[Title] Crop report - Pepper. China Spice Conference 1 November 2018 Wuxi, China

Transcription

1 [Title] Crop report - Pepper [Date] Jos van Gulick China Spice Conference November 28 Wuxi, China

2 US$ US$ / / MT MT US$ / MT Have we seen the bottom yet? 6, 6, 6, 4, 4, 4, Black pepper peaks at US$9,976/MT and white pepper at US$4,62/MT in Jun years 2, 2, 2,,,, 8, 8, 8, 6, 6, 4, 4, 2, 2, Black pepper low at US$,373/MT in Jul Black Black Pepper Pepper FOB Black FOBPepper FOBWhite Pepper Pepper DW FOB DW FOB Note: Monthly price data as per 5-Oct-8. ) Average of ASTA quality Vietnam, Lampung and Brazil. Source: Nedspice research. US$ 2,853 / MT US$ 2,4 / MT US$ 2,87 / MT 2

3 Fundamental market forces Import tariffs Region Regulations Tax Local consumption Cost price Substitutes Acreage Plantings Information Production Knowhow Survival rate GDP growth Chemicals Yield Fertilizer Weather Knowledge Innovation Speculators Stock Holding costs Holding power Efficiency Decay Supply Price Demand Culture Export Regulations Traceability Inflation Middle class Population growth Food trends Organic Speculators New applications Sustainability Healthcare Culture FX M&A Size Source: Nedspice research. 3

4 Global production Others Sri Lanka Malaysia Cambodia China Indonesia Brazil India Equator Vietnam Note: Source: Based on 28 production estimates. Nedspice research. 4

5 Vietnam Vietnam vs RoW Black vs White Production over time (KMT) Production Change in planted area (%) 38% 89% 35 % 3 9% 8% Production per key area Ba Ria Others 9% Vung Tau 9% Dak Lak 28% % 6% 5% 4% Binh Phuoc % Dong Nai 4% Dak Nong 5% Gia Lai 5% 5 3% 2% L3Y Avg.: % 4% Note: Source: Based on 28 production estimates. Nedspice research. 5

6 Vietnam - Crop video Video placeholder: Vietnam Due to heavy rainfall following the creation of this video the estimated yield is slightly less than suggested in the video. The crop estimates in this presentation take into account the latest views.

7 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Vietnam production is at an all-time high and is again expected to increase significantly this season Production over time (KMT) Production Next 2 month stock development (KMT) Change in planted area (%) % 35 % % 8% 7% 6% 5% 4% Stock Sep-8 Consumption Import / Export % % 2% L3Y % Avg.: 5% Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC. 7

8 Brazil Brazil vs RoW Black vs White Production over time (KMT) 4% 98% Production Change in planted area (%) % Production per key area % Bahia 5% Others % % 25 25% Espírito Santo 4% Pará 54% 5 L3Y Avg.: 3% 5% (5) (5%) Note: Source: Based on 28 production estimates. Nedspice research. 8

9 Brazil - Crop video

10 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Brazil becomes No. 2 origin with an expected increase to 9KMT Production over time (KMT) Next 2 month stock development (KMT) Production Change in planted area (%) +2% % 65% 45% Stock Sep-8 29 Consumption 7 Import / Export % % 5 L3Y Avg.: 7% 5% (5) (5%) Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC.

11 India India vs RoW Black vs White Production over time (KMT) 6% % Production Change in planted area (%) % Production per key area % Tamil Nadu 8% Plains/lowlands % % 3% Kerala 32% Karnataka 5% () L3Y Avg.: % % (%) Note: Source: Based on 28 production estimates. Nedspice research.

12 Recent floods in India hit major pepper growing areas; Overall impact on production is estimated to be c. 7 KMT Floods overlapped with major pepper producing areas in India Illustrations Karnataka 2 Most important impacted regions are Kodagu, Hassan and Chikkamagaluru Floods and landslides destroyed c. % of the yielding area Yield is estimated to be 5% less due to a weaker berry setting Overall impacted expected to be 5KMT Kerala Most important impacted regions are Idukki and Wayanad Floods and landslides destroyed c. % of the yielding area in Wayanad Yield is estimated to be 5% less due to a weaker berry setting Overall impacted expected to be 2KMT 3 2. Land slides 2. Dead vines 3. Mudflows 2 Overall impact estimated to be % of production, resulting in a decrease of c. 7 KMT Source: Nedspice research, NASA. 2

13 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 India is expected to have a lower crop of 6 KMT this season, also impacted by the heavy rains and floods last August Production over time (KMT) Next 2 month stock development (KMT) Production Change in planted area (%) (35%) % 7% 5% Stock Sep-8 Consumption Import / Export % % L3Y % Avg.: (2%) () (%) Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC. 3

14 Indonesia Indonesia vs RoW Black vs White Production over time (KMT) 2% 39% Production Change in planted area (%) % 9 9% Production per key area % 7% 6% Kalimantan 6% Others 5% % 4% 3 3% Lampung 32% Bangka 47% 2 2% L3Y Avg.: % 9% Note: Source: Based on 28 production estimates. Nedspice research. 4

15 Indonesia - Crop video (last season crop) Video placeholder: Indonesia

16 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Indonesia is expected to see a decrease in production to 6KMT, driven by a decrease in Lampung Production over time (KMT) Next 2 month stock development (KMT) Production Change in planted area (%) (%) % % 8% 7% 6% 5% Stock Sep-8 Consumption Import / Export 4 4 (26.8%) + 4 4% 3 2 3% 2% L3Y % Avg.: 8% Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC. 6

