# Presentation: UXGG2DFANDFTIZTYHITLQOJSZTRMBF5J

## Challenges Facing the Oilseeds and Grains Industries 2000 and BeyondGlobal Market-Access

**Agricultural Outlook Forum 2000**
** ****February 25, 2000**
**Al Ambrose - VP Cenex Harvest States**
**NOPA Chairman**

##  Global Market-Access 

**Global soybeans - production & crushing**
**Domestic usage vs. exports**
**Foreign-currency Issues**
**Japan as key to Asia**
**A look at China**
**Russia vs. U.S. meat exports**
**The outlook for soybeans**
**Current strategies**

## A few important facts:

**95.4% of world population non-U.S.**
**U.S. essentially a “fully-fed” society**
**U.S. only uses 50-60% of bean crop**
**Over 95% world soybeans processed**
**Absent crushers, you’ve no market...**
**Without beans, we’ve no function...**
**Global industrial tariffs average  - 4%**
**Global agricultural tariffs avg.   - 40%**** **

## Global  Soybeans          Production and Crushing

## World Soybean Production

**Million Metric Tonnes**

**** Up 49% in the 90’s **   **

**World Population up 13%**

## Soybean Yields (avg. bpa)US, Brazil & Argentina 

**Round-up Ready**

## Soybeans Weekly Prices

**Between ‘92 and ‘98**

**7 of 7 years over $6.00**

**5 of 7 years over $7.00**

**1996 and 1997 over $8.50**

**Between ‘93 and ‘98, average farm price was ****$6.48/bu.**

## Soybean ProductionThe Americas (000 mt)

## Soybean ProductionThe Americas (000 mt)

- -25%

- +34%

## US Crush vs. Capacity

- + 6.9%

- +34.5%

**Up 44% in the ‘90s**

## Brazil Crush vs. Capacity

- +26.3%

- +12.5%

**Up 42% in the ‘90s**

## Combined America’s Crush vs. Capacity

- +17.1%

- +34.0%

**Up 58% in the ‘90s**

## Argentine Crush vs. Capacity

- +82%

- +37.5%

**Up 150% in the ‘90s**

## Crush Weekly - 15 years

## EU Imports of Soybeans andMeal By Country of Origin (000 mt)

## Domestic Usage vs. Exports

## U.S. Meat Consumption Per Capita

**Poultry**

**Beef**

**Pork**

**Total Livestock and Poultry**

- 0

- 50

- 100

- 150

- 200

- 250

- 1970

- 1972

- 1974

- 1976

- 1978

- 1980

- 1982

- 1984

- 1986

- 1988

- 1990

- 1992

- 1994

- 1996

- 1998

**Pounds per Person**

## *Columbus* 

- 1994

- 1996

- 1998

- 0%

- 10%

- 20%

- 30%

- 40%

- 50%

- 60%

- 70%

- 80%

- 90%

- U.S. Soybean Oil per capita Consumption

- U.S. Total Oils per capita Consumption

**U.S. Per Capita Consumption of Oils and Soybean Market Share**

- Soy Oil per capita Share

**16 billion pounds domestically**

**16 billion seconds = 507 years**

***Columbus***** **

## Chinese Soybean Oil Consumption and Imports

**Chinese Soybean Oil Consumption and Imports**

- MMT

- 0

- 0.5

- 1

- 1.5

- 2

- 2.5

- 3

- 3.5

- 1964

- 1966

- 1968

- 1970

- 1972

- 1974

- 1976

- 1978

- 1980

- 1982

- 1984

- 1986

- 1988

- 1990

- 1992

- 1994

- 1996

- 1998

-  Soybean Oil Consumption

- Soybean Oil Imports

**Market Access!**

**2.5x U.S. exports**

## Chinese Soybean Meal Consumption and Imports

**Chinese Soybean Meal Consumption and Imports**

- 0

- 2

- 4

- 6

- 8

- 10

- 12

- 14

- 1964

- 1966

- 1968

- 1970

- 1972

- 1974

- 1976

- 1978

- 1980

- 1982

- 1984

- 1986

- 1988

- 1990

- 1992

- 1994

- 1996

- 1998

- Soybean Meal Consumption

- Soybean Meal
- Imports

