Trends in the Global Starch
Industry
World tapioca Conference 2011
Presentation by Martin Todd, 28th June 2011
Presentation topics
Highlighting tapioca’s role in the starch world
•
Global trends in starch production and trade
•
Development of global starch prices and key drivers
•
Dynamics of tapioca starch prices
•
Challenges for the future
Who are the leading players?
Tapioca in South East Asia is very important
Global starch production
Primary starch vs. native vs. modified
•
Global more than 70 million tonnes of primary starch
are produced to make starches and sweeteners
•
Of this, around 33 million tonnes is produced and sold
as starches
•
This comprises approximately 25 million tonnes of
native starch and 8 million tonnes of modified starch
•
In this presentation, I will focus on native starch
Tapioca and corn lead the way
Corn starch: 13 million tonnes
Tapioca starch: 8 million tonnes
Potato: 1.5 million tonnes
Wheat: 1.0 million tonnes
Global native starch production by type of starch
25
million tonnes
20
15
10
5
0
2000
2001
2002
Cassava Starch
2003
2004
Corn Starch
2005
2006
Other Starches
2007
2008
Potato Starch
2009
2010
Wheat Starch
Tapioca represents more than
one third of global production
Global native starch production by type of corn starch,
average 2008-2010
Cassava Starch
34%
Corn Starch
52%
Other Starches
2%
Potato Starch
7%
Wheat Starch
5%
Several of the world’s top ten
starch producers use tapioca as
their main raw material
Top 10 global native starch producing
countries by type of starch, average 2008-2010
South Korea
Vietnam
India
Japan
Brazil
Indonesia
US
EU27
Thailand
China
0
1
Cassava starch
2
3
Corn starch
4
5
6
million tonnes
Potato starch
7
Wheat starch
8
9
Other starches
More tapioca starch is traded
than any other starch
Trade in potato starch is also large in relation to output
Global native starch exports by type of starch
5.5
5.0
4.5
Million tonnes
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2000
2001
2002
Cassava Starch
2003
2004
Corn Starch
2005
2006
Other Starches
2007
2008
Potato Starch
2009
2010
Wheat Starch
Tapioca starch makes up about
40% of world starch trade
Global native starch exports by type of corn starch,
average 2008-2010
Wheat Starch
9%
Potato Starch
19%
Cassava Starch
40%
Other Starches
5%
Corn Starch
27%
Thailand is by far the largest
exporter of any single type of starch
Top 10 global native starch exporting countries
differentiating by type of starch, average 2008-2010
Australia
Argentina
Paraguay
Mexico
India
South Korea
Canada
US
Vietnam
China
EU27
Thailand
0.00
Cassava starch
0.25
0.50
Corn starch
0.75
1.00
million tonnes
Potato starch
1.25
Wheat starch
1.50
Other starches
1.75
China is the largest importer
And, tapioca dominates this list
Top 10 global native starch importing countries
differentiating by type of starch, average 2008-2010
Singapore
Russia
South Korea
Philippines
US
Japan
Malaysia
Indonesia
Taiwan
China
0.0
Cassava starch
0.2
Corn starch
0.4
0.6
'000 tonnes
Potato starch
0.8
Wheat starch
1.0
Other starches
Global trends: conclusions
•
Corn is the most widely used raw material for starch
production
•
However, traded volumes are limited, because the
largest producer (USA) consumes most of its output
and has limited outlets because of its GM status
•
Wheat starch is not widely produced or traded
because it is a low quality starch (especially in its
native form)
•
As a result, tapioca and potato starches are traded
very heavily in relation to their production
Starch price trends
Rising starch prices caused by higher raw material prices
All starch prices show a rising
trend over the past ten years
Potato starch prices have soared in 2011 to >$1,000
800
Native starch prices, differentiating by type of starch
trade unit values (US$/tonne)
700
600
500
400
300
200
100
0
2000
2001
2002
2003
Cassava (Thailand)
Wheat (EU)
2004
2005
Corn (EU)
Corn (USA)
2006
2007
2008
2009
Potato (EU)
2010
Tapioca, wheat and potato
have all increased relative to
corn
trade unit values relative to corn starch
400
Native starch prices relative to US corn starch
350
300
250
200
150
100
50
0
-50
-100
-150
2000 2001 2002 2003 2004 2005
Cassava (Thailand)
Potato (EU)
2006 2007 2008
Wheat (EU)
2009 2010
Corn (EU)
The reason for rising prices is
the upward trend in raw
material prices
100
300
80
240
60
180
40
120
20
60
0
0
Corn, wheat (US$/tonne)
Tapioca roots (US$/tonne)
Prices of corn, wheat and tapioca (axes are set to
reflect relative starch content of tapioca and grains)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tapioca Roots NE Thailand
Wheat, EU
Corn, EU
Corn, US
This is true also of net raw
material prices
After allowing for grain processing by-products
Net raw material prices of corn, wheat and tapioca
150
US$/tonne
125
100
75
50
25
0
2000
2001
2002
2003
Tapioca Roots NE Thailand
2004
2005
2006
Wheat, EU
2007
2008
Corn, EU
2009
2010
Corn, US
Net cost of corn has increased by
less than the others!
This has been reflected in corn starch prices
Index of net raw material prices of
corn, wheat and tapioca
600
2000 = 100
500
400
300
200
100
0
2000
2001
Wheat, EU
2002
2003
2004
2005
Tapioca Roots NE Thailand
2006
2007
2008
Corn, EU
2009
2010
Corn, US
Price trends: conclusions
•
Starch prices are rising because of higher raw
material prices
•
US corn starch prices low because of low net corn
costs
•
Despite this, US corn starch has not taken market
share because of its GM status
•
Tapioca starch prices have seen significant price
inflation due to high root prices
•
Potato starch is suffering from this problem this year
Dynamics of tapioca starch prices
China’s dominant role
What drives tapioca starch
prices?
