Robertson Drew CBH Market Outlook 2016

2016 CBH BARLEY UPDATE
Drew Robertson – August 2016
Senior Barley Trader
AGENDA
• China situation
• Australian exports
• Vietnam
• Australian production
• Global production
• Market Trends
CHINESE BARLEY IMPORTS
Calendar Year
Source: China Customs Import Data & CBH
CHINESE BARLEY IMPORTS
By Country of Origin
Source: China Customs Import Data
CHINESE BARLEY IMPORTS
Summary
• Beer consumption has dropped by 6% for the FH 2016 after
falling 3.6% in 2015
• Inventory levels of malt remain high despite soft demand
• Malting barley demand has been soft for 2H 2016, expect
demand to pick up in Q1 2017
• Chinese feed barley imports continue albeit at a slower pace
• Feed barley with low mycotoxins is blended with low quality
domestic corn
• Don’t expect feed imports to return to 2015 levels but expect
them to continue at similar levels to 2016
AUSTRALIAN BARLEY EXPORTS
Percentage of Exports to China as at June 2016
Source: China Import Data and ABS
AUSTRALIAN BARLEY EXPORTS
Malt, Feed and Malting Barley
Source: ABS
2015/16 AUSTRALIAN BARLEY EXPORTS
Export pace within 3 year range
Source: ACF and ABS
AUSTRALIAN BARLEY EXPORTS TO VIETNAM
Malted exports consistent for last three years
Source: ABS
VIETNAM MALTED BARLEY IMPORTS
• Raw barley imports < 100,000mt including malt and feed
• EU is the main origin for Vietnam malted barley imports
• Ideally Australia can win some market share from EU
VIETNAM BEER MARKET
Beer consumption increasing
• Even though special consumption tax on beer has been applied on the
beginning of this year, statistics show that the consumption in first 5
months of 2016 increased by 5.7% vs same period last year.
• There are four main brewers (Sabeco, Heineken, Habeco and
Carlsberg) in Vietnam’s beer industry, accounting for more than 88.4%
of total marker share.
Source: Beer Consumption Growth 2015 -2035 Scenario Median
Source: Vietnam beer alcohol beverage association
AUSTRALIAN BARLEY PRODUCTION
August 2016
Metric Tonnes (Thousands)
12,000
10,000
9,433
8,000
WA
6,000
SA
4,000
Vic
NSW
2,000
Qld
-
•
•
•
15 Year Australian barley production average = 7.68mmt
10 Year Australian barley production average = 7.59mmt
5 Year Australian barley production average = 8.26mmt
Source: CBH
GLOBAL BARLEY SUPPLY AND DEMAND
Global Production 2016/17 (Change from 2015/16)
Canada
8.50 MMT
Russia
19.00 MMT
(+0.275 MMT)
(+1.92 MMT)
EU
61.16 MMT
(-0.403 MMT)
Ukraine
9.70 MMT
Others
34.52 MMT
(+0.95 MMT)
(-5.04 MMT)
Production Total
145.23 MMT
(-3.39 MMT)
Argentina
3.00 MMT
(-1.90 MMT)
Australia
9.40 MMT
(+0.81 MMT)
Source: USDA
GLOBAL BARLEY SUPPLY AND DEMAND
Exports and Consumption 2016/17 (Change from 2015/16)
Consumption
146.61 MMT
Canada
1.40 MMT
Russia
4.80 MMT
(+0.10 MMT)
(+1.00 MMT)
(-1.15 MMT)
EU
8.00 MMT
(-2.30 MMT)
Ukraine
4.50 MMT
Others
1.58 MMT
(+0.30 MMT)
(+0.28 MMT)
Exports Total
28.38 MMT
(-0.52 MMT)
Argentina
1.90 MMT
(-0.90 MMT)
Australia
6.20 MMT
(+1.00 MMT)
Source: USDA
SUPPLY AND DEMAND
USDA World Barley Ending Stocks and S/U Ratio
Source: USDA
GLOBAL BARLEY OUTLOOK
2016/17
Bullish Factors
Bearish Factors
• Limited malting quality supply in
Europe
• Grower retention of barley – reluctant
sellers
• Based on potential – frost / spring rain
to come
• Weather conditions in Canada
• Excellent Australian crop conditions
• Declining beer production and high
inventory levels in China
• Appreciation of AUD
• Large supply feed grains globally
• EA at export parity – will be our main
competitor at this rate
Swing Factors
• Ample supply of malting barley from Australia to cover China with current crop
forecast and soft finish – this could change with adverse finish
• Extra ordinary demand for feed barley China / Saudi / Middle East??
CBH CURRENT PRICING
2016/17
Grade
Price
Feed
$200
Baudin
+$30 - $35
LaTrobe
+$25 - $30
Flinders
+$25 - $30
Scope
+$25 - $30
Bass
+$30
Hindmarsh
+$10