Marlene Boersch Mercantile Consulting Venture Inc. · India Cont’d Concerns Opportunities Pea...

Marlene BoerschMercantile Consulting Venture Inc.

February 2019

Mercantile, Feb. '19 1

Outline� Outside influences

- India & China – opportunities/ concerns- World econ. Outlook- Cdn. competitiveness (mkt share & costings

� Global pulse production (trends)� How are Canadian pulses fitting in?

� Balance sheets – Peas, Lentils, Chickpeas, Soybeans

� Opportunities for Cdn. farmers?Mercantile, Feb. '19 2

Important noteMktg. - What matters to you/ farmers?

� Canada does not set the commodity prices, but follows world pxs� Some pulses/ spec.

crops are an exception� T4 farmers need to

know what is going on in the world (or have s.o. follow the mkt. for you to translate world values back to SK)

You need to know 3 things:� Where the market is� Where the mkt is going

(trend)� When to hold and when to

sell (when to pull trigger)� ---------------------------------------------------------------------------

� What to grow � rel. to COP/ demand


General Market Environment


India Summary

Concerns Opportunities

� Gvmt. trying to please rural farm population b4 election (40%)

� Protectionist policies following 2 yrs of improved domestic production

� Fundamentally food insecure

� Monsoon 9.4% short; post monsoon 58% short with central India 99% short

� Election in April/May


India Cont’d

Concerns Opportunities

� Pea quotas extended to Mch. 31

� Import tariffs peas/ lentils remain in place

� Slow release of buffer stocks

� Size stocks: 1 mln mtreq’mt; 3.6 mln mt (2 mlnmt c.peas; 1 mln mt pigeon peas)

� Fumigation regul’n relaxed into June 30

� Rabi acres of pulses 5.6% lower (-879k ha)

� Peas: Should need ~1.5 mln mt of pea imports

� Lentils: ~3-700k mt� [using ~500k mt req’mts]


India cont’d� Jan. 24/’19: “There is likely to be a 10 per cent drop

in pulses output this year [2018/19],” acc. to a senior agric. official.

� “In 2018-19, the production is likely to be 22 million tonnes, just enough to meet India’s requirement of 25 million tonnes, with a buffer stock of 36 lakh mt.”� 16/17: 23.13 mln mt pulses; ‘17/18: 25.23 mln mt;


Evolution Cdn pea exports to China (% of total), 2007-2018

11.9%8.3%

12.8%

21.0% 23.4%29.9%

35.3%

24.2% 25.7%32.2% 35.1%

66.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cdn Pea Exports to China as % of Ttl Pea Exports


Canadian ag product export share to China

4.9%

95.9%

60.2%

37.0%

49.8%

49.2%

24.8%

8.6%

65.2%

57.0%

46.8%

97.3%

76.6%

34.8%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

Wheat

Barley

Flax

Canola

Soybeans

Peas

Total

CGC % of Canadian Grain Export Share Held by China YTD Aug-Nov '17/18 vs '18/19

Crop YTD Aug-Nov 2018/19 Crop YTD Aug-Nov 2017/18


Canada-China relationshipCanada could be very vulnerable; China has alternatives for most of the products we sell� Peas: E Europe after summer ’19� Canola: other oilseeds; US & S America� Flax: E Europe; Kazakhstan� Barley: Australia if better crop in ’19� Wheat: E Europe, Australia


World economic outlook� IMF - world economy is slowing, and that it

will get worse if countries keep squabbling over trade;

� China 6.4-6.6%; slowest since 1990 (6.5%)� US: 2.5% (2.9%)� Canada: 2% (2.1%)� India: 7.5% ?? (7.4%)


What is the effect of slowing GDP?

