disclaimercommodity risk management · fcstone, llc will clear swaps when applicable. swaps are...
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
Grain and Oilseed Outlook
Slovenia - November 2015
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk Management
INTLFCStone LtdBranch registered in Ireland No. 907174
5th Floor, Portview House, Thorncastle Street, Ireland
Registered in England and Wales Company No. 5616586
Authorised and regulated by the UK Financial Conduct Authority [FRN: 446717]
In Ireland, the activities of INTL FCStone Ltd are subject to the supervision of conduct of business rules by the Central Bank
of Ireland.
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves
substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative
of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution
and bi-lateral swaps are made solely on behalf of INTL FCStone Markets, LLC. FCStone, LLC will clear swaps when applicable. Swaps
are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to
any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should
be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding
market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation
would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the
needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account
representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and
viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its
subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation
regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any
redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this materia l.
Disclaimer
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
North America
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementFunds
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk ManagementUSA
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
South America
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementSouth America
Out with the old and in with the new
What does Mauricio Macri election mean for
Grain and Oilseed markets, after he takes
office on December 10th??
• Currently Argentina Ag ministry estimates for 15/16 wheat
output hold between 10-12Mmt
• Estimate record Soybean area of 20.6mha for 15/16
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk ManagementSouth America
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
Australia
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementAustralia
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Commodity Risk ManagementAustralia
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
China
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementMaize – Insatiable Chinese demand
But with recent share prices collapse and slowing growth how sustainable is this demand?
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Commodity Risk ManagementChina
228mmt in world stocks
89mmt of which rest in China
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Commodity Risk ManagementChina
-8.20
80
100
120
140
160
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200
220
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 14 15
World Corn Carryout (mmt)Source: USDA
188Mmt of global end stocks
China holds 90mmt
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Commodity Risk ManagementChina
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Commodity Risk ManagementChina
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Commodity Risk ManagementMiddle East & N Africa
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Commodity Risk ManagementMiddle East & N Africa
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Commodity Risk ManagementMiddle East & N Africa
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
North Africa
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementMiddle East & N Africa
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
FSU
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementRussia & Ukraine
• Russian Weather & New crop outlook
• Dryness remains focal talk point for market on new crop
• However primary growing regions get rain this last week
• Temperatures remain warm for time of year
• 95% of Russian Winter wheat is now in the ground
• Remember it was dry at this point last year also & this
year dryness impacting smaller growing areas
• Export Pace for grains
• Wheat exports running 1.5mmt behind last years pace at
between 10.2-11mmt as of October vs. 12.3mmt last at
this point last year
• Corn and barley exports running at historically high pace
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Commodity Risk ManagementRussia & Ukraine
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Commodity Risk ManagementRussia & Ukraine
-1.71
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
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 14 15
FSU-12 Corn Production (mmt)Source: USDA
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Commodity Risk ManagementRussia & Ukraine
EU wheat now
more competitive
than Russian
As EU still needs
to move significant
volume of wheat,
12.5% Pro
Russian wheat
may struggle to
breach $205/210
levels
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Commodity Risk ManagementRussia
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Commodity Risk ManagementRussia
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Commodity Risk ManagementRussia
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Commodity Risk ManagementRussia
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Commodity Risk ManagementUkraine
• Unlike Russia, Ukraine retains a significant dryness challenge
• Central, Southern & Eastern areas remain dry, with some farmers not
planting
• Keep in mind Ukraine usually sow 90-95% of its wheat surface area
to Winter wheat.
• 5.6mha has been planted (90% of intended area) vs. 6.8mha at the
same time last year
• Lowest winter grain area in last ten years. Do we see shift to spring
barley or corn??
• 68% of crop is in good/satisfactory condition vs.83% last year.
• Privates suggesting 16/17 output in wheat can fall to 17/20mmt vs. this
years output of 25/26mmt. Do we see a fall in export levels to sustain
carry out?
• Current exports at 7.5mmt vs. 6.5mmt at the same time last year
• Corn FOB values catch a bid as Brazilian offer fades and makes way for
US to dominate market
• Premium jump from 52c over march Chicago corn to 70c for Jan
shipment, reflecting tighter supply
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Commodity Risk ManagementUkraine
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Commodity Risk ManagementUkraine
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
Europe
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEurope
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Commodity Risk ManagementEU Grain Price evolution
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Commodity Risk ManagementEU Grain Price evolution
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Commodity Risk ManagementEU Grain Price evolution
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Commodity Risk ManagementEU Grain Price evolution
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Commodity Risk Management
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Commodity Risk Management
12.5% protein wheat
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Commodity Risk Management
12.5% protein wheat
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Commodity Risk Management
12.5% protein wheat
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Commodity Risk Management
Jaime Nolan Miralles & Dr. Rory Deverell
Senior Commodity Risk Manager
INTLFCStone Ltd.
Some external drivers
International Assets Holding Corporation | www.intlassets.com
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Commodity Risk ManagementEU Grain Price evolution
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Commodity Risk ManagementBDFI – Global Deflation
New all times lows being
traded. Any rebound in
commodities will be led
by BDFI
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Commodity Risk ManagementCRB Index – Global Deflation
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Commodity Risk ManagementCRB Index – Global Deflation
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Commodity Risk ManagementSummary
• Farmer retention and lack of selling dominates Eu and
Global grain market
• Do sellers need to chase demand?
• Consumer buyers covered through Jan/Feb on average
• USD strength continues to weight on international
market
• However, comparative Euro weakness lend support
internally
• Weather market defines our path forward near term
• Geo/politics – Russia/Ukraine – Argentina (elections)
• Volatility continues to leak out of market –
Complacency?
• Major shift in fundamentals needed to bring higher
prices/ Hard to see downside when we look at current
multi year lows
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Commodity Risk Management
INTLFCStone LtdBranch registered in Ireland No. 907174
5th Floor, Portview House, Thorncastle Street, Ireland
Registered in England and Wales Company No. 5616586
Authorised and regulated by the UK Financial Conduct Authority [FRN: 446717]
In Ireland, the activities of INTL FCStone Ltd are subject to the supervision of conduct of business rules by the Central Bank
of Ireland.
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves
substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative
of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution
and bi-lateral swaps are made solely on behalf of INTL FCStone Markets, LLC. FCStone, LLC will clear swaps when applicable. Swaps
are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to
any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should
be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding
market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation
would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the
needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account
representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and
viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its
subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation
regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any
redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this materia l.
Disclaimer