Welcome Address from Platts. Andrei Agapi Managing Editor Agriculture S&P Global Platts

Transcription

1 Welcome Address from Platts Andrei Agapi Managing Editor Agriculture S&P Global Platts

2 S&P Global Platts introduction Private & Confidential 2

3 Platts Brent price assessment is the benchmark for >60% of the world s crude oil More than 230 Platts price assessments are benchmarks that underpin some 1,400 cleared financial contracts offered by Platts exchange partners: Editorial and market assessments are conducted with complete independence and impartiality 3

4 S&P Global Platts Operation Hubs Houston, US: Americas London, UK: EMEA Singapore: Asia-Pacific 4

5 APW - Asia-Pacific wheat market update Alexis Gan Editor, Agriculture--Asia alexis.gan@spglobal.com S&P Global Platts CME GROUP and S&P GLOBAL PLATTS Melbourne, Australia - August 2017

6 Agenda Australia APW wheat price reviews Supply/production situations Demand focussing on Indonesia Private & Confidential 6

7 Platts APW wheat FOB Australia Specifications Quality: Milling wheat, normalized to APW1: 10.5% min. protein (on 11% moisture basis), max. 12.5% total moisture, min. falling number of 300 seconds Volume: Typical export cargo sizes, normalized to 30,000 mt Timing: Typical spot cargoes, normalized to a loading days ahead of publication date Location: WA and SA ports, normalized to Kwinana. EC loading monitored for pricing consistency Unit of measurement: USD/mt Private & Confidential 7

8 Ample stocks in 2016/17 but volatility not seen in 3 years, weather & currency $/mt Platts APW CBOT SRW Second month c/bu Source: S&P Global Platts Private & Confidential 8

9 1-Jun 3-Jun 5-Jun 7-Jun 9-Jun 11-Jun 13-Jun 15-Jun 17-Jun 19-Jun 21-Jun 23-Jun 25-Jun 27-Jun 29-Jun 1-Jul 3-Jul 5-Jul 7-Jul 9-Jul 11-Jul 13-Jul 15-Jul 17-Jul 19-Jul 21-Jul 23-Jul 25-Jul APW price up 23% June-July, buoyed by weather and AUD $/mt APW hit highest price in two years at $263/mt FOB on July 13 c/bu APW CBOT CBOT up by $25/mt from 1 June to 12 July but APW was up $52 during the same period due to new crop worries and strong AUD Downtrend cushioned by very strong AUD, AUD appreciated 1% overnight from 12 July Source: S&P Global Platts Private & Confidential 9

10 Strong AUD cushioning sharp CBOT corrections after 13 July $/mt 270 /USD APW Wheat FOB Australia $/mt AUD AUD appreciated 3% from 1-15 June and 5.5% from late June-late July Source: S&P Global Platts Private & Confidential 10

11 Widening Bid-Offer Gap in Jun-Jul to $15/mt $/mt Source: S&P Global Platts Private & Confidential 11

12 $/mt Agriculture Record Australia production in 2016/17 at 35 M mt Exporters across different states scrambling to offload from Q4 16- Q AH2 APW ASW Protein spread to APW Higher production inversely reduced protein ASW accounted for 40% of the wheat produced, APW only 28% (down 7-8%) Discount of ASW to APW widened to $10-12 in order to get rid of the sheer volume of ASW Source: S&P Global Platts, Market data China, Philippine, India and Indonesia secured large volume secured large volumes from Q4 16-Q1 17 owing to big discounts Source: CBH Private & Confidential 12

13 Yield across Australia wheat belt above 5-year avg, SA & NSW very competitive in exports 000 mt Export volume except WA mostly higher 2015/ /17 NSW QSLD SA VIC WA 000 mt 12,000 10,000 8,000 6,000 4,000 2, s s mt Source: ABARES - NSW VIC QSLD SA WA / /17 Possible carryout to 2017/18 could be the highest in 10 years :Rabobank 0 NSW QSLD SA VIC WA Private & Confidential 13

14 Moving forward... Private & Confidential 14

15 Australia wheat ending stocks to fall in 2017/18 for the first time in 3 years Mil mt Wheat Production mmt Export % Ending Stocks-to-Use 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: ABARES Private & Confidential 15

16 Inelastic demand from APAC buyers for past 3 years ~50% Australia wheat export volume mt (Oct-May): 15.2 M mt was exported according to traders based on ABS statistics, leaving another 4.8 M mt for the next 3-4 months before new crop or risk very high carry of M mt to Source: CBH Private & Confidential 16