Econ. Growth: Growth of jobs and Productivity� Valuation of capital mkts dependent on

corporate growth rates� Consumer spending dependent on incomes

(PP)


- COMPETITIVENESS –


A LOOK AT SOME Supply Chain WORK DONE BY OUR COMPETITORS …[aegic]


Income & production costs different countries


Export grain supply chain costs in 2015/16 (wheat)


COP & Cost comparison’s


Cda: ‘Cost consciousness’ - Ex.: cost of grading

� CGC surplus of ~$130 mln

� $40 mln ‘contingency operating reserve’; $90

mln ‘strategic investments (safeguards

producers, grain quality assurance, grain

quality science & innovation)


Issue of export capacity changes in the world

Feb. 22, 2018:� Russia will add an extra

30 million tonnes of grain export capacity by 2022, acc. to the Russian agriculture minister. � That’s the equivalent of

Canada’s combined annual canola and wheat exports.

(Russia: Ninefold increase in grain export capacity - past 15 years (~45 mln mt))

� Increases in inland (road & rail) & port capacities Brazil

� Silk Road Initiative China (designed to streamline sourcing raw materials and to reduce costs)


Ex.: Kazakhstan and the New Silk Road (PWC, Sept. ‘17)

… over $43 billion USD of Chinese investment so far in Kazakhstan infrastructure…


CanadaGrain-related investment at the ports in the last five years:� Richardson increased terminal capacity to 5 mln mt (from 3 mln mt)� Viterra upgraded ship loading and dust suppression systems at Pacific

Elevators terminal.� Cargill completed some rail improvements.� Alliance Grain Terminal replaced shipping gallery.� Fibreco Export announced it was adding a grain export terminal to its

wood pellet operations.� P & H announced new grain export terminal at the Port of Vancouver

adding 3.5 mln mt of annual handling capacity to existing 500k mtcapacity at J/V facility operating at the site.

à Current capcity ~69 mln mt/yr� New G3 Terminal 2020 (6 mln mt/yr)� Raymont Cntrs. R. Rupert (100 car unld capacity)à But: What about reliable rail capacity increase? Plans?? Mercantile, Feb. '19 21

… headlines Jan. 21/’19 (Reuters)

� Railways ration space as commodity congestion problems worsen� CTA launches investigation into West Coast port

traffic� Both railways last month rationed the volume of

traffic around Vancouver by restricting movement of some commodities, such as peas, lentils, pulp and paper, according to shipper notices seen by Reuters…


International developments


Global pea production

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Australia Canada U.S. France Ukraine Russia Indian Subc. Pakistan Other (est. only)

'000

mt

Global Pea Production - Major Producers2010/'11 2011/12 2012'13 2013-'14 2014-'15 2015-'16 2016-17 2017-18 E2018-19


Global peas� 2018/19 global

production down abt.

16% from ‘17/18 with

biggest reductions in

Russia (- 1 mln mt) and

in Canada (-~600k mt)

� 14.2 mln mt à 11.9 mln mt

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Australia Canada U.S. France Ukraine Russia Indian

Subc.

Pakistan Other

(est. only)

'000

mt

Global Pea Production - Major Producers2010/'11 2011/12 2012'13 2013-'14 2014-'15 2015-'16 2016-17 2017-18 E2018-19


Global lentil production

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Australia Canada U.S. Turkey Syria Morocco India Bangla/ Paki Kazakhstan Other

Global Lentil Production - Major Producers2009/10 2010/11 2011/12 '2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 E2018/19


Global lentils� 2018/19 global production

down abt. 6% from ‘17/18 with biggest reductions in Canada (- ~460k mt) & Australia (-140k mt)

� Increase in India’ 18/19 (+~400k mt) � ‘19 lentil area down 2%

� 6.1 mln mt à 5.7 mln mt0

500

1,000

1,500

2,000

2,500

3,000

3,500

Austra

lia

Canad

aU.S.

Turkey

Syria

Morocco

India

Bangla

/ Pak

i

Kazak

hstan

Othe

r

Global Lentil Production - Major Producers2009/10 2010/11 2011/12 '2012/13 2013/14

2014/15 2015/16 2016/17 2017/18 E2018/19


Chickpeas

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Australia Canada USA Turkey Spain Mexico Morocco Argentina Pakistan India Other

Global Chickpea Production - Major Producers2013 2014 2015 2016 2017 2018


India 2019� India expects output of chickpeas to drop

6.5% to 10.5 mln mt, while � tur or pigeon pea output is expected to be down

9.33% at 4.08 mln mt○ Competition: NAFED believes traders have

bought almost 400k mt of pigeon peas in Myanmar, expecting the government will lift restrictions on imports because of this season's smaller domestic crop.


