Irish Poultry & Egg Conference
Ronan Hughes
Tuesday 04th November 2008
Topics
Global Trends
Review of Grain Markets
– Global, EU and Ireland
GM
Ethanol
Funds
Freight
Summary
2
Global Trends
Grain and Cereal Production vs. Agricultural Area
Indexed: 1961 = 100
300
300
250
250
Food Production
CAGR: 2.1%
200
200
150
150
Agricultural Area
CAGR: 0.2%
100
100
50
50
0
1961
1966
1971
1976
1981
Food Production
1986
1991
1996
2001
0
2006
Agricultural Area
Source: FAO FASTAT 2008 http://www.faostat.fao.org
4
World Major Crop* Production and Yields
3000
6
Yields
2500
5
2000
4
1500
3
1000
2
500
1
0
YieldinTonnes/ Ha
Productionin'000Tonnes
Production
0
1972
1977
1982
1987
1992
* Cereals, Rice and Oilseeds
1997
2002
Source: USDA
2007
5
Global Population and Agricultural Land Area (ha) Forecast, 1965-2030f
Source FAO and World Bank
6
Global Grain
Global Grain Crop
• World grain
production
projected to set new
record in 2008/09
millions tonnes
2,300
2,200
2,100
• Up 4.3% over last
year and 10.1%
higher than two
years ago
2,000
1,900
1,800
1,700
1,600
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
projected
Source: Oct 10th WASDE
• Ending stocks are
projected to be 6%
higher than last
year and at their
highest level since
2005/06
8
Global Grain Production
2007/2008
Rice
20%
Others
3%
Oats
1%
Others
3%
Wheat
29%
Rice
20%
Wheat
31%
Oats
1%
Sorghum
3%
Sorghum
3%
Barley
6%
Corn
38%
2008/2009
Corn
35%
Barley
7%
Corn
Wheat
Rice
Barley
Others
Sorghum
Oats
07/08
790
611
430
133
65
63
26
08/09
785
680
433
150
72
63
24
inc
-5
70
3
17
7
0
-2
%
1%
11%
1%
13%
11%
0%
7%
Totals
2118
2208
90
4%
9
Global Corn
Global Corn – Area Harvested
1,000 HA
170,000
160,000
150,000
140,000
130,000
120,000
110,000
100,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
11
Global Corn – Average Yield
MT/HA
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
12
Global Corn - Production
Production
1,000 MT
Consumption
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
13
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
Global Corn – Stocks/Use Ratio
Percent
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
14
Major Corn Producers (mln tn) 2008/09
Ot he r
I ndi a
122
15%
18
2%
A r ge nt i na
21
Br az i l
55
7%
3%
C hi na
156
20%
U k r a i ne
9
1%
E U27
62
8%
U SA
309
40%
C a na da
10
M exi co
24
3%
1%
15
Major Corn Exporters
70
2007/08
USA
2008/09
60
50
40
30
A rgentina
20
A ustralia
10
Canada
EU27
Russia
Kazakhstan Ukraine
0
16
Global Wheat
Global Wheat – Area Harvested
1,000 HA
245,000
240,000
235,000
230,000
225,000
220,000
215,000
210,000
205,000
200,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
18
Global Wheat – Average Yield
MT/HA
3.50
3.00
2.50
2.00
1.50
1.00
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
19
Global Wheat – Production
1,000 MT
700,000
Production
Consumption
650,000
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
20
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
Global Wheat – Stocks/Use Ratio
Percent
40%
35%
30%
25%
20%
15%
10%
5%
0%
21
Global Wheat Production (mln tn) 2008/09
I r an
10
I ndi a
1%
P aki st an
M exi co
22
3
Ot he r s
3%
1%
20
EU
147
3%
21%
78
12%
U SA
68
10%
FSU 1 2
113
17%
A r ge nt i na
11
A us t r a l i a
22
2%
3%
C a na da
27
4%
Af r i ca
C hi na
114
Br az i l
17%
5
1%
22
T ur k e y
3%
17
2%
22
Major Wheat Exporters (mln tn)