17 China China vs RoW Black vs White Production over time (KMT) 6% % Production Change in planted area (%) 6 % 9% 5 8% Production per key area % 6% Hainan % 3 2 5% 4% 3% 2% L3Y Avg.: % % Note: Source: Based on 28 production estimates. Nedspice research. 7

18 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 China s crop size is estimated to decrease to 33 KMT this season Production over time (KMT) Next 2 month stock development (KMT) Production Change in planted area (%) (6%) 6 % 5 9% 8% Stock Sep % 6% 5% Consumption 63 Import / Export % + 4% 2 3% 2% L3Y % Avg.: % Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC. 8

19 Cambodia Cambodia vs RoW Black vs White Production over time (KMT) 4% % Production Change in planted area (%) % Production per key area % Kampot % Ratanakiri 7% Others 2% % 3% Tboung Khmum 7% 2 (3) L3Y Avg.: % 4% (%) Note: Source: Based on 28 production estimates. Nedspice research. 9

20 Stock development Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Other considerations Harvest calendar Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Cambodia is set to continue its strong growth for now with an expected crop of 3 KMT, but planted areas start shrinking Production over time (KMT) Next 2 month stock development (KMT) Production Change in planted area (%) +23% % 7% Stock Sep-8 Consumption % 3% L3Y % Avg.: 3% Import / Export % (3) (%) Note: Stock positions are calculated based on estimates of monthly production, consumption, import and export volume, using trade statistics over the last twelve months. ) Last twelve months export figures as per Sep-8. Source: Nedspice Research, ITC. 2

21 Total production is expected to increase with 37 KMT to a total of 62 KMT Global pepper production (KMT) Exportable production (KMT) White 9% +37KMT Others Cambodia China Indonesia 394 Black 8% Brazil India Vietnam ) Excludes imports and exports between producing countries. Source: Nedspice research. (25) (4) (3)

22 Global demand is at some 474 KMT, which remains well below production levels Producing countries (KMT) 4% total Consuming countries (KMT) 6% total 57 India China Others Malaysia Indonesia % % 2% 3% 5% 6% 7% 9% Total demand 474KMT 9% Total production 62 KMT 5% Annual demand growth c. 2.6% p.a. c. 2 KMT p.a. Annual production growth 37 KMT 249 Others Asia Africa M.East Europe North America Versus exportable production of 424 KMT Source: Nedspice research. 22

23 KMT Global stocks are increasing, and it s likely that supply will continue to exceed demand Global stock development (KMT) Planting estimates suggest supply will continue to outgrow demand 4-9 CAGR Producing countries 32.% Consuming countries 24.3% Total 28.4% 57 % Change in planted area % 9% 8% Vines generally enter most productive state in year 5 (22) 6% 3% % Historically, there is a c. 3-6 years reversal period Production Consumption Black Pepper FOB 2 2,, 8, 6, 4, 2, US$ / MT Note: Market data as per 5-Oct-8. ) Weighted average of estimated increase in Vietnam, India, Brazil, Indonesia and Cambodia planted area. The production quantities of the previous year are used as weight. 2) Average of Vietnam, Indonesia and Brazil ASTA quality. Source: Nedspice research. 23

24 KMT Excess production is pushing the ratio of global stocks relative to demand beyond the previous high Stock ratio (%) 5 8% 45 6% 4 4 4% % 3 3 % % % 5 4% 2% 5 5 8% 2, 6%, 4% 8, 2% % 6, 8% 4, 6% 4% 2, 2% 2% Stock ratio (%) US$ / MT ) Defined as global stock position / global demand. Source: Nedspice research. Stock Stock Stock ratio Demand Black Pepper Stock FOB ratio 24

25 and price bottoms tend to occur around stock ratio highs 8% 2, 6%, 4% 2% 8, Stock ratio (%) % 8% 6, US$ / MT 6% 4, 4% 2% Current price US$,8/MT US$2,78/MT US$,454/MT Note: Market data as per 5-Oct-8. ) Defined as global stock position / global demand. 2) Average of Vietnam, Indonesia and Brazil ASTA quality. Source: Nedspice research. Stock ratio Black Pepper FOB 2 2, 25

26 US$ / MT US$ / MT US$ / MT Historical data suggests we have seen the largest part of the price drop, although it may take more time before reversal sets in 6, 4, 2, 7, 6, 5, 4, 3, (67)% price decrease in 3.3 years 82% of the total drop 7, 6, 5, 4, 3, (7)% price decrease in 3.3 years 92% of the total drop 3.3 years 2, 2,, 8,, (44%) price decrease , (2)% price decrease years 5.7 years 6, 4, 2, Note: Monthly price data as per 5-Oct-8. ) Average of Vietnam, Indonesia and Brazil ASTA quality. Source: Nedspice research. Black Pepper FOB White Pepper DW FOB 26

27 Concluding summary Planting of new pepper vines stagnated around the world as prices dropped, however production is still expected to increase to 62 KMT (+37 KMT), driven by Vietnam and Brazil. Growth in demand remains resilient at c. 2.6% p.a. (~2 KMT+), however at a total of 474 KMT it is well below production levels. The excess production will cause global stocks to increase further and it will likely take some time before supply lines up with demand again, resulting in continuous downward price pressure. Also historical data suggests that we may see a further decrease of prices over the next years. Prices are already close to or below production costs in many countries, so the struggle for farmers who concentrate on pepper may harden. 27

28 Thank you 28