Desi vs Kabuli numbers

Desi - S down; Austr. -900k mt (-70%); v. small ending stocks 1% st. use

Kabuli – ’18 S up; ‘19 S down; increasing st. use 20%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Production Supply Trade Ending Stock

MT

Global Kabuli Situation

2014 2015 2016 2017 2018 2019


0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Production Supply Trade Inferred Use Ending Stock

MET

RIC

TO

NN

ES

Global Desi Situation

2014 2015 2016 2017 2018 2019

US chickpea production


North American (US & Cdn) Chickpea Supply

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 2017 E2018 P2019

MT


Production Supply Ending Stocks


Canadian Situation


Cdn. Peas� Production changes � Demand changes

� Exports by destination (China & India)� Changes in competition

� Is anyone taking market share?� Outlook


Cdn. pea overview

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 P2018-19 P2019-20

Canadian Pea Acreage, Production, ExportsAcreage Seeded ('000 ac) Production ('000 mt) Exports ('000 mt)


Exports - Long-term view

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

met

ric to

nne

Canadian Pea Exports by Destination, 2000-E2018Bangladesh Belgium China Colombia Cuba India Pakistan Spain UAE USA

China -Political

risks


Recent export demand

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cdn. Pea Exports (Majors)

World India China Bangladesh Linear (World)

Top 3: 78% mkt

share

World


E European/ Russian competition

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018P2019

Russia-Pea Production, 1992-P2019


Market shares – changes?2017 India - Pea Imports by Origin 2016 India - Pea Imports by Origin 2015 India - Pea Imports by Origin

k mt % Imports k mt % Imports k mt % Imports k mt % ImportsRussia 243 31.2% Canada 1,436 46.1% Canada 1,605 52.4% Canada 1,447 67.5%Ukraine 151 19.4% Russia 541 17.4% Russia 415 13.5% Russia 231 10.8%Canada 134 17.1% Ukraine 385 12.4% France 237 7.8% United States 150 7.0%Lithuania 91 11.7% Romania 177 5.7% Lithuania 212 6.9% France 97 4.5%Netherlands 38 4.8% Lithuania 154 4.9% USA 212 6.9% Australia 83 3.9%Australia 24 3.1% Australia 136 4.4% Ukraine 171 5.6% Ukraine 63,992 3.0%Romania 24 3.1% France 92 2.9%

2018 - n/a 2017 China - Pea Imports by Origin 2016 China - Pea Imports by Origin 2015 China - Pea Imports by Origin

k mt % Imports k mt % Imports k mt % Imports

Canada 1,196 92.8% Canada 912 90.9% Canada 818 90.5%

United States 58 4.5% United States 68 6.8% United States 78 8.6%

Australia 27 2.1% United Kingdom 10 1.0% United Kingdom 5 0.5%

United Kingdom 5 0.4% 0.8% France 1 0.1%

Other 0.1%

2018 India- Pea Imports by Origin


Export numbers Canadian Pea Exports (mt)

Country '15/16 '16/17 '17/18 proj'd 18/19 proj'd 19/20World 2,651,797 3,947,476 3,052,589 3,112,000 3,082,000 India 1,230,521 1,931,269 336,994 200,000 400,000 China 769,443 1,017,134 1,876,204 2,000,000 2,000,000 Bangladesh 273,573 417,314 162,521 400,000 250,000 Cuba 62,110 101,000 79,000 75,000 75,000 Fr./ Europe 282 52,470 2,531 50,000 - USA 102,382 111,030 352,781 180,000 150,000 Mynamar 19,828 53,226 11,487 15,000 15,000 Colombia 24,690 27,019 30,987 25,000 25,000 Algeria 3,504 6,997 5,000 5,000 5,000 UAE 16,970 32,115 12,061 12,000 12,000 Philippines 24,534 30,644 32,174 30,000 30,000 Others 123,960 167,258 150,849 120,000 120,000 Mercantile