40
2007/08
USA
35
2008/09
30
25
20
15
10
5
Canada
EU27
Argentina
Other
Russia
Australia
Kazakhstan
Ukraine
0
23
Global Wheat – Production
1,000 MT
700,000
Production
Consumption
650,000
+70m tonnes
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
24
Global Wheat – yoy increases
Country
07/08
08/09
Inc Tonnes
Inc (%)
EU 27
119
147
28
24%
USA
56
68
12
21%
Australia
13
22
9
69%
Ukraine
14
26
12
86%
Russia
49
61
12
25%
Canada
20
27
7
35%
Others
340
329
-11
-3%
World
611
680
69
11%
25
Global Barley
Global Barley – Area Harvested
1,000 HA
90,000
85,000
80,000
75,000
70,000
65,000
60,000
55,000
50,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
27
Global Barley – Average Yield
MT/HA
2.80
2.60
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
28
Global Barley – Production
1,000 MT
190,000
Production
Consumption
170,000
150,000
130,000
110,000
90,000
70,000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
29
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Global Barley – Stocks/Use Ratio
%
25%
20%
15%
10%
5%
0%
30
Major Barley Producers (mln tn) 2008/09
C a na da
11
U k r a i ne
Ot he r
12
8%
11
7%
U . S. A
5
C hi na
4
3%
2%
7%
R us s i a
20
14%
T ur k e y
6
4%
K a z a k hs t a n
2
1%
A us t r a l i a
9
6%
I r an
2
1%
Af r i ca
E U- 27
64
6
4%
43%
31
Major Barley Exporters
6.00
2007/08
2008/09
5.00
4.00
EU27
Australia
Canada
3.00
2.00
Argentina
1.00
USA
Russia KazakhstanUkraine
Other
0.00
32
Global Barley – yoy increase
Country
07/08
08/09
Inc Tonnes
Inc (%)
EU 27
57
64
7
12%
Australia
6
9
3
50%
Ukraine
7
12
5
71%
Russia
16
20
4
25%
Others
48
46
-2
0.4%
World
134
151
17
13%
33
EU Market
EU27 Cereal Production (mln tn)
150
120
90
60
30
-
2004
2005
2006
2007
2008 est.
Wheat
134
124
117
112
147
Barley
64
55
56
58
64
Corn
68
61
52
48
62
35
EU27/Black Sea Wheat Production (mln tn)
70
60
2007/08
2008/09
Russia
50
France
40
30 Germany
20
10
Kazakhstan
UK
Spain
Denmark
Ireland
Italy
Romania
Poland
Czeck
Hungary
Sw eden
Ukraine
Bulgaria
0
36
EU Wheat – yoy increase
Country
07/08
08/09
Inc Tonnes
Inc (%)
France
33
38
5
15%
Germany
21
26
5
24%
UK
13
17
4
31%
Romania
3
8
5
166%
Hungry
4
6
2
50%
Bulgaria
2
5
3
150%
Others
36
40
4
11%
EU 27
112
140
28
20%
37
EU27 Ending Stocks (mln tn)
20
15
10
5
0
2005
2006
2007
2008 est.
Wheat
20
13
10
16
Co rn
12
10
14
8
B arley
8
6
7
8
38
Irish Market
Structure of the Irish Market
4000
'000 tonnes
3500
3000
2500
2000
1500
1000
500
0
04/05
05/06
Native Harvest
06/07
07/08
Imports
Feed Production
08/09
40
Native Harvest Production (‘000tn)
2,500
2,000
1,500
1,000
500
-
2004
2005
2006
2007
2008 est.
Wheat
1,020
840
806
684
1,050
Barley
1,330
1,060
1,137
1,130
1,300
Oats
150
113
145
157
150
Total
2,500
2,013
2,088
1,971
2,500
41
Price Trends
LIFFE Nov ‘08 Wheat (Aug 06 – Oct 08) £/t
43
MATIF Nov ’08 Wheat (Apr 07 – Oct 08) €/t
44
CBOT Dec ’08 Wheat (Jun 06 – Oct 08) c/bu
45
CBOT Dec ’08 Corn (Jun 06 – Oct 08) c/bu
46
GM Issues
Approval Process
SO FAR NOT A SINGLE GMO HAS BEEN APPROVED BY QUALIFIED
MAJORITY
AUTHORISATIONS HAVE BEEN GRANTED BY THE COMMISSION IN
LINE WITH THE COMITOLOGY PROCEDURE AS THERE WERE NO
QUALIFIED MAJORITIES AGAINST THE APPROVALS
THE EU IS THE ONLY REGION IN THE WORLD THAT ACTUALLY
VOTES ON THE SCIENCE
Commissioner Fisher Boel “politicians are not taking their
responsibilities seriously on the GMO issue”.
