XXVI FEFAC Congress Outlook on the EU and global oilseeds and cereals markets / campaign 2013-1014. COCERAL view on the impacts of the EU financial markets reform Stefan Vogel Vice President COCERAL
XXVI FEFAC Congress
Outlook on the EU and global oilseeds and cereals markets / campaign 2013-1014.
COCERAL view on the impacts of the EU financial markets reform
Stefan VogelVice President COCERAL
Price trend basis Jan. 2012
Source: Oil World, Reuters
June, 06 2013 Chart 2
USA: Precipitation: Departure from normal rains for the period 01.04.2013 - 13.05.2013
June, 06 2013 Chart 3
Source: Earthsat
Nationally: 28% (Last Year 85%, 5 year- Average:65%
USA: Planting Progress Corn
Source: USDA
June, 06 2013 Chart 4
Nationally: 6% (Last Year 43%, 5 year- Average:24%
USA: Planting Progress Soybeans
June, 06 2013
Source: USDA
Chart 5
Precipitation: Departure from normal rains for the period 01.02.2013 - 31.03.2013
Black Sea Region:
June, 06 2013 Chart 6
Source: Earthsat
Black Sea Region:
Precipitation: Departure from normal rains for the period 01.04.2013 - 13.05.2013
June, 06 2013 Chart 7
Source: Earthsat
Precipitation: Departure from normal rains for the period 01.04.2013 - 13.05.2013
EU-28:
June, 06 2013 Chart 8
Source: Earthsat
World: Grain Production 2013 - mln t -
697 656 701
882857
966
134130
138
465470
479
137141
149
0
500
1.000
1.500
2.000
2.500
3.000
2011/12 2012/13 2013/14
Other
Rice
Barley
Maize
Wheat
+8
+7
+8
+109
+45
June, 06 2013 Chart 9
Source: USDA
World: Grain Production & Consumption- mln t -
June, 06 2013 Chart 10
Sources: USDA, IGC, Informa Economics
World: Grain Stocks & Stocks/Use ratio
June, 06 2013 Chart 11
Source: USDA
World: Wheat Production and Use- mln t -
June, 06 2013 Chart 12
Sources: USDA, IGC
USA: Maize Production & Consumption- mln bu –
June, 06 2013 Chart 13
USDA Informa Prudential USDA Informa Prudential USDA Informa Prudential
2010 2011 2011 2012 2012 2012 2013 2013 2013
2011 2012 2012 2013 2013 2013 2014 2014 2014
PLANTED ACRES 88.2 91.9 91.9 97.2 97.2 97.2 97.3 97.3 96.9
HARVESTED ACRES 81.4 84.0 84.0 87.4 87.4 87.4 89.5 89.9 89.1
YIELD 152.8 147.2 147.2 123.4 123.4 123.4 158.0 160.7 152.0
SEP.1 STOCKS 1,708 1,128 1,128 989 989 990 759 844 834
PRODUCTION 12,447 12,358 12,358 10,780 10,780 10,780 14,140 14,455 13,548
IMPORTS 28 25 25 125 150 125 25 10 25
TOTAL SUPPLY 14,182 13,511 13,511 11,894 11,919 11,895 14,924 15,309 14,407
FEED 4,795 4,568 4,325 4,400 4,300 4,350 5,325 5,300 4,900
F/S/I 6,426 6,415 6,380 5,985 6,025 5,960 6,295 6,350 6,310
ETHANOL FOR FUEL 5,019 4,995 4,980 4,600 4,600 4,575 4,850 4,925 4,900
DOMESTIC USE 11,220 10,983 10,705 10,385 10,325 10,310 11,620 11,650 11,210
EXPORTS 1,834 1,540 1,545 750 750 750 1,300 1,550 1,600
TOTAL USAGE 13,054 12,523 12,250 11,135 11,075 11,060 12,920 13,200 12,810
CARRYOUT 1,128 988 1,261 759 844 835 2,004 2,109 1,597
STOCKS TO USAGE 8.6% 7.9% 10.3% 6.8% 7.6% 7.5% 15.5% 16.0% 12.5%
Source: USDA, Infroma Economics, ADM
Sources: USDA, Informa Economics, PBC
World: Maize Production & Consumption- mln t –
June, 06 2013 Chart 14
Sources: USDA, Informa Economics
World: Distribution of Grain Stocks
Share of China declines for the first time in 4 years
28% 27%32% 31% 30% 30% 33% 34%
39% 35%
3% 3%5% 5% 7% 8%
9% 10%11%
10%18% 18%14% 15% 14% 15%
12% 10%10% 15%9% 9%
7% 9% 8%8% 9% 7%
7% 7%13% 12% 9% 7% 9%9% 6% 7%
5% 6%5% 4%
4% 4%5% 6% 5% 6% 3%
4%
24% 26% 29% 29% 25% 25% 25% 26% 26%23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
other
RUK
EU-27
Bra, Can, Aus; Arg
USA
India
China
June, 06 2013 Chart 15
Source: USDA
World: Grain Stocks per Commodity- mln t -
June, 06 2013 Chart 16
Source: USDA
