GLOBAL GRAINS Kiev April 2019 thomas.deevy@Cerealcom.com Trends in B Black S Sea Wheat Markets
Agenda T Trends Romania Demand Target Wheat Trade Flows Supply Side / Price Driver 2019
Romania Prod oducti ction on T Tren end Romania Grain and Oilseed Production (MMT) 30 30 Grain & Oilseed Production (MMT) Grain & Oilseed Production (MMT) 28 25 25 23 20 20 18 15 15 13 10 10 8 5 5 3 0 0 Soft Wheat Maize Sunseed Barley Rapeseed Soybean Линейная ( Trend)
Roman ania A a Area ea (Static) c) Romania Grain and Oilseed Harvest Area (MHA) 8 Grain & Oilseed Harvest Area ( MHA) 7 6 5 4 3 2 1 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Soft Wheat Maize Sunseed Barley Rapeseed Soybean How t Ho to e explain t the c e chan ange? e?
Roma mani nia Y Yield T Trend nd Romania Grain and Oilseed Yield ( T/HA ) 5,5 5,5 Grain & Oilseed Yield ( T/HA) Grain & Oilseed Yield ( T/HA) 5,0 5,0 4,5 4,5 4,0 4,0 3,5 3,5 3,0 3,0 2,5 2,5 2,0 2,0 1,5 1,5 1,0 1,0 0,5 0,5 Maize Sunseed Barley Rapeseed Soybean Soft Wheat
Roma mani nia Evolut ution T n Trend nd
Romania Ag Ag signifi ficant transformations Romanian Farm Size Evolution (size in %) 100% Romania Farm Size ( % of total Farm Area) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA
Rom omania 1990 1990’s s 4.6 Subsistence Million farming farms Central Ce Ave farm Farm Fa Demographic size 2.85ha Sys ystem Wheat Rural Exodus Yields ~2.5 t/ha
~72% of Romanian Farms Rom omania ( (201 2010) les ess t s tha han 2 2 Hec Hectares! s! +40 40% R Romanian F Farmer ers s +65 Years of Age
Roma mani nia a an ev evolving ma market Romanian Farm Size Evolution (size in %) 100% Romania Farm Size ( % of total Farm Area) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA Exa xample
CEREALCOM Production Family Business Innovation / Technology Concentrated Cultivate +25 KHA 200kt – EU Origin & NON GMO
Advanta tage Cerea ealcom om Qu Qualit ity
CEREALCOM Origination 600kt Silos Road Rail Danube
CEREALCOM Trading Innovation / technology Logistic Adv Export 1MMT Potential
Roma mani nia an an e evolving m mark arket est. 2028 2028 Romanian Farm Size Evolution (size in %) 100% Title 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 5 HA 5 - 50 HA 50 - 100 HA Grater than 100 HA
Romania Poten ential N National Romanian G Grain & & Oilseed P Production ~35MMT Romanian Production Forecast 2028 (MMT) 40 35 30 25 20 15 10 5 0 Wheat Corn Barley Sunseed Soybeans Rapeseed
Romania Poten ential N National Romanian G Grain & & Oilseed Ex Exports ~27MMT Romanian Export Forecast 2028 (MMT) 30 25 20 15 10 5 0 Wheat Corn Barley Sunseed Soybeans Rapeseed
Product ction P Poten ential al Demand S Side T e Tren end
Global W Whea eat Imp mport T Trends nds Top 2 25 Global W l Whe heat I Import C Countrie ies (MMT) 160 100% Top 25 importers as a % of Total Global Wheat 140 80% 68% 68% 120 MT) (MMT 60% Global wheat imports ~175MMT 100 orts ( 40% Impor 80 Imports 20% Top 25 importers 68-70% Wheat I 60 0% 40 + 40% on past 10 Years -20% 20 0 -40% 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Top 25 importers (+1MMT) Top 25 importers VS. Global (%)
Target get Ma Market et Whe heat I t Impo port T t Trends Top 3 35 Global W l Whe heat I Importin ing C Countries ( (MMT) 160 100% Top 35 importers as a % of Total Global Wheat 140 80% 66% 66% (MMT) 120 60% Global wheat imports ~175MMT 100 Imports 40% Importers 80 20% Top 35 importers 66 - 68% eat I 60 Whea 0% 40 + 44% on past 10 Years (static) -20% 20 0 -40% 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 Top 35 importers (+1MMT) Top 35 importers VS. Global (%)
10-15 U 10 15 U$D Logistic A Adv dvantage ~30 30-40 U 40 U$D Freight A Advanta tage ge ~40 40-50 U 50 U$D
Trade F Flow T Trends
Top 4 account for 60% of total global exports Gl Global W Whea heat EU / Black Sea eroding US mkt share Export T Trends Improved production / Planting trend
EU Black Sea eroding French mkt share EU Exp xport T Trends Cost of production Improved Quality / Milling standard
