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This material has been prepared by ConsiliAgra who provides research market commentary and trade recommendations as
part of his or her solicitation for accounts and solicitation for trades; however, ConsiliAgra does not maintain a research
department as defined in CFTC Rule 1.71. ConsiliAgra may trade in derivatives for their own accounts or for the accounts of
others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term
strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or
liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or
commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged
positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.
Macro element – uncertainty, uncertainty, uncertainty
Policy uncertainty – higher in 2019 – it used to be during a time of crisis, investors asked “what will the government do
for us?” Now they are questioning, “what else will they do to us….”
World growth – likely slower in 2019…. Will it be a growth or no growth cycle? World Bank = 2.9%
Global economy – less active – more & more capital preservation strategies?
U.S. Fed – become more dovish? 2 rate hikes? Cost of debt financing for U.S. farm sector an increasing challenge
Trade wars & tariffs – Mr. Tariff Man versus the rest of the world… beginning with China
Global food system – key drivers: food safety, sustainability and food traceability
4.00%
3.50%
1.50%
1.00%
0.50%
0.00%
Barley Wheat Corn Soy + canola
World soy supply cushion & the difference between now and previous years
2015/2016
demand / dietary
2014/2015 shift continues.
800
2013/2014
2012/2013 It puts soybeans
2011/2012 at a very
600
2010/2011 susceptible
2009/2010 place of a supply
2008/2009 shock in either
400
2007/2008 major exporter:
2006/2007 Brazil or the
2005/2006
United States 200
2004/2005
2003/2004
CLEARLY – no
2002/2003
2001/2002
major production 0
2000/2001
issues for 2018-
19
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
World soybean production vs consumption – key theme for price forecast outlook
-25,000 -20,000 -15,000 -10,000 -5,000 0 5,000 10,000 15,000 20,000 25,000
World canola + sunflower supply cushion & the difference between now and previous years
50
World canola supply
cushion = 31.7 days
40
Canola Sun
World canola + sunflower consumption – canola flat with sunflower in growth phase
World sunflower consumption
World canola consumption
60,000 160
80,000 250
World canola
70,000 demand looks to 140
50,000
200
plateau as EU
steps away from 120
60,000
biofuel production. 40,000
100
50,000
150
Daily canola
40,000 30,000 80
consumption =
100 195KMT / day 60
30,000
20,000
20,000
World sunflower 40
50 demand remains
10,000
10,000 in growth phase 20
0 0 Daily sunflower 0 0
consumption =
136KMT
Canola Daily Sun Daily
World veg oil supply cushion – multi year lows but……. Palm oil the bearish factor
World veg oil supply cushion - days World palm oil stocks + its own supply cushion
70 Global veg oil 12,000 80
supply cushion
60
at a multi-year 10,000
70
consumption
0 and trade 0 0
World major veg oil production vs consumption – key for assessing the price environment
-3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Palm Canola Soy Sun
Back to soybeans and more importantly soymeal
This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any commodity.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.