Jan. 302/19

1,161,234

789,843

70,136

73,182

64,220

10,626

2,537

4,268

2,236

7,732

1,136,429

591,620

114,668

51,051

241,849

8,410

3,691

4,212

1,597

1,034

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

World

China

USA

Bangladesh

India

Philippines

Algeria

Peru

Brazil

Yemen

Top Importers of Cdn. Peas, YTD '18/19 vs. YTD '17/18

YTD '18/19 Last YTD '17/18


Peas – by the numbers


Merc. Merc Merc Merc Merc Merc Merc Merc AAFC

('000 mt) 2012-13 2013-14 2014-15 2015-16 2016-17 F2017-18 E2018-19 P2019-20 P2019-20

seeded Ha 1,509

Harvested HA 1,475 (-12.5% ac) (+8% ac.) (-0.3% ac.)

seeded acreage 3,730 3,285 3,795 3,680 4,300 4,128 3,612 3,901 3,608harvested acreage 3,645 3,269 3,624 3,643 4,279 4,107 3,528 3,862 3,546Yield (mt/Ha) 2.260 2.51Yield (bu/acres) 33.6 43.05 36.50 32.00 42.00 37.00 38.00 37.10 37.32production 3,334 3,830 3,600 3,173 4,891 4,136 3,649 3,899 3,602

imports 19 26 15 16 32 14 15 15 15ttl supply 3,645 4,023 3,924 3,873 5,075 4,303 4,231 4,196 4,265

exports 2,653 2,779 3,100 2,720 3,947 3,060 3,100 3,080 2,800ttl domestic use 825 850 425 1,000 800 675 850 900 935carry-out 167 394 399 153 328 568 281 216 530

StatsCan: 309 684stock-use ratio 5% 11% 11% 4% 7% 15% 7% 5% 14%

Mercantile, Jan. 31/'19 *

CANADIAN PEA BALANCE SHEET

Smaller C/O !

2019/20: +8-10% acres

To watch: exports

Peas by type

� Next year more greens?

2018 Pea Production Estimate by Type('000 mt) 2016 2017 P2018 % of Total 2018

yellow 4,104 3,596 3,125 83%green 623 463 520 14%other 54 53 100 3% total 4,781 4,112 3,745 100%


Outlook

Remainder 2018/19 Outlook next year

� Solid export demand this year ard 3 mln mt

� ‘If’ India buys, then stocks could become tight

� Ending stocks will be down to ~315k mt

� ~8% stock-use ratio � “Constructive”

� Chinese question adding uncertainty

� Expect ~ 3 mln mt export demand

� Given 8-10% > acres & avgyield, balanced S & D

� N/C: Sell first tranche at/ above 7.00/bu (above COP)


Other info:

Pea fractioning

� Roquette plant (Portage La Prairie, MB) scheduled to open Q4 2020

� 125,000 mt annual capacity

� Contracting fall 2020

� Will fractionate peas into starch, fibre, hull, protein and solubles; sell the components into numerous markets, including human nutrition, pet foods and pharmaceuticals.

� Verident Foods, Vanscoy, SK: 160k mt capacity


Cdn. Lentils� Production changes� Demand changes

� Exports by destination� Changes in competition


� Reds� greens


Lentil overview

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2013-14 2014-15 2015-16 2016-17 2017-18 P2018-19 P2019-20

Canadian Lentil Acreage, Production, ExportsAcreage Seeded ('000 ac) Production ('000 mt) Exports ('000 mt) Linear (Exports ('000 mt))


Exports - Long-term view

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cdn. Lentil Exports by Destination, 2000-2017 (kg)

India Turkey United Arab Emirates Bangladesh Egypt

Pakistan Colombia Sri Lanka Spain Mexico

Peru United States Italy Morocco all other

Lentil export dynamics are

tied to volumes to India

Big vol. reductions to Turkey


Problems c India are due to protective regime.- What’s going on with our exports to Turkey?