EU Wheat E Exporter ers (Aver erage, e, E Ex - EU ex exports) Wheat Expor orts Bulgaria Bul 4% 4% Pola land 8% 8% Germany ny 18% 18% Ro Romania 21% 21% France Black S Sea W Wheat E Exporter ers (5 5 Year A Ave.) 34% 34% Other members rs 15% 15% Uk Ukraine Expor orts 29% 29% Romania ia Expor orts 11% 11% Rom / Ro / Bul ~18 18-20 20% B Black S Sea Russia ia Expor orts Rom / Ro / Bul ~ 2 ~ 25-27% E 27% EU 53% 53% Bulgaria Expor orts 7% 7%
Typical Expo port P Program Time A e Advan antag age Typi pical l Romania W Whe heat E Export Program ( (5.5 M MMT A Ave.) 20% 120% 18% 18% 5 Year A 100% 100 97% 97% ce (%) 100% 92% 92% 16% 86% 86% Ave. C Pace 14% 78% 78% 80% . Monthly P 71% 71% Cum 12% 12% 64% 64% umulativ 56% 56% 10% 60% r Ave. Mo 47% 47% 8% 41% 41% ive P 40% 5 Year A Pace 6% 30% 30% 4% (%) 20% 12% 12% 2% Monthly Pace left Axis Cumulativ ive P Pace Ri Right A Axis 0% 0% July August Sept October Nov December Jan February March April May June 5 Year Ave. Monthly Pace (%) 5 Year Ave. Cumulative Pace (%)
Trends i in Markets Supply
Gl Global Supp upply T Tren ends First production decline in 5 years Globa bal W Wheat P Produc duction ( n (MMT) -30MMT Yr. on Yr. 80 80 (MMT) 73 73 71 71 56 56 60 60 48 48 in Production 40 40 14 14 8 -39MMT on Average 18 18 3 20 20 9 16 16 7 ange i 0 Chan ar C -20 20 -8 -14 14 Year -14 14 on Y -40 40 Year o -30 30 -38 38 -38 38 -22 22 -60 60 Year o on Y n Yea ear C Cha hange ge 15 Y Yea ear a aver erage
First production Black Sea S Supply T Trends decline in 5 years -17MMT Yr. on Yr. Black S Sea ea W Whea eat P Production Y Yea ear o on Y Yea ear C Change ( (MMT) 45 45 (MMT) 35 35 35 35 29 29 28 28 28 28 -22MMT on Average Change in Production 25 25 13 13 14 14 Typical production 5 15 15 9 5 5 4 rebound? 5 -5 -5 -5 -6 -15 15 Year C -25 25 -17 17 on Y -31 31 -35 35 Year o -40 40 -45 45 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year on Year Change (MMT) 15 Year Average
First production Price Dr e Driver er 201 019 decline in 5 years Globa bal W Wheat P Produc duction m n minus nus C Cons nsum umption ( n (MMT) -7MMT Yr. on Yr. 60 60 Year on Year Change in Production minus 48 48 50 50 37 37 40 40 25 25 30 30 Could we repeat Consumption (MMT) 30 30 25 25 3 21 21 21 21 21 7 21 2004 or 2008? 20 20 10 10 -3 0 -10 10 -4 -7 -2 -20 20 -22 22 -30 30 -26 26 -33 33 -28 28 -40 40
Price Dr e Driver er 201 019 Funds Short US Fund Fund P Posit itio ion i in n Whe heat a and C nd CME W Whe heat ( (Sep) Fut Futures Chicago U$D/MT Fund Position (*1000 Contracts) Chi & KC Wheat 125 125 Funds short 310 310 Kansas CME Wheat Sep Futures Contract USD / MT 75 75 290 290 270 270 25 25 250 250 -25 25 230 230 -66 66 -43 210 210 -75 75 -62 62 -51 51 190 190 -125 125 170 170 170 170 -175 175 150 150 Fund Wheat Position Chi Fund Wheat Position KC 10 Year Ave Fund position 5 Year Ave Fund position CME in U$D /MT
Su Summary
Romanian Export Forecast 2028 (MMT) Romania P Poten ential 30 25 Typi pical l Romania W Whe heat E Export Program ( (5.5 M MMT A Ave.) 20 20% 120% 15 18% 5 Year A 18% 100% 100 97% 97% ce (%) 100% 92% 92% 16% 10 86% 86% Ave. C Pace 14% 78% 78% 80% 5 . Monthly P 71% 71% Cum 12% 12% 64% 64% umulativ 56% 56% 10% 0 60% r Ave. Mo 47% 47% 8% 41% 41% ive P 40% 5 Year A Corn Barley Sunseed Soybeans Rapeseed Pace 6% 30% 30% 4% (%) 20% 12% 12% 2% Monthly Pace left Axis Cumulativ ive P Pace Ri Right A Axis 0% 0% July August Sept October Nov December Jan February March April May June 5 Year Ave. Monthly Pace (%) 5 Year Ave. Cumulative Pace (%)
Target get Ma Market et Whe heat I t Impo port T t Trends Top 3 35 Global W l Whe heat I Importin ing C Countries ( (MMT) 160 100% Top 35 importers as a % of Total Global Wheat 140 80% 66% 66% (MMT) 120 60% 100 Imports 40% Importers + 44% on past 10 Years (static) 80 20% eat I 60 Whea 0% 40 -20% 20 0 -40% 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 Top 35 importers (+1MMT) Top 35 importers VS. Global (%)
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