World: Distribution of maize stocks
Share of the USA rises from 15% to 33%Chinas share declines from 50% to 38%
56%51%
43%
28% 28%33%
29%35% 35%
39%45%
50%
38%
1%5%
8%
3% 2%
3% 10%
8% 7%8%
7%
9%
8%
27%22%
23%
41% 40% 30%31%
29% 30% 22%19%
15%
33%
2%3%
4%4% 4%
4% 5%4% 6% 7%
4%4%
4%
12% 15%19% 17% 18%
23% 22% 20%19% 21% 20% 17%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
others
other Exporters
EU-27
USA
Brasilien
China
June, 06 2013 Chart 17
Source: USDA
World Grain Exports- mln t -
June, 06 2013 Chart 18
Source: USDA
EU Grain Production- mln t -
Some thoughts and figuresUK badRecovery in S.E. Europe expectedSpain good crop
June, 06 2013 Chart 19
Source: Coceral
EU Grain S&D - mln t -
June, 06 2013 Chart 20
Source: Coceral
13/14 12/13 11/12 13/14 12/13 11/12 13/14 12/13 11/12 13/14 12/13 11/12
Beginning stocks 10,4 13,8 11,8 4,2 5,3 6,9 7,6 9,7 8,5 22,3 28,8 27,3
Production 127,0 123,8 129,4 54,6 54,3 51,5 62,2 54,7 64,8 243,8 232,7 245,7
Imports 4,0 3,2 5,4 0,3 0,1 0,4 8,5 11,6 6,2 12,8 14,9 12,0
Total supply 141,4 140,8 146,6 59,1 59,6 58,9 78,3 75,9 79,5 278,9 276,4 285,0
Domestic Use 113,8 111,8 118,4 47,8 48,5 48,1 68,4 67,5 66,6 230,0 227,8 233,1
of which Feed Use 49,6 48,2 54,4 35,3 36,0 35,4 51,0 50,5 49,7 135,9 134,7 139,5
of which Bioethanol Production 5,0 4,6 4,6 0,2 0,3 0,3 3,7 3,3 3,2 8,9 8,2 8,1
Exports 3rd 16,5 18,6 14,4 6,2 6,9 5,5 1,5 0,8 3,2 24,2 26,3 23,1
Carry-out 11,1 10,4 13,8 5,1 4,2 5,3 8,4 7,6 9,7 24,7 22,3 28,8
Stock to use ratio 10% 9% 12% 11% 9% 11% 12% 11% 15% 11% 10% 12%
WHEAT BARLEY Corn TOTAL CEREALS
65,6 63,3 70,578,5 71,8
82,5
48,232,7
58,253,8
43,5
53,2
44,1
41,5
39,0 36,2
40,3
29,4
157,9
137,5
167,7 168,5
155,6165,1
0
40
80
120
160
200
2008 2009 2010 2011 2012 2013
USA
Brasilien
Argentinien
Available quantity of Soybeans in March* - mln t -
* Brazil from January onwards
Sources: USDA, Oil World
June, 06 2013 Chart 21
USA: Soybean Production & Consumption- mln bu –
June, 06 2013 Chart 22
Sources: USDA, Informa Economics, PBC
US Soybeans
September-August USDA Informa Prudential USDA Informa Prudential USDA Informa Prudential
2011 2011 2011 2012 2012 2012 2013 2013 2013
2012 2012 2012 2013 2013 2013 2014 2014 2014
PLANTED ACRES 75.0 75.0 75.0 77.2 77.2 77.2 77.1 77.1 79.0
HARVESTED ACRES 73.6 73.8 73.8 76.1 76.1 76.1 76.2 76.1 77.8
YIELD 41.9 41.9 41.9 39.6 39.6 39.6 44.5 43.9 44.5
SOYBEANS (MIL BU)
SEP. 1 STOCKS 215 215 215 169 169 169 125 140 115
PRODUCTION 3,094 3,094 3,094 3,015 3,015 3,015 3,390 3,344 3,463
IMPORTS 16 16 15 20 25 20 15 15 15
TOTAL SUPPLY 3,325 3,325 3,324 3,204 3,209 3,204 3,530 3,499 3,593
CRUSH 1,703 1,697 1,705 1,635 1,635 1,653 1,695 1,650 1,695
EXPORTS 1,360 1,362 1,360 1,350 1,340 1,343 1,450 1,425 1,550
SEED 90 89 89 90 90 90 87 100 90
OTHER 3 6 1 5 5 3 33 30 20
TOTAL USAGE 3,156 3,154 3,155 3,080 3,070 3,089 3,265 3,205 3,355
YEAR END STOCKS 169 171 169 124 139 115 265 294 238
STOCKS/USAGE 5.4% 5.4% 5.4% 4.0% 4.5% 3.7% 8.1% 9.2% 7.1%
EU: rapeseed balance-mln t -
June, 06 2013 Chart 23
Sources: Oil World, GTIS, Toepfer
Production 15,6 16,1 18,5 19,1 21,5 20,3 19,1 19,7 20,7
Imports 0,4 0,5 0,7 3,3 2,2 2,7 3,5 3,1 2,9
Ukraine 0,1 0,4 0,4 2,3 1,4 1,2 1,1 1,0 1,3
Australia 0,3 0,2 0,8 0,4 1,1 1,9 1,8 1,2
Canada 0,1 0,3 0,2 0,1 0,1
? ?General:• Tight grain balance in 2012/13
• Low ending stock levels, especially in exporting countries
• Prices should remain volatile
Bullish:• South American Logistics - this will mainly affect soy
• Warm and dry weather in Russia - not a big issue yet, as long as March-
May rainfall is adequate
• Wetness in US/Canada during planting - Concern of lower yields and reduced
corn area
• China imports - ??
