally lower. The central, northern and western areas are all coming to terms with a series of poor years and will be looking to get runs on the board through the comparatively higher priced grain markets. This may cause some issues for rotations in future years (leading to a stronger swing back to canola at that time), but for now they need to put something in the bank. For the SE areas of NSW, it’s business as usual and sticking to rotations. In the southern river areas of NSW, where they can, they will stick to rotations, but there is a theme of lower oil contents in recent tough years, and again, looking to bank on the high cereal prices.

In VIC, we are seeing a slight switch out of canola into faba beans and wheat in the south, whilst many other areas will remain largely unchanged.

It’s still early days, with two months until the planting window opens up, moisture between now and then will obviously have something to say about the current planting intentions.

GLOBAL MARKET UPDATEThe Coronavirus impact is still very much an unknown with the severity of the outbreak having now overtaken SARS. The debate about demand delays or demand destruction continues. Logistics are going to be a challenge in the short-term and, for perishable commodities like beef, this is a bigger deal than, for say, canola. Carrying grains and oil seeds is a far easier feat than fresh, chilled or frozen meat.

We have reduced EU imports by 250 kmt due to revisions of carry-in and FSR. Crush in the EU looks solid, we are at 23.4 mmt and, with margins remaining very strong, this is a reasonable place to be. The only flag is recent downtimes as plants are longer than expected, which might knock 100-200 kmt off that figure once we are all said and done. There is still a lot of pressure to get seed from Canada into Europe, we are at 2.75 mmt today, with 2 mmt believed to have been booked so far.

In Canada we reduced the Canadian old crop production number following the StatsCan report and poor winter weather that will likely see the abandonment of winterised canola. We still find it hard to get down to the StatsCan number at this point given the anecdotal feedback that came through during the season. The stocks report was a touch lower than expected, and down on last year, but it’s hard to draw direct parallels to what that means for production. We still have canola standing in the fields. Into the new season, we reduced Canadian production a fraction due to the flow-on from trend yield reduction from 2019/20’s drop. We are banking on a return from China, with exports at 4 mmt (1.75 mmt 2019/20) which sees us tightening in Canada.

Globally we continue to trend tighter and show another tight situation ahead. Clearly there are two major flags:1) Where 2019/20 production really ends up 2) What China does in 2020/21

CASE STUDY – TIME TO PLANIt’s planning season, what can we expect in the year ahead for Canola markets and what should we be keeping an eye out for?Everyone always wants a crystal ball look at the year ahead, something we all wish we could deliver. But in the absence of a crystal ball, let’s take a look at what the main drivers are likely to be in the year ahead.

Firstly, rotation is always the most important factor. Where moisture is available it brings choice, and the decision is made on the longer-term sustainability of a profitable cropping enterprise. For those that had late breaks last year, the agronomic pressure is on to re-instate more canola into the system. For those that haven’t had favourable seasons for two years, the financial pressure is on to find a solution that balances risk and reward in what is a critical situation.

In the market space, globally we have a situation whereby Europe is likely going to be in the same situation as this year - short and needing a lot of imports. Canada still has plentiful canola supplies; however the big swing factor is how China participates in 2020. Will they resume imports from Canada? Politically we still have a lot of water to go under the bridge, but if this partial “blockade” continues to the end of 2020 then China is going to have some extreme structural challenges with managing its canola oil supply. Holding out for 12 months so far has been impressive, but can we go another full 12 months without breaking markets? Clearly this is a potentially supportive factor for global canola, combined with the tightness in Europe, it shows some positive potential for canola markets.

Global vegetable oil has a lot of players bullish, which will bring with it a lot of volatility, this will influence canola.

Global soybeans have a large crop potential in South America, the bears are watching this space. Then we have our entire growing season to get through.

This document may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.TruFlex® and Roundup Ready® are Registered Trademarks of the Bayer Group.