Argentina’s Default and the ‘Lucky’ Soybean Factor
CPA. Daniel A. Miró November 2012
Chart 1
EXPORT PRICES INDEX base year 1993=100
270 250 230
Cereals
Oilseeds
Oils & Fats
Oil Meals
210 190 170 150 130 110 90
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
70
Source: INDEC N贸vitas S.A.
Chart 2
Soybean Complex Share in Argentine Total Exports (in Million US Dollars) 1999 139 2044 1011
SOYBEANS SOY OIL BIODIESEL SOY MEAL TOTAL SOYBEAN COMPLEX 3193 TOTAL EXPORTS % SHARE OF THE SOYBEAN COMPLEX
2000 642 1740 1442
2001 504 1800 1206
2002 773 2170 907
2003 1239 2401 1000
2004 1113 2561 1280
2005 1833 3260 2002
3824
3510
3850
4640
4955
7096
23333 26409 26610 25709 29566 34550 40013
14%
14%
13%
15%
16%
14%
18%
2006 2007 2008 2009 2010 2011 2012* SOYBEANS 1779 3415 4592 1654 4966 5335 3485 SOY OIL 4358 5741 7189 8051 8195 9789 4180 BIODIESEL 2789 4260 4734 3136 3959 4925 2282 SOY MEAL 5 135 845 913 1225 2142 9980 TOTAL SOYBEAN COMPLEX 8931 13551 17360 13754 18345 22191 19926 TOTAL EXPORTS % SHARE OF THE SOYBEAN COMPLEX *Forecast Source: INDEC N贸vitas S.A.
45456 55780 70589 55669 68500 84269 81954
20%
24%
25%
25%
27%
26%
24%
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
1996/97
1995/96
1994/95
1993/94
35
1992/93
40
2012/13*
*Forecast
1991/92
1990/91
Billion US Dollars
Chart 3 www.novitas.com.ar
Argentina: Value of Grain Production and Export Taxes
45
Value of Grain Production
Amount of Export Taxes
30
25
20
15
10
5
0
-Can this trend continue? -Is this just luck? -Are we facing a new market scenario?
The Grain Market and the Changing “Dynamics� of Demand
Chart 4 EVOLUTION OF WORLD POPULATION AND THE WORLD DEMAND OF MAIN GRAINS AND OILSEEDS Base Index 1976/77 - 1980/81 = 100
360 340
WORLD POPULATION
320
COARSE GRAINS
300
WHEAT
280
CORN OILSEEDS
260
SOYBEAN
240
220 200 180 160 140
120 100 *Forecast
Source: USDA and Oil World N贸vitas S.A.
Chart 5
EVOLUTION OF WORLD POPULATION AND THE WORLD DEMAND OF MAIN GRAINS AND OILSEEDS ANNUAL CUMULATIVE GROWTH RATES
PERIOD WORLD POPULATION WHEAT COARSE GRAINS CORN OILSEEDS SOYBEAN
1975-2012 1,43% 1,80% 1,53% 2,54% 3,44% 4,04%
1995-2012 1,17% 1,26% 1,68% 2,61% 3,16% 4,02%
The Trade/Consumption Relation: A Key Indicator
Chart 6
300
Soybean: World Consumption and Soybean Complex Exports Consumption
In Millon Tons
250
Exports (in grain equivalent)
200 150 100
64% 50
*Forecast
64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*
0
Source: USDA N贸vitas S.A.
Chart 7
USA: Soybean Production and Soybean Complex Exports 100
Production
90
Exports (In grain equivalent)
80
In Million Tons
70 60 50
40 30
54%
20 10
Source: USDA N贸vitas S.A.
10/11
08/09
06/07
04/05
02/03
00/01
98/99
96/97
94/95
92/93
90/91
88/89
86/87
84/85
82/83
80/81
78/79
76/77
74/75
72/73
12/13*
*Forecast
70/71
68/69
66/67
64/65
0
Chart 8
South America: Soybean Production and Soybean Complex Exports 160
Production
140
Exports (in grain equivalent)
In Million Tons
120 100 80 60 40
75%
20
*Forecast
Source: USDA N贸vitas S.A.
12/13*
10/11
08/09
06/07
04/05
02/03
00/01
98/99
96/97
94/95
92/93
90/91
88/89
86/87
84/85
82/83
80/81
0
Chart 9
NET WORLD EXPORTS OF THE SOYBEAN COMPLEX 1976/77-1978/79 USA 71,0% OTHERS 0,5% SOUTH AMERICA 29% ARGENTINA 4,0%
PARAGUAY 0,5%
BRAZIL 24,0% TOTAL: 32,89 MILLION TONS.