� Increased competition by lower cost producer


Cdn. lentil market share Turkey

� Cdn. lentil exports to Turkey

� 420k mt ‘15 à 200k mt ‘18; 32k mt cr. yr. to

date

� Kazakh lentil exports to Turkey

� 27k mt in ’15 à E200k mt ‘18/19


Kazakh snapshot

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

E2017

/18

E2018

/19

Kazakhstan-Lentil Area, Production & Exports (mt)Prod'n (mt) Area (ha) Est'd Exports


… Kazakhstan


Cdn. lentil market share to Turkey

2018 Turkey - Lentil Imports by Origin 2017 Turkey - Lentil Imports by Origin 2016 Turkey - Lentil Imports by Origin (Jan-Oct.'18) k mt % Imports k mt % Imports k mt % ImportsCanada 190 64.1% Canada 217 58.1% Canada 313 92.5%Kazakhstan 76 25.7% Kazakhstan 62 16.7% Kazakhstan 8 2.4%Russia 12 4.0% Australia 60 16.1% Australia 6 1.7%

Australia 9 2.9% Russia 18 4.7% Russia 4 1.2%

Syria 5 1.6% Syria 10 2.7% United States 3 0.9%

Other 2 0.8% United States 5 1.3% Syria 3 0.8%

Ukraine 1 0.4% Other 1 0.4% Lebanon 1 0.3%

United States 1 0.4% Iraq 0 0.1% Other 0 0.1%

Kyrgyzstan 0 0.0% Germany 0 0.0% China 0 0.0%

Myanmar 0 0.0% Netherlands 0 0.0% Bulgaria 0 0.0%

Italy 0 0.0% Italy 0 0.0% Germany 0 0.0%

Total 296 100.0% Iran 0 0.0% Italy 0 0.0%

Total 373 100.0% Total 338 100.0%


Cdn. lentil market share to India

2018 India - Lentil Imports by Origin 2017 India - Lentil Imports by Origin 2016 India - Lentil Imports by Origin (Jan-Nov.'18) k mt % Imports k mt % Imports k mt % Imports

Canada 135 64.9% Canada 791 73.1% Canada 621 82.4%

Australia 49 23.5% Australia 277 25.6% United States 94 12.4%

Netherlands 9 4.5% United States 54 5.0% Australia 39 5.2%

Singapore 6 3.0% Other 1 0.1% Ukraine 0 0.0%

United States 6 3.0% Turkey 1 0.1% Total 754

United Arab Emirates 1 0.6% Korea, South 0 0.0%

Other 1 0.5% Myanmar 0 0.0%

Turkey 0 0.0% Ukraine 0 0.0%

Russia 0 0.0% Total 1,082 100.0%

Total 207 100.0%


Recent export demand

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

India Turkey Bangladesh Egypt Sri Lanka UAE Pakistan Spain Italy Algeria Mexico Morocco Colombia Other

Cdn lentil Exports by Destination, '14/15-P19/10

2014/15 2015/16 16/17 17/18 P'18/19 P'19/20

Top 3: Big

swings


Export numbers Canadian Lentil ExportsCountry 2014/15 2015/16 16/17 17/18 P'18/19 P'19/20World 2,180,679 2,254,210 2,457,746 1,536,940 1,865,000 1,795,000India 647,446 849,927 910,364 149,503 500,000 500,000 Turkey 386,029 387,935 362,874 245,034 125,000 200,000 Bangladesh 102,063 84,676 153,106 154,661 150,000 100,000 Egypt 104,072 50,495 71,602 50,000 80,000 70,000 Sri Lanka 78,308 97,630 86,305 76,136 100,000 75,000 UAE 223,889 189,852 195,134 156,744 160,000 150,000 Pakistan 107,728 61,377 143,829 75,100 90,000 60,000 Spain 36,285 38,327 44,555 26,623 40,000 35,000 Italy 18,356 21,292 23,267 20,000 20,000 Algeria 73,592 67,782 60,952 82,902 80,000 70,000 Mexico 14,137 33,556 124,829 175,000 150,000 Morocco 9,040 30,842 47,309 25,000 20,000 Colombia 44,264 44,730 49,759 45,000 45,000 Other 421,267 340,411 298,605 275,073 275,000 300,000

