Category Intelligence on Wheat

© Copyright 2017 Beroe Inc. All rights reserved.

Procurement prospects drive up wheat production

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Table of Contents

01Executive Summary

• Executive Summary• Global Wheat Market Overview• Contract Structures

02Market Analysis

• Value Chain Analysis• Wheat Starch Industrial Process• Global Market Outlook– Global Supply–Demand Analysis– Global Demand Analysis– Global Wheat Trade Dynamics – Global Wheat Starch Supply–Demand

Analysis– Cost Structures

03Regional Market Analysis

• Regional Market Outlook (Russia, US, China, India, and EU)– Supply–Demand Analysis– Trade Dynamics– Pricing Analysis

• Industry Outlook (US, EU, and Asia)– Porter’s Five Forces Analysis – Innovations

04Supplier Analysis

• Global Wheat Supplier Market Share • Profiling of Major Suppliers– ADM– Cargill Inc.– Roquette Freres– Agrana Group– Tereos SA– Regional Suppliers

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Executive Summary

Sources: UN Comtrade, Beroe Analysis, USDA

KEY SUPPLY CONSTRAINTS/DRIVERS1.8 percent rise in global

industrial (wheat processing) demand

~8 percent rise in global feed demandPRICES IN KEY

REGIONSRussia: 170 $/MT EU: 160.5 €/MT US: 131.3 $/MT

GLOBAL SUPPLY(2016/2017) 1151.9 MMTGLOBAL CONSUMPTION (2016/2017) 728.4 MMTGLOBAL ENDING STOCKS (2016/2017) 252.8 MMT

KEY PRODUCINGCOUNTRIESEU (19.8%)China (17.5%)India (11.8%)Russia (9.7%)US (8.5%)

KEY EXPORTINGCOUNTRIESRussia (17.7%)EU (15.9%)US (15%)Canada (12.4%)Australia (10.9%)

KEY CONSUMINGCOUNTRIESEU (17.8%)China (16.1%)India (12.8%)Russia (5.3%)US (5.1%)

KEY IMPORTINGCOUNTRIESEgypt (7.3%)Indonesia (5.4%)Algeria (4.9%)Brazil (3.6%)EU (3.6%)

SURPLUS STOCKS (2016/2017 vs. past five years’ average)Global – 23.2% Russia – 46.2% EU – 3.2% US – 45.3%

BENCHMARK PRICE INDICES

MATIF Euronext (EU)FOB Novorossiysk

Export Price(Russia)

ENGAGEMENT MODELSContract length: 3–6 months Contract type: MATIF based + basis (EU), FOB Novorossiysk export price + Freight (Russia) BEST PRICE-LOCK MONTHS: August–October (EU), September–November (Russia), and February–April (Russia)

COST DRIVERSIncrease in the cost of labor in the US by 3–4 percent compared to the previous year.Decrease in the cost of fertilizers in the US by 7–8 percent compared to the previous year.

WEATHER IMPACT (2016/2017)Russia – FavorableEU – Unfavorable (heavy rain) US – Less unfavorable (dry), but no major adverse impact

TRADE TARIFFSRussia – 0% (Egypt)EU – 0% (Egypt)US – (89.1%) Japan

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Executive Summary

01 US (2015/2016 vs. 2016/2017) 02 Russia (2015/2016 vs. 2016/2017)

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KeyTakeaway

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03 EU (2015/2016 vs. 2016/2017)

Production: -7.8% Consumption: -0.5% Price: -6.9%

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Sources: USDA, Beroe Analysis

Production: 13.1% Consumption: 17.8% Price: -29.4%

Production: 18% Consumption: 4.1% Price: 0.4%

• The global production of wheat has been rising at a CAGR of 3.09 over a period of five years. Production in 2016–2017 is estimated to reach 743.4 MMT, a modest increase by 1.2 percent, due to high supply in the US and Russia

• The key factors driving the growth include emphasis on wheat production in Russia, due to export potential and the end-use industries, such as feed and food, especially in South East Asia, with consumption having risen by ~3 percent from the last year

• With respect to wheat starch industry, ~4.7-4.9 MMT is produced on an annual basis. The major producing regions are France, the US, Germany, the Netherlands, Australia, the UK, Belgium, Canada, Japan, and China

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