NET WORLD EXPORTS OF THE SOYBEAN COMPLEX 2010/11-2012/13 URUGUAY 1% PARAGUAY 4,2% BOLIVIA 1,1%
USA 30,7%
CANADA 1,1%
INDIA 2,3% OTHERS 0,4%
SOUTH AMERICA 65,6% BRAZIL 32,0%
ARGENTINA 27,4%
TOTAL: 154,91 MILLION TONS. N贸vitas S.A.
900
*Forecast
60/61 62/63 64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*
In Millon Tons
Chart 10
CORN: WORLD CONSUMPTION AND EXPORTS
800 Consumption
700 Exports
600
500
400
300
200
100
0
11%
Source: USDA N贸vitas S.A.
60/61 62/63 64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*
In Million Tons
Chart 11
USA: Corn Production and Exports
350
Production
0
*Forecast
Source: USDA N贸vitas S.A.
Exports
300
250
200
150
100
50
11%
Soybean Supply: An American Continent Issue
Chart 12
WORLD SOYBEAN PRODUCTION 275 250 OTHER COUNTRIES
225
MERCOSUR + BOLIVIA
200
In Million Tons
USA + CANADA 175 150 125 100 75 50
*Forecast
Source: USDA N贸vitas S.A.
12/13*
10/11
08/09
06/07
04/05
02/03
00/01
98/99
96/97
94/95
92/93
90/91
88/89
86/87
84/85
82/83
80/81
78/79
76/77
74/75
72/73
0
70/71
25
*Forecast
Source: USDA N贸vitas S.A.
12/13*
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
Brazil Paraguay Uruguay
97/98
96/97
95/96
94/95
50
93/94
92/93
91/92
90/91
In Million Hectares
Chart 13
SOYBEAN AREA IN SOUTH AMERICA
60
Argentina Bolivia Others
40
30
20
10
0
Soybean Demand: The Chinese ‘Dilemma’
Chart 14
Source: USDA N贸vitas S.A.
10/11
08/09
06/07
04/05
02/03
00/01
98/99
96/97
94/95
92/93
90/91
88/89
12/13*
*Forecast
86/87
84/85
82/83
5 0 -5 -10 -15 -20 -25 -30 -35 -40 -45 -50 -55 -60 -65
80/81
In Million Tons
CHINA: Net Trade of Soybeans
Chart 15
CHINA: SOYBEAN CRUSHINGS & IMPORTS 70 64
Imports
Crushings
58
In Milllon Tons
52 46 40 34 28 22 16 10 4 *Forecast
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13*
Source: USDA N贸vitas S.A.
Chart 16
CHINA: SOYBEAN IMPORTS BY ORIGIN 60 OTHERS
In Million Tons
50 40
SOUTH AMERICA USA
30 20 10
0
Source: OILWORLD N贸vitas S.A.
80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13
In Million Tons 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
In Million Tons
Chart 17 70
USE OF PROTEIN MEALS IN CHINA
60
50
40
140
OTHERS FISH MEAL GROUNDNUT MEAL COTTON MEAL RAPE MEAL SOY MEAL
30
20
10
0
180
FEED USE OF GRAINS IN CHINA
160
CORN OTHERS
Source: OIL WORLD - USDA N贸vitas S.A. WHEAT
120
100
80
60
40
20
0
Chart 18 CHINA: SOYBEAN PRODUCTION AND HUMAN CONSUMPTION 20 18
In Million Tons
16 14 12 10 8 6
4 2 0
*Forecast
Source: Oil World N贸vitas S.A.
Production Human Consumption
www.novitas.com.ar
Chart 19
7
CHINA: MONTHLY SOYBEAN IMPORTS 2009/10
2010/11
2011/12
2012/13
In Million Tons
6 5 4 3 2 1 OCT NOV DEC JAN
FEB MAR APR MAY JUN
JUL AUG SEP
Soybean Demand and the Biofuels ‘Fever’
www.novitas.com.ar
Chart 20
ENERGETICA MUNDIAL AMATRIZ VIEW ABOUT THE FUTURE OF THE WORLD ENERGY EQUATION We are Here
Modern Biomass
Traditional Biomass Mineral Gas
Mineral Oil
Coal Others
Challenge: The Diversification of Energy Sources
Chart 21
BIODIESEL WORLD PRODUCTION In Million Tons COUNTRIES Germany France Italy Other E.U. E.U. (27 countries) BRAZIL ARGENTINA U.S.A. OTHERS WORLD TOTAL Source; Oil World N贸vitas S.A.
