Wednesday, 16th November – General Session

Hotel President Wilson, home of the Global Grain Geneva 2011 Conference

Registration this morning was a breeze, due in no small part to the fact that many could register yesterday evening. Based on the crowd, this looks like it’s going to be a very well-attended event.

Conference Opening
by James Dunsterville, Global Commodities Group Conference Chairman

James Dunsterville, Global Grain Geneva 2011

Opening remarks were brief. James welcomed over 1000 delegates from over 50 countries, 45% of whom are traders. He mentioned that this was yet another year of volatility brought on by factors external to the trading industry (weather, political, et al.) Global Grain Asia will be 13-15 March, 2012 in Singapore at the Shangri-La Hotel.

Dan Day-Robinson, Global Training Group – Moderator
Dan takes the stage as chair of the day’s activities, and explains the format as well as the ground rules for participation.

World Grain Outlook for 2011/12 and observations for 2012/13
By Dan Basse, President, AgResource, Chicago.

Dan Basse, Global Grain Geneva 2011

After a few technical difficulties with microphones, Dan opens with an ags joke, and introduces Bill Tierney as his data expert for today’s presentation.Again, citing market volatility, Dan points to several key influences over the past 8 years in the ags industry – China’s arrival in 2003, huge harvests in 2004, economic uncertainty beginning in 2007, and the year of corn in 2010.

In 2011, with a slowing world economy, grains markets have been exceedingly erratic.There is a crisis in confidence right now, and with no clear political leader with a sound plan for moving forward, everyone is attempting to reduce risk, and ag stock valuations are coming down.

The greatest influence on grains markets in 2012 with be Black Sea Grains from FSU countries.

Most salient point of Dan’s presentation is that it’s not about how much money you make trading, it’s about how much you can keep.

The Grain Markets in Australia and Canada: The potential and prospects of an open market
By Fran Malecha, COO Grain, Viterra, Canada

Fran Malecha, Global Grain 2011

Evolution of Global Agribusiness has resulted in increased global demand, competition from Eastern Europe, and increased international market deregulation.

AUSTRALIA: There has been a multi-stage deregulation process in Australia’s wheat market since 1999 from a single desk to multi-desk/exporters. Australia is now well-positioned as an exporter to the world’s fastest growing markets, namely SE Asia.

CANADA: As the Canadian Wheat Board’s monopoly ends, starting this December/January, purchasers will be able to buy from Canadian farmers for August 2012 delivery. This will result in increased supply chain control, logistical transparency, opportunity for risk management, market efficiency, and new marketing options. We will also likely see an increase in working capital requirements, the opportunity for higher returns for growers, and farmers will be able to finely control the timing of grain contracting and delivery.

The Geopolitics of Grains and Oilseeds: how can the trade operate in a reshaping world?
By Alain Butler, Senior Advisor on Soft Commodities, BNP Paribas

Alain presents several case studies on some key grains importers/exporters.

Alain Butler, Global Grain Geneva 2011

1. ARGENTINA: Leading exporter of soy (#1 exporter of soybean oil/meal, peanut oil) thanks to a very effective crushing setup. Land is increasingly being grown by organized pools of farmers who own their land, and who tend to be wealthier on average than their international peers as a result.
2. BRAZIL: High performing producer of diversified agricultural products. Grain only accounts for 33% of ags exports (90% of that is soy,) with large-scale plantations, and high competition between grains and other agricultural products. There is a huge logistics bottleneck in central Brazil, and agri-trade is influenced by feed & energy. This model is expanding into Sub-Saharan Africa.
3. USA: This leading exporter of grains also retains a huge local market.Corn, soy & wheat occupy 85% of arable land. Their greatest strength is the ability to reallocate crops based on growing conditions. Very limited potential for grain export boosts for various reasons, including the need for a new generation of farmers.
4. UKRAINE: Seen as potential granary for the world, with favorable climate & black soil. The evolution of reforms will define the future of Ukrainian farming, in particular with regard to land ownership regulation reform, which could attract new capital and productivity.
5. EGYPT: Net importer of agricultural products, due to dry, arid, desert land dominance. Consumption and imports are driven by population growth. Egypt must continue to manage scarce resources used in farming, including crop diversification, changes in eating habits, and water management.
6. CHINA: Desires to remain self-sufficient on cereals; agriculture is the key to national stability. China foresees agricultural productivity in the coming years by developing crushing capacity, increasing land reallocation, optimizing farming productivity, and developing international partnerships to secure supplies.