587,61297,295

49,44340,555

26,42624,36825,501

6,74213,132

49,74918,340

5,2506,48010,2395,554

39,47010,24718,736

11,522128,563

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000

WorldIndia

MexicoAlgeria

United StatesColombia

TurkeySpain

ItalyBangladesh

NepalSudan

SyriaPakistan

BrazilEgyptPeru

Sri LankaMorocco

Other

Top Importers of Cdn. Lentils, YTD '18/19 vs. YTD '17/18

YTD '18/19 Last YTD '17/18


Lentils – by the numbers

Lentil Balance Sheet Merc. Merc Merc.StatsCan Dec.4/'15 StatsCan Merc

Merc Merc N/C AACF N/C

('000 mt) 2013-14 2014-15 2015-16 2015-16 2016-17 2017-18 E2018/19 P2019/20 P2019/20

seeded Ha Harvested HA (-14% ac) (-4%) (-11.5%)

seeded acreage 2,600 3,300 3,946 3,946 5,869 4,405 3,767 3,616 3,336 harvested acreage 2,587 3,152 3,926 3,926 5,740 4,383 3,729 3,580 3,299 Yield (mt/Ha) 1.49 1.40 1.5Yield (lb/acres) 1,825 1,400 1,325 1,323 1,250 1,280 1,250 1,285 1,338production 2,142 2,001 2,360 2,373 3,255 2,545 2,114 2,087 2,002

imports 10 10 16 17 100 30 15 20 20ttl supply 2,407 2,711 2,694 2,755 3,415 2,974 3,027 2,729 2,820

exports 1,757 2,143 2,275 2,145 2,455 1,537 1,865 1,800 1,800

ttl domestic use 350 250 275 550 560 540 540 575 485

carry-out 700 318 144 60 400 897 622 354 535

stock-use ratio 33% 13% 6% 2% 13% 43% 26% 15% 23%

Jan. 22/'19

2019/20: -2-4% acres?

To watch: Swing exports

India/ Tky.

Chance to reduce C/O


Lentils by type

� Next year?


Outlook

Remainder 2018/19 Outlook next year

� Solid demand this year ard. 1.9 mln mt, ‘reduced’ stocks (not eliminated stocks)

� Sell all O/C Reds at 20.50c; Lrge Grns. at 24c; Sm. Grns at 20c

� Ending stocks will be down to ~635k mt; some say as low as 480k mt

� ~26% stock-use ratio

� K. reducing acres nxt yr.

� Cdn. acreage question important

� Expect ~ 1.8 mln mt export demand

� Given 2-4% < acres & avg yield, ending stocks down to 16%

� Sell first tranche at/ above 20c/ 21c reds. Lrge Grns; Reds at 19.5c [cover COP]


Cdn. Chickpeas� Production changes � Demand changes

� Exports by destination (USA)� Changes in competition



Cdn. chickpeas

Canadian Chickpea Balance Sheet Year 2013 2014 2015 2016 2017 2018 2019Area (acres) 190,500 180,000 123,000 156,000 209,000 442,900 200,000Yield ( lbs) 2,088 1,581 1,611 1,289 1,251 1,550 1,496Production 180,423 129,100 89,900 91,200 118,600 311,300 135,592Imports 8,510 8,351 13,594 26,812 46,000 29,000 30,000Carry In 92,000 175,000 181,000 74,000 28,000 3,000 156,000Supply 280,933 312,450 284,495 192,012 192,600 343,300 321,592DisappearanceExports 48,377 78,445 151,641 107,624 115,883 107,200 140,000Seed 14,040 9,340 12,240 16,340 35,058 15,043 13,943Feed & Waste 28,376 27,365 26,756 14,194 9,949 33,497 27,757Other Domestic 15,177 16,300 19,858 25,854 28,710 31,560 31,400Total Usage 105,970 131,450 210,495 164,012 189,600 187,300 213,100Ending Stock 174,963 181,000 74,000 28,000 3,000 156,000 108,492Stock/Use 1152.8% 137.7% 35.2% 17.1% 1.6% 83.3% 50.9%



0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 2017 E2018 P2019

MT


Production Supply Ending Stocks


YTD exportsMonthly CHICKPEA Exports 2018/'19 crop yr.

