Transitions in the
Canadian Market
James Rea
AVP Bulk Product Sales
American Fats & Oils Association
Annual Meeting 2012
Agenda
Major Transitions
• Deregulation of the Canadian Wheat Board
• Rationalization of Origination Assets/Players
• Canola and the Expansion of the Canola
Processing Industry
• Acreage – Crops and Returns
Deregulation
Deregulation of the Market
• Canadian Wheat Board monopoly ends
after 77 years (1935-2012)
• Open Market as of August 1, 2012
• Canadian Wheat Board’s Participation
Going Forward?
• Wheat/Barley account for 37 MMT or ~50%
of Cdn Grain/Oilseed production
Rationalization - Grain Handling Capacity
Western Canada
Crop Year
No. of
Elevators
1990-1991
1999-2000
2010-2011
1,567
969
340
Down 78%
No. of 100
Capacity in
Rail Car
MMT
Loaders
14
3
12
50
11
106
Down 3MMT
Dramatic increase in handling and loading
efficiency over 2 decades
Rationalization of Major Asset Owners
1998
2001
2007
2012
Today
Manitoba Pool
Elevators
1926-1998
Alberta Wheat
Pool
1923-1998
Agricore
Cooperative
Limited
1998-2001
United Grain
Growers Limited
1917-2001
United Grain
Growers Limited
1917-2001
Agricore United
2001-2007
Saskatchewan
Wheat Pool
1923-2007
Saskatchewan
Wheat Pool
1923-2007
Saskatchewan
Wheat Pool
1923-2007
Viterra
2007-2012
Glencore
1974-
Richardson
International
1857-
Richardson
International
1857-
Richardson
International
1857-
Richardson
International
1857-
Richardson
International
1857-
Cargill
1865-
Cargill
1865-
Cargill
1865-
Cargill
1865-
Cargill
1865-
Rationalization - Country Elevators
Approximate Elevator Capacity
(mt)
Pre-Glencore Capacity Distribution
Conventional Elevator Capacity
2,500,000
50-56 Car Loader Capacity
2,000,000
100+ Car Loader Capacity
1,500,000
1,000,000
500,000
-
Viterra Richardson Cargill
N
u
m
b
e
# of 100+ Car Elevators
# of 50+ Car Elevators
5
0
39
25
31
6
12
15
LDC
8
2
Paterson
4
3
P&H
4
9
Other
4
11
Rationalization - Country Elevators
u
m
b
e
Approximate Elevator Capacity
N
(mt)
Post-Glencore Capacity Distribution
05
2,000,000
Conventional Elevator Capacity
50-56 Car Loader Capacity
1,500,000
100+ Car Loader Capacity
1,000,000
500,000
-
RichardsonGlencore Cargill
N
u
m
b
e
# of 100+ Car Elevators
# of 50+ Car Elevators
5
0
41
11
29
20
12
15
LDC
8
2
Paterson
4
3
P&H
4
9
Other
4
11
Final production
not yet known
Crush and the Canola S&D
Crop Year
2008/09
2009/10
2010/11
2011/12
2012/13
Acreage Seeded
16,160
16,125
17,608
18,645
21,337
Acreage Harvested
16,048
15,680
16,922
18,010
20,852
35
36.2
33.3
35.5
28.2
1,744
1,944
2,688
2,198
793
12,643
12,888
12,773
14,500
13,336
Imports
120.5
127.9
223.7
92
100
Supply
14,507
14,959
15,685
16,790
14,230
Domestic
4,280
4,788
6,310
7,000
6,500
377
320
73
268
300
7,907
7,163
7,104
8,729
6430
12,564
12,271
13,487
15,997
13,232
1,944
2,688
2,198
793
1,000
15.47%
21.91%
16.30%
4.96%
4.06%
Yield (Bu/Acre)
Carry In
Production
Seed/Feed
Exports
Disposition
Carryout
Stocks/use
Canola Crush Capacity (MMT)
Canada/U.S. North - Approx
2008
2012
Current
2016
Forecast
ADM
2.2
2.5
2.7
Bunge
1.8
2.5
3.0
Richardson
0.4
1.3
2.1
Cargill
0.8
1.6
2.4
LDM
0.0
0.9
0.9
Viterra/Glencore
0.3
0.3
0.3
Other
0.0
0.3
0.7
Total
5.5
9.4
12.1
Canadian Crush and Oil Production
7000000
6000000
2012 Canadian Crush Capacity ~ 7.5MMT
5000000
4000000
Crush
3000000
2000000
1000000
0
Oil Production
CANOLA OIL EXPORTS
TOTAL CANOLA OIL EXPORTS FROM CANADA
2006
2007
2008
United States
Other
Mexico
729,975
4,332
29,784
764,324
4,672
31,202
1,048,300
10,906
22,548
1,002,404
4,208
3,984
1,092,071
22,643
5,126
1,520,557
48,959
54,477
EU
290,368
56,161
211
8
28,015
182,675
China
Asia - non China
65,832
110,433
280,913
128,875
232,792
107,924
441,267
96,552
988,114
109,411
578,395
154,729
Totals
2009
2010
2011
1,230,724 1,266,147 1,422,681 1,548,423 2,245,380 2,539,792
Growth in Canadian Canola Acres
25,000
20,000
15,000
10,000
5,000
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
• Expecting canola acres to remain in the
19-21 million range for the next 3-5 yrs
Acreage Shift 2004 - 2012
30000
25000
20000
Wheat
Oats
Barley
Canola
15000
Soybeans
Dry Peas
Corn
10000
Other
5000
0
2004
000’s Acres
2012
Return Per Acre
Commodity
Per Acre Return
Acres (Million)
$110 - $150
21.3
Wheat(excl Durum)
$30 - $90
19.0
Peas
$70 - $80
3.2
Barley
$20 - $80
7.4
Durum
$30 - $90
4.6
Corn
$230 - $290
3.6
Oats
$30 - $70
3.0
$200 - $290
4.3
Canola
Soy Beans
Summary
• 2012/13 – Canadian Open Market Volumes
Increase Dramatically
• Grain and Oilseed handling in Canada has been
extensively rationalized over the past 20 years
• Strong Oil Demand Driving Investments in Canola
Processing
• Canadian Canola acres have doubled in the past
10 years as Farm-gate returns advance Canola
seed production