•
The key driver is China
•
China has become increasingly dependent on starch
imports, in particular tapioca starch
 The link to tapioca starch is through:
 China’s starch markets, which is linked to its corn
market
 China’s ethanol market also influences the starch
market via tapioca chips
Meeting China’s demand
•
China’s starch demand has been growing at an annual
rate of more than 10% per annum
•
And, it will continue to grow very rapidly in the future
•
But, the government is limiting the use of corn for
industrial uses
•
At the same time, production from other starches is
small and will not meet the future growth in demand
 So, China’s has become more dependent on
imports
China’s tightening grains sector
A constraint for starch production
China’s corn supply/demand balance
30
180
25
160
20
140
15
120
10
100
5
80
0
60
-5
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
Exports/(Imports)
Production
Consumption
Exports/imports (mn tonnes)
Production & consumption (mn tonnes)
200
China’s increased dependence
on imports
10.0
1.0
8.0
0.8
6.0
0.6
4.0
0.4
2.0
0.2
0.0
0.0
2000
2002
2004
Net imports
2006
2008
Consumption
2010
Net imports (thousand tonnes)
Consumption (million tonnes)
China’s native starch supply/demand balance
China has turned to tapioca
starch
China’s imports of native starch by type of starch
1,000
'000 tonnes
800
600
400
200
0
2000
2001
2002
Cassava Starch
2003
2004
Potato Starch
2005
2006
Corn Starch
2007
2008
Wheat Starch
2009
2010
Other Starches
And to Thailand (as well as
Vietnam)
China’s imports tapioca starch by origin
900
800
'000 tonnes
700
600
500
400
300
200
100
0
2000
2001
2002
2003
2004
Thailand
2005
2006
Vietnam
2007
Other
2008
2009
2010
The result is a link between Chinese
corn/starch and SE Asian tapioca
500
600
400
450
300
300
200
150
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Cassava Starch FOB BKK
Corn starch NE China
0
Corn NE China Futures
Corn (US$ per tonne)
Starch (US$ per tonne)
750
Thai tapioca starch prices vs. Chinese corn
and corn starch prices
But, cassava starch is a premium
starch for functional reasons
750
Chinese prices of Tapioca starch and corn starch
US$ per tonne
600
450
300
150
0
2008
2009
Tapioca starch - corn starch
2010
Corn starch NE China
2011
Tapioca Starch Guangxi
The link also exists between Chinese
corn/ethanol and SE Asian tapioca
400
750
300
500
200
250
100
0
2000
0
2002
2004
2006
Corn-based Ethanol North Jiangsu
Corn NE China Futures
2008
2010
Cassava Chips FOB BKK
Chips, corn (US$ per tonne)
Ethanol (US$ per cubic metre)
1,000
Thai tapioca starch prices vs. Chinese corn
and corn ethanol prices
The relationship between corn prices
in China and the world (US) is
influenced by politics (e.g. 2008, 2010)
Chinese corn prices vs. world (US Gulf) prices
350
300
US$ per tonne
250
200
150
100
50
0
-50
2000
2002
2004
China corn - US corn
2006
Corn FOB USG
2008
2010
Corn NE China Futures
Tapioca starch prices are similar
throughout SE Asia
Tapioca starch prices in Indonesia, Thailand
and Vietnam
400
350
US$ per tonne
300
250
200
150
100
50
0
1998
1999 2000
2001
2002 2003
Indonesia
2004
Thailand
2005 2006
Vietnam
2007
2008 2009
Price dynamics: conclusions
•
Tapioca starch prices are linked to China’s corn
market via starch and ethanol (and are similar
across SE Asia)
•
Tapioca starch commands a premium over corn
starch reflecting its superior qualities as a food
starch
•
China’s corn market does not track the world corn
market in the short term because of government
intervention
Challenges for the future
• China: meeting its demand
• EU: where next for potato starch?
• Thailand: mealy bug
Will China need more imports?
17.5
China’s starch supply/demand
balance and projected demand 1.75
15.0
1.50
12.5
1.25
10.0
1.00
?
7.5
0.75
5.0
0.50
2.5
0.25
0.0
0.00
2000
2003
2006
Net imports
2009
2012
Consumption
2015
Net imports (thousand tonnes)
Consumption (million tonnes)
Will corn for industrial use remain restricted?
Can tapioca & potato step in?
EU potato starch: still alive
But, what will happen after the reforms?
EU exports of potato starch by destination
700
600
'000 tonnes
500
400
300
200
100
0
2000 2001 2002 2003 2004
East Asia
NAFTA
2005 2006 2007 2008 2009 2010
South East Asia
East Europe
Other
Can Thailand continue to grow?
Short run: mealy bug
Long run: yields (land is limited in SE Asia)
Thai production of tapioca roots
35
30
million tonnes
25
20
15
How long will
this last?
10
5
0
1998/99
2000/01
2002/03
2004/05
2006/07
2008/09
2010/11
Conclusions
Conclusions
•
Tapioca starch plays a huge role in world trade and
in supplying China’s import needs in particular
•
As a result, its price dynamics are now linked to
China’s corn, starch and ethanol markets
•
Tightening supply in China’s corn market suggests
its imports will continue to grow
•
Can cassava continue to meet China’s demand?
•
Land is scarce in SE Asia, so productivity will be key
Thank You
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