Aug. '18 Sept. '18 Oct.'18 Nov.'18 YTD '18/19Last YTD

'17/18% of lst yr

World 1,645 6,476 15,608 20,123 43,852 74,467 0.59 United States 1,409 1,268 1,973 1,929 6,579 12,442 0.53 UAE 358 1,464 1,585 3,407 6,832 0.50 Egypt 108 1,105 1,861 3,074 1,816 1.69 Pakistan 87 3,812 7,169 9,259 20,327 14,389 1.41 Italy 40 100 340 163 643 1,715 0.37 New Zealand 19 19 19 19 76 92 0.82 Germany 20 20 109 149 218 0.68 Trinidad and Tobago 25 175 125 26 351 431 0.81 Colombia 25 25 129 74 253 588 0.43 Lebanon 9 79 315 403 851 0.47 Japan 5 21 30 56 232 0.24 UK 2 446 823 1,271 1,771 0.72 Ireland, Republic of (EIRE)2 12 20 34 22 1.55 Other 3 558 2,600 4,069 7,230 33,068

� YTD exports to US at 53% lst. yr’s

� Pakistan at 140%

� Egypt at 170%


Market factors� 3 major Cdn. Kab. export areas: Asia, M. East, US

� ‘19/20: 140-150k mt (110-120k mt this yr.)

� Mexican kabuli planting back to ~80k ha (200k ac); 185k ha (460k ac last yr.), but have ~80k mtending stocks from last yr.� Export ~145k mt every yr.

� Indian chickpea output expected down at least 6.5%


Outlook

� Improved exports, but not enough� Increased ending stocks� Drop in N. Am. acres ‘19/20; smaller

Mexican/ Indian crops� Potential for better prices


Cdn. Soybeans

� Prov. acres & Balance sheet� Exports by destination� Outlook next year


Soybean acreage by province

0 0 0 00 0 0 0 0

00 0

0170,008

270,086

270,086239,939

850,000

407,500

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cdn. Soybean Acreage by Province Ontario Quebec Maritimes Manitoba Saskatchewan Alberta


Cdn. soybeans

Canada Prairie Provinces

Canadian Soybeans000 mt 2017-2018 2018-2019 P2019-2020

Area seeded (kac) 7,577 6,577 6,363Area harvested (ac) 7,546 6,530 6,309Yield (bu/ac) 39.1 42.5 42.4Production 7,717 7,267 7,000Imports 487 400 400Total supply 8,559 8,318 7,800Exports 4,998 5,500 5,000Food and Ind. Use 1,969 1,900 1,900Feed, Waste & Dockage 679 318 375Total Domestic Use 2,909 2,418 2,475Carry-out Stocks 651 400 325Stock-Use (%) 8.2% 5.1% 4.3%


SBN production by province


847,000 898,000 1,088,100 1,129,400 1,115,000 1,164,000

3,238,6003,791,100 3,728,500 3,429,200 3,796,600

4,200,500

1,068,200

1,107,7001,390,700 1,769,000

2,245,300 1,582,000

0

00 0

479,000232

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

2013 2014 2015 2016 2017 2018

mt

Cdn. Soybean Prod'n by Prov.Québec Ontario Manitoba Saskatchewan Alberta

Soybean export destinations

39.50%

9.40%

7.10%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

China

USA

Japan

Italy

Spain

Norway

Germ

any

Netherlands

Malaysia

Viet Nam

Iran

Portugal

Belgium

Turkey

Taiwan

Thailand

Ire land

S.Arabia

Hong Kong

PER

CEN

T

MET

RIC

TO

INN

ES

Top 20 Cdn. Soybean Markets (96%)

Volume (MT) % of 2017 SBN Exports


Potential problem


Notes soybeans 2018/19

� Cdn SBN’s could command a prem. this fall over US SBN’s due Chinese tariffs vs. US SBN’s

� Prem. was not maintained at farm level� Some was avail. early in dispute, now the prem.

has disappeared

� All ‘Cdn.’ futures CT’s are gone save canola


SBN exports by coast

� Sask. SBN’s will travel west and have a frt. advantage over Gulf SBN’s � No major problem to market them

