What’s driving the global grain
market?
And why are things so volatile?
by
Dave Norris
Website: www.nogger.co.uk
KEY FACTORS:
•
•
•
•
Supply & Demand
Weather
Money Flows
External Influences
Website: www.nogger.co.uk
SUPPLY & DEMAND 2012/13:
• World wheat crop -6%
• World wheat stocks -10%
• World corn crop -4%
• World corn stocks -10%
Note - Chinese stocks:
World corn 51%
World wheat 31%
Website: www.nogger.co.uk
WEATHER 2012:
• US has worst drought since 1956
• Russia, Kazakhstan
& Ukraine have second
drought in 3 years
Website: www.nogger.co.uk
WHEAT SUPPLY 2012/13:
Country
2012/13 (MMT)
2011/12 (MMT)
Change %
USA
61.7
54.4
+13%
Canada
27.2
25.3
+8%
Europe
131.7
137.2
-4%
Australia
22.0
29.5
-25%
Russia
38.0
56.2
-32%
Ukraine
14.5
22.1
-34%
Argentina
10.0
15.5
-35%
Kazakhstan
10.5
22.7
-54%
Total
315.6
362.9
-13%
Source: USDA
Website: www.nogger.co.uk
WHEAT STOCKS 2012/13:
Country
2012/13 (MMT)
2011/12 (MMT)
Change %
USA
19.2
20.2
-5%
Europe
10.0
11.1
-10%
Canada
5.1
5.9
-14%
Argentina
0.6
1.0
-40%
Australia
4.3
8.3
-48%
Russia
5.5
11.0
-50%
Ukraine
3.0
6.6
-55%
Kazakhstan
2.5
6.1
-59%
Total
50.2
70.2
-28%
Source: IGC
Website: www.nogger.co.uk
US CORN & WHEAT PRICES 2012:
Website: www.nogger.co.uk
CHICAGO VOLUME 2007/12:
2012: Corn 73m contracts, Soybeans 52m, Wheat 27.4m
Website: www.nogger.co.uk
LIFFE VOLUME 2007/12:
Paris wheat volume up 750% in 5 years, EU wheat production
up by less than 10% during the same period
Website: www.nogger.co.uk
CHICAGO VOLUME 2012:
Corn: 73m contracts = 9.27 billion tonnes = 11x world crop
Soybeans 52m = 7.08 billion tonnes = 26x world crop
Wheat 27.4m = 3.73 billion tonnes = 5.7x world crop
Note: futures only, options take the volume even higher
Website: www.nogger.co.uk
CHICAGO VOLUME 2012:
Corn: almost all the world production of corn traded every
single month in 2012
Soybeans: all the soybeans grown in the world trade every
Single fortnight in 2012
Wheat: nearly half the world’s production of wheat traded
every month in 2012
Note: futures only, options take the volume even higher
Website: www.nogger.co.uk
CHICAGO VOLUME 2000/12:
•
Since 2000 CBOT corn/wheat volume is up 500% yet world production of corn is only up 32%
and wheat output up 18% during this time.
Website: www.nogger.co.uk
CHICAGO VOLUME 2000/12:
•
There seems to be a clear link between volume & price
Website: www.nogger.co.uk
WORLD FOOD PRICES 2000/12:
•
World food prices appear to also be linked to volume traded in Chicago
Website: www.nogger.co.uk
CHICAGO FUND ACTIVITY IN CORN:
•
Fund buying and/or selling activity seems clearly linked to price movements
Website: www.nogger.co.uk
CHICAGO FUND ACTIVITY IN CORN
& WHEAT 2011/12:
•
Fund buying and/or selling activity seems clearly linked to price movements
Website: www.nogger.co.uk
CHICAGO SEASONAL PRICE
MOVEMENTS:
Website: www.nogger.co.uk
CHICAGO SEASONAL PRICE
MOVEMENTS:
Website: www.nogger.co.uk
CHICAGO SEASONAL VS 2012:
Website: www.nogger.co.uk
CHICAGO SOYMEAL:
Website: www.nogger.co.uk
COMMODITY PRICES SUMMARY:
•
Spec money, traditionally one fifth of the market
now outnumbers bona fide hedgers 4-1
•
Increased volatility is the order of the day
•
Price movements can be sudden & severe
•
Markets also heavily influence by external factors
Website: www.nogger.co.uk
WHAT WILL 2013 DELIVER?
•
2010 Russian drought & export ban
•
2011 South American drought, UK drought
•
2012 US drought, UK rain & lack of sunshine,
more Black Sea drought
Website: www.nogger.co.uk
WHAT WILL 2013 DELIVER?
•
Poor state of UK winter crops
•
US farmers expected to plant large corn, soybean
& wheat crops, but the drought isn’t over yet
•
Big crops coming from South America – but with
that comes logistical problems
•
How will Black Sea crops emerge from winter
Website: www.nogger.co.uk
WHAT WILL 2013 DELIVER?
External Influences:
•
US fiscal cliff
•
US debt ceiling
•
Eurozone crisis
Website: www.nogger.co.uk
WHAT WILL 2013 DELIVER?
The US Fiscal Cliff
$
US tax revenue
2,170,000,000,000
Fed budget
3,820,000,000,000
New debt
1,650,000,000,000
National debt
Recent budget cuts
Nogger’s Family Income
14,271,000,000,000
38,500,000,000
$
Wages
21,700.00
Outgoings
38,200.00
New debt on credit card
16,500.00
Outstanding on credit card
Budget cuts we’ve made so far
142,710.00
38.50
Website: www.nogger.co.uk
WHAT WILL 2013 DELIVER?
Website: www.nogger.co.uk
WHAT WILL THE FUTURE DELIVER?
Website: www.nogger.co.uk
KEY FACTORS TO WATCH OUT FOR:
Supply & Demand
Weather
Money Flows
External Influences
Website: www.nogger.co.uk
28
THANK YOU
Which way is the bar?
Website: www.nogger.co.uk
29