1. Recent world grain market trends Opportunities for Mexico Michel FERRET FranceAgriMer, Paris 10/11 April 2013

2. Part I : Recent trends

3. Reminder : « Financialisation » of commodities markets + Price explosion 2007/08 (not addressed here) Global wheat production vs corn production : and the winner is … corn –Impact of the US Farm Bill 1996 –No visible impact of GMO’s on corn yield Major shifts in grain acreage in the USA and Latin America Competitors of the USA increase their market share in grain exports A new way of supporting farmers’s incomes : biofuel policies World prices architecture, as reflected by Chicago (CME) quotations : –Corn is the market driver ….but beware of …. –China’s overwhelming part in oilseeds imports : a serious threat to the stability of the grain price architecture –Inversion of the Corn / SRW price relationship : a new situation –Emergence of Black sea producers : a welcome contribution to the world supply situation (wheat, barley, corn) but a major instability factor Main changes

4. Global corn and wheat production. Difference 2012 : 195 million tons (Mt) IGC projections for 2017: Corn 981 Mt, wheat 731 Mt. Difference : 250 Mt

5. USA: Area devoted to corn, soybeans and wheat. Impact of the 1996 Farm Bill Source: USDA /NASS/Prospective Planting Report 28/03/2013 Monde Area (Mha) Yield (t/ha)

6. Corn yields in selected countries

7. Corn yield trends (t/ha): no visible impact of GMO’s on corn yields USA : > 90 % of the corn area planted to GMO varieties ; France 0 %

8. USA: Corn production, use for ethanol, exports (Mt) Source: USDA /NASS Ethanol: ~ 40 % of corn use / EU: 3,6 % of wheat production, 5,5 % of corn production US ethanol production: 64 % of world ethanol production

9. Global ethanol production (2011): 844 Mhl / 66 Mt For reference: Global biodiesel production: 19,4 Mt EU: 9,6 Mt; USA: 3,2 Mt

10. USA: Corn supply and demand

11. World corn prices: « ethanol impact »

12. Brazil: corn and soybeans area Source : IGC Corn Soybeans

13. Argentina: area devoted to cereals and oilseeds CerealsOilseeds Source : USDA And the loser is: … wheat

14. Ukraine: a newcomer, now among the 4 top corn exporters! (Mt) Source : IGC

15. Top world exporters, corn and soybeans Source: USDA Corn (Mt) Soybeans (Mt)

16. Structure of world soybean imports: a dangerous situation Soybean imports by China: in 2012/13 63 % of the world imports ! Priority given in China to the growing of corn Growing Chinese interest in Canadian canola

17. USA: Corn, wheat and soybeans prices in Chicago ($/t) Source: IGC

18. Part II : Opportunities for Mexico 2 examples

19. Opportunities for Mexican beer exports Why? –Beer production in Mexico expanding –Excellent image in Europe How? –Mexico-EU trade agreement negociations?

20. Global beer production (Mt) China, Brazil and Mexico : the new driving force in beer production Source : FAO

21. Opportunities for Mexican durum exports Durum consumption increasing in the Maghreb countries Mexico among the top 4 durum exporters A new « grain landscape » in North America after the removal of the CWB’s marketing monopoly USA : the « shale oil / gas rush » : a new paradigm, in many respects : –World energy balance –Geopolitics –Durum wheat production!

22. Durum wheat consumption in Maghreb countries Source : IGC /FranceAgriMer

23. Mexico: Durum wheat production and exports (Mt) World market in durum wheat : ~7,5 Mt Mexico’s market share : ~15 % USA : ~10 % ; Canada : 45-55 % Source : IGC

24. USA: Durum wheat production: North Dakota, the main producing state Source : USDA - NASS, January 2013 0 500 1 000 1 500 2 000 2 500 3 000 2002200320042005 200620072008200920102011 2012 1 000 t US total North Dakota Montana California Arizona North Dakota : 40-50 % of US durum wheat production

25. The « Bakken formation » (shale gas and oil) North Dakota’s Durum wheat area : located in the north-western corner of the State

26. Trend : increasing. North Dakota is already the 2 nd producer state in the USA, behind Texas (2 millions barrels/day), ahead of Alaska

27. Gas flaring in North Dakota Currently : 8 000 wells, potentially 40 000 ? Will there still be room for durum production ?

28. Concerning grain markets : –Dependency, yes, but… –Diversification of potential suppliers More competition, better procurement prices ? –Some interesting export opportunities Conclusion:« Potencia alimentaria o impotencia dependiente ? »