2006 2,55 0,74 0,50 0,89 4,88 1,13 0,05 0,06 1,04 7,16
2007 2,93 0,87 0,46 1,53 6,02 1,70 0,18 0,36 1,37 9,63
2008 2,67 1,86 0,62 2,18 7,57 2,69 0,71 1,03 2,10 14,10
2009 2,49 2,00 0,80 2,83 8,87 1,87 1,18 1,42 2,56 15,89
2010 2,55 2,00 0,76 3,47 9,58 1,08 1,82 2,10 3,83 18,40
2011 (2) 2,73 1,78 0,43 3,63 9,13 2,95 2,43 2,35 4,00 20,85
2012 % VAR (1) (1/2) 2,40 -12,1 1,80 1,1 0,48 11,6 3,60 -0,8 9,00 -1,4 3,38 14,6 2,60 7,1 2,20 -6,3 4,00 0,0 21,18 1,6
% 2012 11,3% 8,5% 2,3% 17,0% 42,5% 16,0% 12,3% 10,4% 18,9% 100,0%
Chart 22
Argentina: Biodiesel Production and Capacity
In Millon Tons
4,0 3,5
Capacity
3,0
Production
2,5
2,0 1,5 1,0 0,5 0,0
2005 N贸vitas S.A.
2006
2007
2008
2009
2010
2011 2012* *Forecast
The Role of ‘Structural Exporters’ The Amazing Argentine Case
Chart 23
100% 90%
ARGENTINA: AVERAGE INTERNAL PRODUCTION EXPORTED IN THE LAST 5 YEARS AS DERIVATIVES AS GRAINS/OILSEEDS
90,3%
80% 70%
59,5%
65,5% 58,8%
60% 50% 40% 30% 20% 10% 0% WHEAT Source: Argentine Ag Ministy Nóvitas S.A.
CORN
Cambiar colores – ampliar letras SOYBEAN SUNFLOWER
Chart 24
ARGENTINA: EVOLUTION OF PLANTED AREA WITH CEREALS AND OILSEEDS 35 CEREALS OILSEEDS
30
In Million Hectares
25 20 15 10 5
Source: Buenos Aires Grain Exchange & Argentine Ag Ministry N贸vitas S.A.
10/11
12/13*
*Forecast
08/09
06/07
04/05
02/03
00/01
98/99
96/97
94/95
92/93
90/91
88/89
86/87
84/85
82/83
80/81
0
Chart 25
SOYBEAN OIL DEMAND STRUCTURE: ARGENTINA, BRAZIL AND THE USA IN 2012/13 10
Biodiesel exports Soybean oil exports Biodiesel domestic use Soybean oil domestic use
9 In tMillion Tons
8 7 6 5 4 3 2 1 0
Argentina Source: USDA N贸vitas S.A.
Brazil
USA
Chart 26
EVOLUTION OF PRODUCTION AND OVERHEAD COSTS FOR MAIN CROPS IN ARGENTINA (In US Dollars per Hectare) SOYBEANS (1) CORN (2) WHEAT (3) Production Overhead Production Overhead Production Overhead 05/06 (A) 173 99 267 99 146 76 06/07 182 113 277 113 169 86 07/08 183 121 290 121 190 105 08/09 199 141 309 141 208 112 09/10 211 145 345 145 217 120 10/11 216 153 345 153 237 131 11/12 244 165 395 165 261 134 12/13 (B) 282 185 476 185 366 150 (B/A) 63% 87% 78% 87% 151% 97% (1) GMO, Cero Tillage, Main Soybean Belt (2) Cero Tillage, Main Corn Belt (3) Conventional Tillage, Southeastern Areas
Looking into the Future -Limited Availability in Grain Markets -Is Corn Facing a Similar Imbalance as Soybeans? -Is there a ‘Quick’ Solution?
Source: USDA N贸vitas S.A. 12/13
11/12
10/11
World
09/10
08/09
07/08
30
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
91/92
90/91
89/90
%
Chart 27 CORN: WORLD AND U.S. STOCK/USE RATIO
35
U.S.A.
25
20
15
10
5
0
Chart 28
WORLD PRODUCTION OF COARSE GRAINS In Million Tons
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
12/13
VAR %
(1)
(2)
N贸vitas
(2/1)
Corn
699,74 714,05 794,22 799,54 821,20 830,29 877,75 839,0
827,0
-4,4
Barley
136,22 136,97 133,08 155,05 150,76 122,78 134,06 130,7
132,5
-2,5
Sorghum
59,62
57,51
65,98
64,70
54,27
62,47
53,78
59,5
58,8
10,6
Millet
30,63
31,66
32,14
32,76
28,28
34,98
32,94
30,7
30,6
-6,7
Oats
23,93
22,77
25,75
25,80
23,52
19,84
22,99
21,5
22,0
-6,7
Mixed Grain
14,52
12,20
14,39
17,32
17,52
11,44
12,87
13,8
13,3
7,6
Rye
15,71
13,56
15,10
15,98
17,20
15,56
14,44
14,9
15,1
2,9
1099,3
-3,4
TOTAL Source: USDA N贸vitas S.A.