**Market Access!**

**75% U.S. exports**

## Foreign-currency Issues

## Changes Since June ‘97 in Value of Asian Currencies (vs. U.S. $)

## Purchasing Power of Various Currencies

_**	**__**	**_**Population****	****	****	****	**** % vs. $ past**
_**Country**__**	**__** Rank**__**	**__**(millions)**__**	**__**%**__**	**__**Currency**__**	**__**24-30 months**_
- China	    1	1,200		20	Renminbi		 --0-- (peg)
- India	    2	   985		16	Rupee		-22% (4 yrs)
- U.S.	    3	   270		4.5	Dollar		 --0--
- Indonesia	    4	   213		3.5	Rupiah		-66%
- Brazil	    5	   170		2.8	Real		-39%
- Russia *	    6	   147		2.5	Ruble		?????
- Japan	    8	   126		2.0	Yen		+04%
- Mexico	   11	     99		1.7	Peso		+11%
- Philippines 13	     78		1.3	Peso		-36%
- Thailand	   18	     60		1.0	Bhat		-35%
- S. Korea	   26	     26		0.8	Won		-21%
- Taiwan	   45	     22		0.4	Dollar		-09%
- Malaysia	   48	     21		0.4	Ringgit		-33%

*** During Gorbachev era 28,880 rubles(@ 8/US$) ****was $3,600;**** now is $1.00**

## Slide 24

## Lean Hogs - Weekly

## Soybean Meal - Weekly

## Crush Weekly - 4 years

**104-week moving average**
**22.65 cents**

## Soybeans - Weekly

## Japan as Key to Asia

**Japan as Key to Asia**

## Nikkei Business Weekly - April ‘99

**Nikkei Business Weekly - ****April ‘99**

## Nikkei Business Weekly - April ‘99

**Nikkei Business Weekly - ****April ‘99**

## Japanese Yen -  Monthly

## A WORD ON CHINA

**A WORD ON CHINA**

## Chinese GDP growth

**1992/93            13.0%**
**1993/94            12.6%**
**1994/95             10.5%**
**1995/96               9.6%      **
**1996/97               8.8%**
**1997/98               7.8%**
**1998/99               7.1%****	**
**1999/00****	****             7.0%**
**Source: Oil World**

**54%**

**34%**

## Chinese Imports of Oilseeds,Oil & Meal - 000 tonnes

- Access Denied!

## China’s Share ofWorld Urea & DAP Imports

**China has historically been ****the world’s largest importer of****both urea and DAP fertilizers, ****accounting for as much as ****40% of total world trade.  **

## China Urea Imports vs. World Urea Price

**Since the Chinese government imposed a ban on urea imports in mid-1997, China’s imports have dropped to virtually nothing, ****and world urea prices have collapsed to their lowest level in over a decade.**

**Access**
**Denied!**

## RUSSIA VS.

**RUSSIA VS.**
**U.S. MEAT EXPORTS**

## Notes on Russia

**GDP -5%, 1998:   -5%, 1999 (proj.)**
**US ag exports to Russia down 80%**
**Approx. 50% US poultry export went to Russia prior to crisis**
**Since Aug.’98 - US poultry to Russia ****down 75-80%**** *** no major rebound              anticipated in near future.....       **
** ****Source: USDA ERS Study on Russia**

## U.S. Beef, Poultry and Pork Exports

**U.S. Beef, Poultry and Pork Exports**

- 1985

- 1987

- 1989

- 1991

- 1993

- 1995

- 1997

- 1999

- U.S. Pork Exports

- U.S. Poultry Exports

- U.S. Beef & Veal Exports

**7 years ‘89 to ‘96 average increase 29%**

**1997 was 462% of 1990**

**1998 -2% **

**1999 -3%**** **

## Selected Equity Prices:

**Tyson           $15 (‘94)     $25(‘98)    $10.50  (Feb‘00)**
**ConAgra       $15(‘95)     $38(‘97)    $17.00  (Feb‘00)**
**Sand. Fms.   $11(‘95)     $19(‘97)      $7.06  (Feb’00)**
**ADM             $13.5(‘95)   $22(‘97)    $10.88  (Feb’00)**