Bearish:• Well developed crops in Europe
• Big area in US - USDA corn area to high
• Return to average yields?
June, 06 2013 Chart 24
COCERAL views on the impacts of EU financial markets reform
June, 06 2013 Chart 25
Quality of Data: USDA-Estimate of World Grain S+D for 2007/08
Source: USDA
Consumption estimate
Difference = Prod. – Consumption in Mil. t
Production estimateMil. t
June, 06 2013 Chart 26
1. E
tim
ate
May
07In US$/t
Quality of Data: Development of Wheat Prices CBoT & USDA Estimate
Feb
. 08
Est
im.
Fin
anci
al C
risi
s
Exp
ort
sto
pR
U
Fuko
shim
a
Dro
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SA/R
UK
Wheat Price CBoT in US$/t
June, 06 2013 Chart 27
Sources: USDA, Reuters
EU Financial Markets Regulations - Overview
MiFID (Markets in Financial
Instruments Directive)
MAD (Market Abuse
Directive)
MiFID II MAD II MAR (Markets
AbuseRegulation)
EMIR (European Markets
Infrastructure Regulation)
REMIT(Regulation on Energy Market
Integrity & Transparency )
Revision New Revision New New New
MiFIR(Markets in Financial
Instruments Regulation)
2012-13 the year of rulemaking 2014-15 the year of implementation
Regulation of Exchanges
Regulation ofInsider Information
In Force:
OTC Regulation EnergyMarkets, EUAs
(Emissions)
June, 06 2013 Chart 28
Under EU legislative process:
MiFID II/MiFIR
• MiFID is in force since 2007 and now under revision MiFID II plus MiFIR (Directive and Regulation)
• MiFID governs investment services in financial instruments by banks and investment firms and the operation of traditional stock exchanges and Multilateral Trading Facilities (MTF)
• MiFID II will introduce a new type of trading venue: the Organised Trading Facility (OTF)– Stricter framework for commodity derivatives markets
– Improve transparency
• MiFID II/MiFIR still under negotiations in Council
MiFID II for agricultural commodities
• Exemption – art.2: Commercial (agricultural) firms which hedge their risks are exempted from MiFID II for their main and ancillary business.
• Position checks – art.59: ag. commodity contracts will be subject to “position checks” instead of limits. Flexible vs. rigid approach.
• Position reporting – art.60: position reporting done by financial counterparties, i.e. CCP (Central Clearing Party) or broker. – Creation of weekly publication with aggregated positions
by category of trader -> similar to CFTC report
MAD II/MAR
• MAD is in force since 2003 and now is under revision to be replaced by a regulation: MAR
• MAD introduced a framework to tackle insider dealing and market manipulation
• MAR will be extended beyond MTF, to OTF and to related financial instruments traded OTC– Rules are extended to include agricultural derivatives
• MAR legislative process is integrated with MiFIDII/MIFIR – Council agreed already on a general approach on
MAR, but no finalisation until MiFID II progresses
MAR for agricultural commodities
• Prohibition of insider dealing – art.9: as designed today, art. 9 could prevent hedging of risks for ag. commodities contracts
• Exemption to insider dealing – art. 7
– Need for a workable exemption of hedging strategies for ag. commodities operators
EMIR
• EMIR entered into force on 16 August 2012. It introduces:– Reporting and clearing obligation for OTC derivatives, – common rules for central counterparties (CCPs) and for trade
repositories,– rules on the establishment of interoperability between CCPs.
• An OTC regulated by EMIR is an option, future, swap, forward or other derivatives contract that is settled in cash. Are excluded: – Physically delivered options, futures and swaps relating to
commodities not traded through a regulated market or MTF– Physically delivered commodity forwards which are not cleared
through a clearing house
• Technical regulatory & implementing standards defines practical applications– 9 are already adopted and more to come
EMIR and agricultural commodities
• Clearing threshold for non-financial entities
• If > 3 bln EUR OTC volumes for 30 consecutive days, non-financial entities are subject to central clearing requirements– Clearing obligation abolished if threshold is not
exceeded anymore for 30 days.
• For uncleared trades: Post-trade reporting, record-keeping, collateralization and margin
• Clearing obligation for non-financial entities will enter into force not before 2017