17 Indonesia s wheat import on the rise How would Australia recapture its market? Private & Confidential 17

18 Indonesia wheat consumption at a glance, 20% uptrend for food Source: APTINDO & USDA Population million million Wheat consumption Total wheat consumption 22 kg/capita 23 kg/capita 7.45 M mt 10.5 M mt Indonesia flour milling industry is highly competitive, with 32 flour mills and excess operating capacities (total installed capacities at 11.4 million mt/year). Dry noodles 4% Bread 26% Instant noodle 36% Wheat flour produced mostly for domestic consumption (~ 90-95%) as depreciated IDR in 2015 reduced import attractiveness, after ADD for flour import lapsed in Biscuits, snacks, etc 16% Wet noodle 18% Source: Australia Export Grain Innovation Centre Private &Confidential 18

19 Prices matters more for Indonesia Buyers sourcing for cheapest origins for blending after high wheat prices in 2013 CAGR over for wheat import at 12%, driven by changes in food consumption patterns (westernized and convenience food), & cheaper than other food such as rice vs instant noodle. In 2016, nearly 20% of the wheat imported goes to feed industry as ample feed wheat increased its competitiveness against other raw materials (corn) for feed sectors. Depreciated Indonesia rupiah against US dollars (Sept 2013 and Sept 2015), led to higher operating costs in increasing price sensitivities of wheat. 000 mt 12,000 10,000 8,000 6,000 4,000 2, Source: APTINDO & USDA Other Russia Ukraine US Canada Australia Private & Confidential 19

20 Observed Black sea transactions into Indonesia on the rise 000 mt Black Sea (Ukraine & Russia) Black Sea wheat to Indonesia increased Australia by ~18% in Q (totaling 527,456 mt vs 490, 297 mt in Q Feed wheat imports soar Import controls introduced Source: S&P Global Platts Private & Confidential 20

21 Black Sea competitiveness into SE Asia $15/mt minimal spread to APW to switch (feed) and $25 for food for 2015/16 $/mt UKR 11.5% discount to APW 0 Jul-15 Oct-15 Jan-16 May-16 Aug-16 Nov-16 Mar-17 Jun-17 Sep Buyers turned to Black Sea wheat amid higher Australia wheat prices owing to logistic delay and Indian demand Source: S&P Global Platts Private & Confidential 21

22 Black Sea competitiveness into SE Asia This season, $25-30 minimal spread to APW (feed) and $50-60 for food $/mt UKR 11.5% discount to APW 0 Jul-15 Oct-15 Jan-16 May-16 Aug-16 Nov-16 Mar-17 Jun-17 Sep $ Dryness & AUD pushed up APW export prices, spread widened to $50-60/mt in June-July -$50 Source: S&P Global Platts Private & Confidential 22

23 US wheat values spiked over supply concerns for HRW and spring wheat $/mt HRW 11.5% SWW 10.5% DNS 14% Oct-15 Jan-16 May-16 Aug-16 Nov-16 Mar-17 Jun-17 Sep-17 Source: S&P Global Platts Private & Confidential 23

24 Could Australia recapture market shares in ? 400 Price CFR SE Asia ($/mt) ASW UKR 11.5 US SWW 10.5 APW RUS 12.5 AH2 HRW 11.5 CWRS DNS 14 APH Protein % (dry basis) Source: S&P Global Platts Private & Confidential 24

25 Australia, Canada and Black Sea wheat - important in Indonesia flour consumption Q1 2016: 3.75 million mt Q : 3.28 million mt France 7% Ukraine 12% Others 15% Australia 39% Ukraine United 6% States 6% Russia 10% Others 7% Australia 58% Canada 14% Argentine 13% Canada 13% Source : Indonesia Statistic unit (BPS) Private & Confidential 25

26 Platts APW - additional metrics (*This is Platts-observed transaction data not the full actual trade flow) Australian deal volume in Calendar Year 2016 Percentage of Australian deals where both counterparties are known (2016) Percentage of Australian wheat exports captured (2016) Average bid-offer gap (since launch) Average price delta to actual transactions (after normalization) 7.1 mil mt 55% 38% $5.17/ mt $1.16/ mt Thailand 5% New Zealand 3% Middle East 8% SEA 6% Vietnam 6% China 2% Singapore 2% Japan 9% Philippines 11% Papua New Guinea 1% Indonesia 21% India 12% South Korea 14% Captured Australian deals per destination Source: S&P Global Platts Private & Confidential 26

27 Assessment Process Private & Confidential 27

28 S&P Global Platts Grains Methodology A live document containing all the specifications and assessment processes Details the specific dimensions of our assessments rences/methodologyspecs/grains-methodology.pdf Backbone of Platts prices Published online & updated regularly Private & Confidential 28