## Soybean Outlook

## U.S. Soybean Supply/Demand

**	**
**                                                                                               **
**                                                                                                                  ****USDA        CHS                                                                                                                                                                                                                                      Proj.         Proj.**
**                                                                            **
**	****	****	**_**95/96**__**	**__**96/97**__**	**__**97/98**__**	**__**98/99**__**	**_**   **_**99/00        00/01***_
**Beginning Supply****	****2,514****	****2,573****	****2,826****	****2,946****	****   2,994        3,193**
**Crush****	****	****	****1,363****	****1,436****	****1,597****	****1,590****	****   1,600        1,640**
**Exports****	****	****	****   855****	****   882 ****	****   900****	****   801****	****      890           925#**
**Total Usage****	****	****2,325****	****2,441****	****2,626****	****2,596****	****   2,649        2,725**
**Carryout****	****	****   183****	****   132****	****   200****	****   348****	****      345           448**
**Average Farm Price****	****$6.72****	****$7.35****	****$6.47****	****$4.93    $4.50-5.00  $4.25-5.00**
**         **
**       *****(Assumes:  ****74 mln pltd, ****  72.5mln hvst (.98),   ****39BPA,   ****2,828 bln. prod.)**
**                            ****(# Record Exports - ****929 mln bu - 81/82**** crop year) **
**    **

**Million bushels**

## Producer Marketing Suggestions

**Think and market like a commercial entity...**
**Develop price and/or profit objectives...**
**Develop marketing plans to transfer risk and execute... **
**If you’ve already taken the LDP:   **
**  ****sell calls or buy puts against stocks or future production **
**Seek out competent marketing assistance...**
**Reminder: farmers are intrinsic longs...**
**A food-chain is no stronger than its’ weakest link...**

##      Wrapping it up.....     

**What Do We Do Now?**

## Immediate Imperatives:

**Steadfastly oppose:**
**unilateral trade sanctions on food**
**protectionism (in all forms)**
**trade barriers**
**border wars**
**tariffs**
**supply controls**
**set-asides**
**government-inspired reserves**

## Intermediate/Longer-Term Objectives

**Persistently promote ****global market access**
**Advocate ****sanctions reform**** (i.e. global food treaty in exchange for market access)**
**Support (****improved****) IMF funding - stabilize/revive faltering, developing economies**
**Promote permanent normalized trade relations (****PNTR****) with China**
**Pass fast-track legislation(trade-negotiating authority - ****TNA****)**
**Work with U.S. trade representatives to promote  swift, but ****proper**** Chinese accession to W.T.O.**

## “Trade reforms best way to help farmers...”       Reuters                                                              

**“****The more we can open up markets abroad, and there is a lot of room to do that...strikes me as the most important thing we can do to keep a viable, very productive agriculture”       **
**Fed Chairman Alan Greenspan **
**Senate Banking Committee**
**Feb 23, 2000**

## Why Unilateral Sanctions Don’t Work:

**Food flows like water(rain on a hill...)**
**Other nations will subvert...**
**Delay our potential to become inter-dependent (no nation will make itself even partially dependent upon us if it believes that we might withhold food)**
**Threats only escalate the tensions...**
**If you would seek to alter a mans’ (or nations’) behavior, feed his children**

## Unintended Consequences:

**Strengthen the tyrant(creates dependency)...**
**Alienate the citizenry(projects the”Ugly American” image)...**
**Destroy U.S. farmers opportunities...**
**Make food more expensive for the worlds’ impoverished and hungry...**
**Trample upon established business ties and lines of communication...**
**Magnify and ossify our differences...**
**Make the world less safe...**

## The Challenge:Global Market-Access

**Questions?**
**February 25, 2000**
**Al Ambrose - VP Cenex Harvest States**
**NOPA Chairman**