� Need min. 25 yields to cover var. costs; ~38 bu yields to cover ttl. costs


Thoughts on next year’s acreages hrvstd. ACRES merc 2018 merc 2019 ∆ 2018 to 2019

All wheat 24,419 24,610

spring wht 17,393 18,436 106.0%

durum 6,859 6,173 90.0%

Canola 21,651 21,002 97.0%

Barley 6,446 6,768 105.0%

Oats 2,888 2,946 102.0%

Flaxseed 934 990 106.0%

Rye 393 373 95.0%

Soybeans 6,070 6,070 100.0%

Corn for grain 3,181 3,341 105.0%

total acres 65,816 66,099 100.4%

Special crops

Canary seed 280 308 110.0%

Lentils 3767 3918 104.0%

Sunflower seed

Mustard seed

Dry peas 3612 3901 108.0%


Return per acreage ideas - Total Costs

$74.00

$(33.50)

$5.50

$17.50

$91.50

$79.00

$11.00

$(262.00)

$(92.00)

$(34.00)

$5.50

$(2.75)

$(60.00)

$40.75

$(11.00)

$(20.00)

$(68.00)

$30.00

$(300.00) $(250.00) $(200.00) $(150.00) $(100.00) $(50.00) $- $50.00 $100.00 $150.00

Rye

CWRS Wheat

CPS Wheat

Durum

Malt Bly.

Fd. Barley

Pea/Oats

Cover Crop

Soy

Oats

Pea/Can

LLC

LLC Carg

Flaxseed

Lrge Grn Lentils

Red lentils

Peas

Corn

SK - Margin per crop over Total Costs, P2019(on deferrerd futures or cash values)


Return per acreage ideas - Variable Costs

$299.00

$196.50

$235.50

$168.50

$242.50

$230.00

$241.00

$(67.00)

$138.00

$196.00

$235.50

$227.25

$170.00

$191.75

$140.00

$131.00

$162.00

$260.00

$(100.00) $(50.00) $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00

Rye

CWRS Wheat

CPS Wheat

Durum

Malt Bly.

Fd. Barley

Pea/Oats

Cover Crop

Soy

Oats

Pea/Can

LLC

LLC Carg

Flaxseed

Lrge Grn Lentils

Red lentils

Peas

Corn

SK - Margin per crop over Variable Costs, P2019(on deferrerd futures or cash values)


assumptions

Rye CWRS Wheat CPS Wheat Durum Malt Bly. Fd. Barley Pea/Oats Cover Crop Soy Oats Pea/Canyield bu/ac 90 55 65 40 75 80 80 0 30 110 45price $/bu 5.00 7.00 6.50 $7.30 $5.50 $5.00 4.60 - 10.75 3.00 10.50 MARGIN 74.00$ (33.50)$ 5.50$ 17.50$ 91.50$ 79.00$ 11.00$ (262.00)$ (92.00)$ (34.00)$ 5.50$

Ret/Var. Costs 299.00$ 196.50$ 235.50$ 168.50$ 242.50$ 230.00$ 241.00$ (67.00)$ 138.00$ 196.00$ 235.50$

LLC LLC Carg Flaxseed Lrge Grn LentilsRed lentils Peas Corn45 40 27 1400 1500 42 140

10.25 10.00 $12.25 $0.21 $0.19 7.00 4.50 (2.75)$ (60.00)$ 40.75$ (11.00)$ (20.00)$ (68.00)$ 30.00$

227.25$ 170.00$ 191.75$ 140.00$ 131.00$ 162.00$ 260.00$


Price trends (basis today’s mkt. intel)


$22.43

$18.17 $18.71 $19.50 $19.16 $21.67

$28.88

$22.63

$10.63

$7.37

$4.59

$33.67

$27.29 $27.33

$33.25

$17.75

$26.67

$43.50

$20.13

$8.20 $6.75 $6.52

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

LargeGreen

SmallGreen

MediumGreen

FrenchGreen

Red Desi Kabuli9mm

CanarySeed

Green Yellow Feed

Special Crops Price Trends (per cwt; per bu)Jan. 30/'19 Week Ago Year Ago

Mercantile Consulting Venture Inc.www.mercantileventure.com


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