The who and where of world soybean ending stocks Brazil ending stocks - world's largest exporter
30,000 45.00%
Argentina ending stocks - world's largest reserve 40.00%
MY2018-19 25,000
40,000 45.00% 35.00%
35,000 40.00% projections as to 20,000 30.00%
35.00%
30,000
30.00%
who stores and 15,000
25.00%
25,000 20.00%
20,000
25.00% has the world’s 10,000 15.00%
20.00% soybeans
15,000 10.00%
15.00% 5,000
10,000 10.00% 5.00%
5,000 5.00% Argentina – 0 0.00%
0 0.00%
35.8%
Brazil – 18.5%
China ending stocks - world's largest importer U.S. ending stocks - world's most transparent market
China – 17.2%
30,000 30.00%
25,000 35.00%
30.00% U.S. – 22.5% 25,000 25.00%
20,000
25.00% 20,000 20.00%
15,000 20.00% U.S. follows the 15,000 15.00%
10,000 15.00% trend in wheat
10,000 10.00%
10.00% and corn for
5,000 5,000 5.00%
5.00% world buyers
0 0.00% 0 0.00%
U.S. crush margins – remain very profitable – record monthly crush repeatedly
Argentina - struggle
U.S. soymeal exports - MY2017-18 a new record European soymeal import demand - flat but origination higher to come back online
16,000 25.00% from U.S. with the 2018-19
30,000 60.00% crop not until April-
14,000 May 2019
20.00% 25,000 50.00%
12,000
U.S. soymeal
demand has
benefited from the
10,000 20,000 40.00%
15.00% smaller soymeal
supplies ex-Argentina
8,000
15,000 30.00%
10.00% Record U.S. soymeal
6,000
export program
10,000 20.00% achieved for 2017-18
4,000
5.00%
5,000 10.00%
Strong export
2,000 demand continues
with Brazil exporting
0 0.00% 0 0.00% soybeans and slow-
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
2018/2019
steady crush in
Argentina
World soy crush capacity expands – reduces need for soymeal export trade: hurts Argentina longer-term
World soymeal demand reduces reliance on imports World soymeal export trade - flat over past 5 years
70,000 30.00%
250,000 40.00%
Does the
35.00% market 60,000
25.00%
200,000 underestimate
30.00%
the global shift 50,000
– increase in 20.00%
25.00%
150,000 crush capacity
40,000
20.00%
while soymeal
exports have 15.00%
100,000
15.00% been largely 30,000
flat in the past
10.00%
10.00% 5 years despite 20,000
50,000 demand
5.00% growth of 4- 5.00%
6%? 10,000
0 0.00%
0 0.00%
Imports as % of demand
World soybean exports – led by Brazil + U.S. as world crush capacity expands
Brazil + U.S. dominate world soy export trade World soy export trade dominated
90,000 100.00%
by Brazil + U.S. – forecast to 82.8% of
world trade (2018-19) versus peak of
80,000 90.00%
87.6% in 2017-18 as Argentina
70,000
80.00% suffered its epic drought in early
70.00% CY2018
60,000
60.00%
50,000 Brazil exports forecast = 81MMT
50.00%
40,000
with the majority of that tonnage
40.00% likely to end up in China (will do
30,000
30.00% 84MMT for CY2018)
20,000
20.00%
U.S. exports forecast = 51.71MMT –
10,000 10.00% with numerous origins / remainder
0 0.00% of world buyers focused on U.S.
origination. U.S. will need some
China biz if it’s to hit this USDA target
Brazil U.S.
Brazil – does a smaller 2018-19 crop really change the world trade flow grid?
Exports dominate Brazil soy production – with its crush capacity largely flat - stagnant
Brazil soy exports - % of its production Brazil crush demand - as a % of its production
Rule of thumb –
90,000 70.00%
as goes Brazil soy 50,000 70.00%
production, so 45,000
80,000
60.00% goes its export 60.00%
50.00% MY 50.00%
35,000
60,000
40.00%
Bigger 30,000
50,000 40.00%
production =
25,000
40,000
bigger exports
30.00% 30.00%
20,000
30,000 Brazil crush
15,000
20.00% “taps” out 20.00%
20,000 between 40- 10,000
10.00% 45MMT (crush 10.00%
10,000 5,000
margin
0 0.00% profitability very 0 0.00%
important)
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
2018/2019
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
2018/2019
U.S. ending stocks – a record. The most “bearish” graph – stocks surge – but does it matter?
The U.S. storing more of world
U.S. ending soybean stock surge - % world stocks soybean stocks should be viewed
30,000 30.00% by world importers and users as a
positive feature for a supply
25,000 25.00%
source. Similar to what we’ve
seen in corn + wheat market /
transitions.
20,000 20.00%
This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any commodity.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.