48
GM Update – Approval Timeline Corn
Herculex - 33 Months - (Approved by Default )
GA 21 - 31 Months - (Approved by Default )
MIR604 Agrisure ………………..Already clocked up 43 months
Mon 88017 Yield Guard ……….Already clocked up 34 months
49
GM Update – MON89788 “RR2” SOYA (Monsanto)
Submitted
Oct 2006
EFSA completeness check
Jun 2007
( 8 months)
EFSA Opinion
Jul 2008
(21 months)
Approval likely ?????
Mar/Apr 2009
(29/30 months ????)
Favorable EFSA opinion on RR2 received Jul 2008
RR2 was presented to the Standing Committee on 29th Sep ’08 - NO QMV
Possibly goes to Council within 90 days
Do not expect a majority …it will go to the Commission to be forced through,
and could be approved in Mar/Apr 2009
50
Irelands Soy Imports
2004
2005
2006
2007
Total NGFI imports
1,886
1,807
2,049
1,916
Total Soy Imports
443
500
505
616
23%
28%
25%
32%
% of total
51
Ethanol
EU-27 Bioethanol Production
3000
2500
2000
1500
1000
500
0
2006
2007
2008 (e)
2009 (f)
2010 (f)
53
EU-27 Feedstock Use for Bioethanol Production
3500
3000
'000 MT
2500
2000
1500
1000
500
0
2006
2007
Wheat
2008 (e)
Barley &Rye
2009 (f)
2010 (f)
Corn
Feedstock use equivalent to 1.17% of total EU-27 grains production
54
EU-27 Biodiesel Production
10000
9000
8000
'000MT
7000
6000
5000
4000
3000
2000
1000
0
2006
2007
2008 (e)
2009 (f)
2010 (f)
55
EU-27 Feedstock use for Biodiesel Production
6000
5000
'000MT
4000
3000
2000
1000
0
2006
2007
Rapeseed Oil
2008 (e)
Soybean Oil
2009 (f)
2010 (f)
Palm Oil
Feedstock OSR use is equivalent to 19.5% of EU-27 OSR production
56
Funds
03/09/2008
03/07/2008
03/05/2008
03/03/2008
03/01/2008
03/11/2007
03/09/2007
03/07/2007
03/05/2007
03/03/2007
03/01/2007
03/11/2006
03/09/2006
03/07/2006
03/05/2006
03/03/2006
03/01/2006
Number of Contracts
Contracts Held - Corn, Wheat, Soybeans, Soybean Oil, Sugar and Cotton
1,500,000
1,400,000
1,300,000
1,200,000
1,100,000
1,000,000
900,000
800,000
700,000
58
Ju
l-0
6
O
ct
-0
6
Ja
n07
Ap
r-0
7
Ju
l-0
7
O
ct
-0
7
Ja
n08
Ap
r-0
8
Ju
l-0
8
6
Ap
r-0
06
$80
$70
$60
$50
$40
$30
$20
$10
$0
Ja
n-
Billions of USD
US $ Invested in Ag Commodities by Index Funds
Corn, Wheat, Beans, Soyoil, Cotton and Sugar
59
Freight
World Freight Market
Freight markets encapsulate much of what is driving the world today
– they are a good indicator of the state of international trade
They are similar to the oil markets in this respect, however their price
movements in recent times have been even more stark
Falling ocean freight prices to move goods and resources of late
point to slowing global trade
61
$ per metric tonne.
100
90
80
70
60
50
40
30
20
10
0
Jan-02
MarMayJul-02
Sep-02
Nov-02
Jan-03
MarMayJul-03
Sep-03
Nov-03
Jan-04
MarMayJul-04
Sep-04
Nov-04
Jan-05
MarMayJul-05
Sep-05
Nov-05
Jan-06
MarMayJul-06
Sep-06
Nov-06
Jan-07
MarMayJul-07
Sep-07
Nov-07
Jan-08
MarMayJul-08
Sep-08
Freight
Increase in absolute level and also in
the volatility of freight rates
Spot Freight Rate South America to EU
62
16
/1
0/
16 0 3
/0
2
16 /0 4
/0
6
16 /0 4
/1
0
16 /0 4
/0
2
16 /0 5
/0
6/
16 0 5
/1
0/
16 0 5
/0
2
16 /0 6
/0
6/
16 0 6
/1
0
16 /0 6
/0
2
16 /0 7
/0
6/
16 0 7
/1
0/
16 0 7
/0
2
16 /0 8
/0
6/
16 0 8
/1
0/
08
Baltic Dry Index
14000
12000
10000
8000
6000
4000
2000
0
63
Summary
World Financial Crisis
Continued Fund Speculation & Liquidation
Strength of US $
Weather
Freight
Oil
Planting Intentions for next year
64
Thank You