29 Assessment Do s Private & Confidential 29

30 Assessment Dont s Private & Confidential 30

31 Editorial Judgement An essential element Essential for qualitative data integration Allows editors to the quality of price points Allows for integration of other elements impacting grains prices. Foreign exchange, freight rates. Allows for a more accurate normalization process of related prices Private & Confidential 31

32 How to find our information ed PDF 4 Weeks Free Trial Mobile App (ios) «Platts Grains» on itunes 32

33 Thank You! Q&A Private & Confidential 33

34 Andrei Agapi Managing Editor Agriculture S&P Global Platts Black Sea Update AGIC GTA 1 August 2017

35 Agenda Market Update Why is the Black Sea region important? Spot price update GASC factor Harvest and logistics Black Sea Wheat index Q&A Private & Confidential 35

36 Black Sea wheat update Private & Confidential 36

37 Black Sea Region wheat exports Export Volumes in MY: Black Sea Wheat exports 90% higher than US 97% higher than EU 160% higher than AU Mil mt EU-26* US Black Sea** Linear (Black Sea**) % Compound Annual Growth Rate Russia Ukraine Romania Bulgaria 2% 8% % 62% *Excluding Romania & Bulgaria wheat exports to third countries **Russia, Ukraine, Romania & Bulgaria to third countries Source: S&P Global Platts, USDA Private & Confidential 37

38 Weather rally: Rise and Fall? Weather related worries in US helped Black Sea price increase Correction on CBOT not affecting Black Sea prices /mt $200 $195 $190 $185 $180 $175 Bullish factors: o Egypt Demand o VAT crackdown o Port logistics o Delayed harvest $170 $165 $160 $155 $150 CBOT SRW Sep '17 FOB Black Sea 12.5% 1-Jun 8-Jun 15-Jun 22-Jun 29-Jun 6-Jul 13-Jul 20-Jul Source: S&P Global Platts, ProphetX DTN Private & Confidential 38

39 Egypt s GASC - Origins Black Sea Region is the main supplier with 97% sales = 2.26 million mt committed before September 10 Majority of the sales are made from Russia FOB Novorossiisk: 96.5% of total volume Romania 26% France 3% Ukraine 8% Logistical squeeze in Novo and surrounding infrastructure Russia 63% Source: S&P Global Platts Private & Confidential 39

40 Egypt s GASC purchases well ahead last years 000 mt 7,000 6,000 5,000 4, ,000 2,000 1,000 0 Jul Jul Aug Aug Sep Oct Oct Nov Nov Dec Dec Jan Feb Feb Mar Apr Apr May Jun Jun Source: S&P Global Platts Private & Confidential 40

41 Russia: Harvest progress Mil Ha Source: Russian Ministry of Agriculture Private & Confidential 41

42 Russia: Delayed harvest = delayed exports Mil mt MY 2014/15 MY 2015/16 MY 2016/17 MY 2017/ Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun 1-26 July 17 Source: Russian Ministry of Agriculture Private & Confidential 42

43 Black Sea wheat index Private & Confidential 43

44 FOB Black Sea Wheat Index Based on physical trades, bids and offers Platts usual observed bidoffer range of $2-5/mt Observed wheat trades occur on average within $0.33/mt of the index Private & Confidential 44

45 Platts FOB Black Sea wheat (Russia, 12.5%) Quality: Russian Milling wheat, normalized to paper spec 12.5% protein Volume: Handy to Panamax, normalized to 25,000 mt Timing: Loading days ahead of publication date Location: Russian Deep Sea ports, normalized to Novorossiisk Unit of measurement: USD/mt Private & Confidential 45

46 Thank you! Questions & Answers 46

47 CORN - Asia-Pacific Outlook Samar Niazi Pricing Specialist, Editor Agriculture, S&P Global Platts CME GROUP and S&P GLOBAL PLATTS Melbourne, Australia - August 2017

48 Asian corn market Private & Confidential 48

49 Asian markets - Short-term trend - Brazilian corn currently the cheapest FOB origin. Japanese & Korean concentrating upon Brazil origin. - Argentine corn crop delay into ports and less competitive against Brazil. Logistics issues and strikes delaying buying and loading in Argentina. - South Korean millers bought cheapest corn in 2017 buying million mt during June, for delivery in Sep-Oct-Nov. - Lowest deal transacted at $177.50/mt CFR South Korea 2 port KOCOPIA (27 June) - Japanese buyers buy Brazil cargoes FOB Santos/Tubarao during 2H July for August-September demand Private & Confidential 49