World wheat supply cushion & the difference between now and LY
World wheat supply cushion (days) World - without China - wheat supply cushion (days)
160 120
World supply
140
cushion = 131.6
days vs 137.7 100
120
days in 2017-18
80
100
80 60
World supply
60 cushion –
without China = 40
40 73 days vs 87
days last year 20
20
0 0
Russia continues to set world wheat flat prices – dictates trade flows
Russia wheat exports - % world trade U.S. wheat exports - % of world trade
45000 25.00% 40,000 35.00%
40000 35,000
As Russian 30.00%
35000
20.00% exports have
30,000
increased – 25.00%
30000 U.S. exports
25,000
15.00% have declined
25000 20.00%
20,000
Shift to U.S.
20000 15.00%
10.00% origination
15,000
15000 will take time
– not 10.00%
10,000
10000
5.00%
expected until
Q1 CY2019 5.00%
5000 5,000
0 0.00% 0 0.00%
This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any commodity.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.
And like soybeans and corn, the world still has the U.S. as its transparent, free market storage tank
U.S. wheat ending stocks - % world wheat stocks U.S. wheat ending stocks - without China
35,000 14.00% 35,000 25.00%
15.00%
20,000 8.00% 20,000
5.00%
5,000 2.00% 5,000
0 0.00% 0 0.00%
Corn – range-bound / follower: needs a demand shock
(China) or a supply shock (U.S. 2019-2020 crop)
This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any commodity.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.
World corn supply cushion & the difference between now and LY
World corn supply cushion = 100 days World corn World - withouth China - corn supply cushion (days)
140
supply cushion –
70
forecast at 100
days
120 60
World corn
100 supply cushion 50
without China –
80
forecast at 43.6 40
days for 2018-19
44.7% of those
40 stocks 20
South American 10
20
corn production
– forecast to
0
0 increase 20-
21MMT in 2018-
19
World corn consumption closes in on 3MMT / day
World daily corn consumption rate (KMT)
corn
2018/2019 consumption is 3000
2017/2018
at nearly
2016/2017
2015/2016
3.1MMT / day
2500
2014/2015
2013/2014 Ethanol faces
2012/2013 its own mid-life 2000
2011/2012 crisis –
2010/2011 accounts for 1500
2009/2010
38.5% of daily
2008/2009
2007/2008
corn
1000
2006/2007 consumption or
2005/2006 1.16MMT / day.
2004/2005 It has accounted 500
2003/2004 for 38.5 – 40% of
2002/2003
corn demand per 0
2001/2002
year since 2008-
2000/2001
09
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000
World corn production vs consumption – key theme for price forecast outlook
World corn production vs consumption
World corn demand will again outstrip global
2018/2019 production
2017/2018
2016/2017 Risks?
2015/2016
2014/2015 • U.S. yields – technology dominates as weather
2013/2014 becomes less of an influence
2012/2013
2011/2012
• World demand could move higher as a result of less
2010/2011
wheat feeding (Europe) given the current price
2009/2010
relationship between corn & wheat
2008/2009
2007/2008
• Argentina + Brazil – dialed in for a combined 20-
2006/2007
2005/2006
21MMT in production gains for 2018-19
2004/2005
2003/2004
• U.S. faces record demand – however, it continues to
2002/2003 hold the majority of world corn stocks and act as a
2001/2002 reserve for world corn buyers (similar to its role in the
2000/2001 world wheat market)
-40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000
Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by ConsiliAgra who provides research market commentary and trade recommendations as
part of his or her solicitation for accounts and solicitation for trades; however, ConsiliAgra does not maintain a research
department as defined in CFTC Rule 1.71. ConsiliAgra may trade in derivatives for their own accounts or for the accounts of
others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term
strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or
liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or
commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged
positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
Although the statements of fact in this report are obtained from reliable sources, we do not guarantee their accuracy and any such information may be
incomplete or condensed. All options and opinions are subject to change without notice.