Brian Perrott, Global Grain Geneva 2011

Brian discussed the importance of policing your contracts for obligation language, citing several litigation cases and settlements in the agricultural industry.

Ocean Freight Markets: Dynamics of Supply and Demand
By Tom Cutler, SwissMarine, Geneva

Tom Cutler, Global Grain Geneva 2011

Everyone loves a good Monty Python analogy, and Ton’s comparison of the black knight to the freight industry seems fairly apt, given the strange and unforeseen challenges they’ve faced in the past few years.Atlantic-Pacific trade is increasing with long haul/long ballast trips, which are incredibly inefficient. The slowing of many global economies has really cut back freight trade, though iron ore trade with China is beginning to recover.

Until 2009, iron ore & freight prices showed tight correlation, however since the end of 2009, prices of the two are nearly inversed.Coastal coal trade and nickel imports in China, port delays, cost of fuel (and subsequent slow steaming), and record ship scrapping amongst other things, have all affected the freight industry.

Managing Grain Price Volatility in an increasingly uncertain world
By Graham Trask, Macquarie Bank, Switzerland

Graham Trask, Global Grain Geneva 2011

Volatility has doubled over the last decade, which has led to higher absolute price variance, in addition to which agricultural business risk has almost tripled, and relative open interest has shown considerable growth in the past five years.

Major drivers are population growth, chronic underinvestment in agricultural supply chain, higher worldwide incomes, flattening yield curves, less arable land, and weather patterns.

To combat this change, organizations must use corporate introspection, disaggregate pricing, hedging, and structured commodity finance.Graham presented several case studies illustrating how risk management is critical to businesses moving forward.The big question is: Are you ready? Will your organization be able to absorb large shifts in price on a daily basis?

Latest Developments in Commodity Finance: Prospects for 2012
By Bruce Tozer, Crédit Agricole Corporate Investment Bank, London

Bruce Tozer, Global Grain Geneva 2011

Demand for finance is growing, but supply of finance is decreasing due to various debt crises & political uncertainties. More bank & corporate consolidation seems likely in the next few years.

Macroeconomic factors are casting a long shadow across the agricultural finance community, and the risk environment is becoming much more challenging for commodity finance, and commodity price volatility is adding to financing pressure, which is impacting the way credit committees are looking at the landscape.

Finding a proper balance between banks & clients will be the key moving forward.”Happiness is a positive cash flow.”

Adding Value and Sustainability throughout the Supply Chain
By Paul Harrison, Vice President, Agricultural Services, SGS Group

Paul Harrison, Global Grain Geneva 2011

How will we meet increasing demand? Solutions must be both safe & sustainable.Supply chain monitoring/certification, testing goods at key handling points, a standardized approach with the assistance of a third party to understand and comply with legislation.

Soil fertility mapping & management, implementation of integrated pest management, fully integrated food safety & loss prevention facilities, as well as agrochemical research & registration will also be key to sustainability.

Sustainability certification schemes are available, and appear to be working for some sectors, such as biofuels, manufacturing and fibers.

Thursday, 17th November: Company Presentations

Company Presentations
Amongst the many other company presentations, including a brief preview of Global Grain Asia 2012, John Scherb (SolArc) drew business cards and presented winners of the iPad drawing with their prizes:

John Scherb Drawing business cards for various prizes at the SolArc Exhibit, Global Grain Geneva

John Scherb presents iTouch winner with his prize at Global Grain Geneva 2011

John Scherb with iPad winner at SolArc's exhibit at Global Grain Geneva 2011

Conference organizers closed this year’s conference with a reminder that the next Global Commodities Group conference will be:

Global Grain Asia
13-15 Mar, 2012 – Singapore
Shangri-La Hotel, Singapore