50 Asian markets - Short-term trend - Vietnamese feed millers hit hard since April- May, by lower hog prices and China border shutdown. - Trading activity at standstill. Domestic distributors sitting on corn and soybean meal stocks, asking for shipment deferrals on May- August cargoes. - 3 parcels traded in last week Prices as low as $ /mt CFR South Vietnam, Aug- Sep shipment. - Indonesian feed millers use domestic feed components, especially corn, which causes reduced livestock margins, since feed price is government controlled. Private & Confidential 50

51 Platts Corn CFR South Korea launched 22 Aug? Private & Confidential 51

52 CFR South Korea Corn A global destination for corn $/mt Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-17 Source: S&P Global Platts Private & Confidential 52

53 Reconstructing replacement value $/mt Origination to South Korea freight (USD/mt) FOB basis at origin (USD/mt) CBOT Corn (USD/mt) - 13-Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-17 Private & Confidential 53

54 Actual CFR price at a discount to replacement $/mt Origination to South Korea freight (USD/mt) FOB basis at origin (USD/mt) CBOT Corn (USD/mt) - 13-Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-17 Private & Confidential 54

55 Discount vs replacement value $/mt $ $ $ $ Replacement Value $ Platts Corn CFR South Korea Average discount to replacement: $3.41/mt $ Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-17 Private & Confidential 55

56 CFR South Korea Corn Index Vs. Deals $/mt Platts Corn CFR South Korea Deals (normalized) Average accuracy transactions vs Index 99.88% Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun-17 Private & Confidential 56

57 Bids, offers and deals $/mt $ $ $ Platts Corn CFR South Korea Best Bid Deals (normalized) Best Offer $ $ $ $ $ Average delta transactions vs Index $0.218/mt $ Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-17 Private & Confidential 57

58 Correlation v CBOT $/mt $/mt CBOT (c/bu) Platts Corn CFR South Korea Correlation vs CBOT front-month Correlation vs CBOT front-month prior day Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

59 Korean corn deal capture Corn transaction volumes observed into S. Korea Share of Korean market captured (mil mt annualised /17) In 000 MT Not captured 27% Captured 73% Both counterparties known? No 6% Yes 94% Private & Confidential 59

60 Platts Corn Daily Heards The Platts daily round up of the Asian corn market Private & Confidential 60

61 Advantages of Indexation Private & Confidential 61

62 CFR South Korea Corn Index - Measuring the true value of CFR South Korea corn on a daily basis, against a well-defined methodology. - Provides a daily price reference for buyers and sellers instead of waiting for tender transacted price. - Spot market: Spot indexing minimizes flat price risk for buyers and sellers. Always getting the market price. - On the spot market, indexation protects against big moves in the market. Private & Confidential 62

63 Index-linked contracts on physical cargoes? Frame agreements (long-term contracts) Index-linked spot transactions (floating price) Some benefits: - New trading strategies that allow better control of price risk - Can help reduce likelihood of defaults - Removes price tension between buyer-seller - For end-users, helps secure continuous supply, regardless of market scenarios (drought, etc ) 63

64 CFR South Korea Corn Index compared to CBOT - Price is multi-origin, depends upon most competitive origin on any given day. - Accounts for freight fluctuations. - True CFR South Korea price based on actual CFR transactions, bids and offers collected from traders and millers. - Provides a complimentary Asian price to CBOT pricing. - Physical price not moved by fund trading activity. - Acts as a close proxy for Japan and Taiwan markets after incorporating freight differentials. Private & Confidential 64

65 Peeking into the future Swap Contract? - Australian APW wheat and Black Sea wheat assessments have led to swaps contract demand. - So far, 7 trading firms and 1 miller have expressed appetite for a Korean corn derivative contract - Buyers and sellers could hedge risk on a futures contract using the CFR South Korea price assessed daily, which is 99.88% correlated to physical transaction values - Would be a clean hedge for Japan, South Korean and Taiwan, or about 30 million mt of corn Private & Confidential 65

66 Introducing our Asia team Platts Editorial Asia Alexis Gan Editor, Wheat Platts Editorial Asia Samar Niazi Editor, Corn Platts Commercial Asia Atin Kapur Sales Manager, Oceania and India Platts Commercial Asia Frances Tho Business Development Manager, Singapore/Australia Platts Editorial Asia Daisy Tseng Editor, Sugar & Corn Platts Editorial Asia Fay (Xiaojuan) Gao Associate Editor, Ethanol Private & Confidential 66

67 Afternoon Tea

68 Wrap Up Andrei Agapi Managing Editor Agriculture S&P Global Platts