980,36 988,72 1080,67 1111,13 1112,74 1097,35 1148,83 1110,1
Chart 29 COARSE GRAINS: WORLD SUPPLY AND DEMAND Production Season 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12
2012/13 2012/13 N贸vitas Source: USDA N贸vitas S.A.
Ending Stock
722,8 794,3 828,8 812,2 868,9 797,6 869,4 800,9 909,1 881,4 891,5 878,1 863,7 896,6 873,6 916,0 1015,6 980,4 988,7 1080,7 1111,1 1112,7 1097,4 1148,8
Use In Million Tons 780,3 814,9 815,2 813,1 841,4 836,2 853,8 835,8 869,5 867,9 869,7 882,6 884,7 909,0 901,2 944,8 978,9 994,0 1013,5 1057,4 1081,0 1111,0 1129,5 1148,6
204,0 183,4 197,1 196,3 221,3 182,7 198,3 163,4 203,0 216,4 238,1 233,1 212,0 199,6 172,1 143,3 180,0 166,3 141,5 164,8 194,9 196,7 164,6 164,8
Stock/Use Ratio (% ) 26,1 22,5 24,2 24,1 26,3 21,8 23,2 19,6 23,3 24,9 27,4 26,4 24,0 22,0 19,1 15,2 18,4 16,7 14,0 15,6 18,0 17,7 14,6 14,3
1110,1 1099,3
1128,6 1124,0
146,3 140,1
13,0 12,5
88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13*
%
Chart 30
EVOLUTION OF THE U.S. STOCKS/USE RELATIONS
30 CORN
* Forecast
Source: USDA N贸vitas S.A. SOYBEANS
25
20
15
10
5
0
The 2012/13 Soybean Campaign in South America A ‘Key’ Crop
Chart 31
USA: SUPPLY & DEMAND OF SOYBEANS USDA 11/12
USDA 12/13
AUG
SEP
OCT
AUG
SEP
OCT
NOVITAS OCT
Planted Area (Million Hectares) Harvested Area (Million Hectares) Yields (Tons/Ha)
30,4 29,8 2,790
30,4 29,8 2,790
30,4 29,9 2,817
30,8 30,2 2,427
30,8 30,2 2,373
31,3 30,4 2,541
31,3 30,3 2,258
Begining Stocks Production Imports Total Supply
5,9 83,2 0,4 89,4
5,9 83,2 0,4 89,4
5,9 84,2 0,4 90,4
3,9 73,3 0,5 77,7
3,5 71,7 0,5 75,8
4,6 77,8 0,5 83,0
4,6 75,1 0,5 80,2
Crushings Other Uses Exports Total Use
46,0 2,7 36,7 85,5
46,4 2,5 37,0 85,9
46,3 2,4 37,0 85,9
41,2 3,2 30,2 74,6
40,8 3,2 28,7 72,7
41,9 3,1 34,4 79,4
41,7 2,8 32,3 76,8
Ending Stocks Stocks/Consumption Rel. (%)
3,9 4,6%
3,5 4,1%
4,6 5,3%
3,1 4,2%
3,1 4,3%
3,5 4,4%
3,4 4,4%
Chart 32
SOYBEAN: SOUTH AMERICAN PRODUCTION In Million Tons 04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13*
BRAZIL
53,00
57,00
59,00
61,00
57,80
69,00
75,50
66,50
81,00
ARGENTINA
39,00
40,50
48,80
46,20
32,00
54,50
49,00
41,00
55,00
PARAGUAY
4,04
3,64
5,58
5,97
3,65
7,38
8,31
4,00
8,10
URUGUAY
0,48
0,63
0,82
0,81
1,17
1,82
1,55
1,60
1,90
BOLIVIA
2,03
2,06
1,65
1,05
1,60
1,67
2,10
2,20
2,30
OTHERS
0,17
0,13
0,15
0,18
0,20
0,21
0,21
0,21
0,21
TOTAL Source: USDA N贸vitas S.A.
98,72 103,96 116,00 115,21
96,42 134,57 136,67 115,51 148,51 *Forecast
Funds Waiting: A 15/20 million tons failure in South American soybean production will give us back record prices
www.novitas.com.ar
35
In Millon Tons
30
CBOT Soybeans: Nearby Quotes and Net Fund Positions Speculative Funds Index Funds Nearby Quotes
660 620 580
25
540
20
500
460
15 420
10 5
380 340 300
0 -5
260 220
U$S/Ton
Chart 33