FinalPPT AgribusinessValueChainDay2

Food and agriculture Lee Bridgett, Food retail and
manufacturing analyst
An increasingly global landscape 8 June 2022
S&P Global Commodity Insights

Changes in the global food and agriculture landscape
• More agricultural production is being traded internationally
• Supply-side drivers
– Explosion in agricultural production in Argentina, Brazil, Ukraine, Russia
• Demand-side drivers
– Increased demand for higher-value agricultural products
– Increased demand for agricultural products as inputs or ingredients
• Implications
– Global food and agriculture trade has become more complex
– Food system has become highly reliant on shipping and logistics to align supply and demand
– Trade plays a greater role in determining world prices
– Seemingly local challenges (production shortfalls, lockdowns, conflicts, currency fluctuations, etc.) can have far-
reaching effects on the food system
S&P Global Commodity Insights 2

More agricultural production going to world trade
World exports as a percentage of world production

100%
90% 21%
3%
80%
70% -9%
4%
4%
60% 5%
19%
50% 3% 15%
40% 1%
30% 6% 6%
9%
7%
20% 4%
5% 0% 3%
-3% 5%
10%
0%
2001/02-2005/06 2016/17-2020/21
Source: USDA © 2022 IHS Markit

Corn exports have shifted from the US to Argentina, Brazil, and Ukraine
World’s largest corn exporters (2001/02-2005/06) World’s largest corn exporters (2016/17-2020/21)
Others , 12%
Argentina; Argentina,
Others ; 18% Brazil; 4%
15% 20%
Ukraine; 2%
United States, Brazil, 18%

35%
United States;
61% Ukraine, 15%
Source: IHS Markit © 2022 IHS Markit Source: IHS Markit © 2022 IHS Markit

More corn exports going to EU, China, Vietnam for animal feed
World's largest corn importers (2001/02-2005/06) World's largest corn importers (2016/17-2020/21)
European China, 6%
Union, 4%
European
Union, 11%
Japan, 22%
Japan, 10%
Others, 51%
Others, 55% Korea, South,
Korea, South, 7%
11%
Mexico, 10%
Mexico,
7%
Vietnam, 6%

Soybean exports have concentrated in Brazil
World’s largest soybean exporters (2001/02-2005/06) World’s largest soybean exporters (2016/17-2020/21)
Others,
8% Argentina, Others, 11%
13% Argentina, 4%
United States,
35%
United States, Brazil, 34%

46%
Brazil, 50%

China now the predominant soybean importer due to animal feed demand
World's largest soybean importers (2001/02-2005/06) World's largest soybean importers (2016/17-2020/21)
Others
Others China 27%
32% 34%
Mexico
China
3%
61%
Mexico European
7% Union
European 9%
Union
27%

Wheat exports have concentrated in the Black Sea
World's largest wheat exporters (2001/02-2005/06) World's largest wheat exporters (2016/17-2020/21)
Canada, 13%
United States,
United States,
14%
25%
Others, 30%
European Canada, 12%

Union, 13%
European
Russia, Ukraine, 10% Union, 16%
7%
Others, 37%
Ukraine, 4%
Russia, 19%

Meat and processed food consumption has made supply chains more
complex
• Meat consumption has risen in tandem with rising Chicken, swine, beef and veal consumption
incomes Change in domestic consumption
(2016/17-2020/21 average over 2001/02-2005/06 average)
– More livestock production in lower/middle income Country Chicken Swine Beef and veal
countries, but trade still necessary to meet global
meat demand World +51% +15% +3%
– More trade in both meat and animal feed Argentina +130% +191% -3%
– More efficient chicken and pork production Brazil +57% +49% +17%
Canada +34% +1% -1%
• More consumption of processed food and food China +33% +15% +58%
away from home European Union +21% -9% -23%
– Consumption of manufactured/ultra-processed Mexico +64% +68% -10%
foods rising rapidly in low and middle-income
Russia +95% +58% -29%
countries
South Africa +54% +61% +37%
– More food consumption outside of the home,
especially in high-income countries Ukraine +107% +31% -36%
– Industrial/commercial food preparation requires United States +26% +13% -2%

more complex supply chains Vietnam +220% +85% +209%
Source: USDA © 2022 IHS
Markit

Transport and logistics has become extremely important, both as an input
cost and a potential supply constraint
Global Food Manufacturing PMI, Food & Beverage, supplier delivery
Ocean freight spot rates, monthly average
times
70.000 55
Values below 50 indicate slower delivery times
60.000
50
50.000
40.000
45
30.000
40
20.000
10.000
35
0
mai/14 mar/15 jan/16 nov/16 set/17 jul/18 mai/19 mar/20 jan/21 nov/21
Capesize (C5TC) Panamax (P4TC) Supramax (S10TC) 30
May-18 Jan-19 Sep-19 May-20 Jan-21 Sep-21

More trade, more complex trade, and greater reliance on global supply
chains has increased the potential for volatility in food prices
FAO Food Price Index, 2014-2016=100
180
160
140
120
100
80
60
40
20
0
jan/01 mar/02 mai/03 jul/04 set/05 nov/06 jan/08 mar/09 mai/10 jul/11 set/12 nov/13 jan/15 mar/16 mai/17 jul/18 set/19 nov/20 jan/22
Source: FAOStat © 2022 IHS Markit

The increasingly global food and agriculture landscape
• More trade
– Increased agricultural production in countries Argentina, Brazil, Ukraine, Russia
– Greater global demand for animal protein and higher-value agricultural/food products
• More complex trade

– More agricultural production used as an intermediate input (animal feed, biofuel, food processing)
– Interconnectedness with energy markets and other sectors
• More dependent on global supply chains

– Trade disruptions pose substantial supply risks
– Local/regional challenges have farther-reaching global impacts

Darren Stobbart
Senior Research Analyst, Crop
Science
Vulnerable Supply Chain Sanjiv Rana

Editor-in-chief, Crop Science
Crop Science Developments 08/06/2022

Crop Science developments: trade dynamics and regulation
• Vulnerability in agrochemical supply – dominance of Chinese production

• Highlight the significance of Chinese sourced products
• Discuss historic trend in Chinese agrochemical exports
• Influence of Chinese prices on global market performance
• Vulnerability in agrochemical supply – a regulatory and legal perspective

• Glyphosate situation in Europe and the US
• EU regulatory roadmap and way forward
• Questions
14
Vulnerability in agrochemical supply – dominance of Chinese production

Global split of pesticide trade by origin
• China dominates value and volume of global exports at 18% and 33% each
• Approximately $8bn and 2.2 million tonnes
• The greater share in volumes helps to highlight the lower cost generic nature of such products. In the “west” companies tend to offer more
proprietary, higher value products
• The notable exception to this being the R&D driven companies in Japan
• Belgian trade skewed by the port of Rotterdam with a significant proportion of the exports having been imported from other EU nations
16
Global pesticide trade by product and origin
• China dominates in the export of herbicides and insecticides

• Many manufacturers in country focus on herbicides, i.e.
• Hubei Xingfa ~$640 m. total sales in 2020 – 100% of sales from herbicides, notably glyphosate
• Sichuan Hebang (~$440m) – 94% of sales attributed to glyphosate
• Nantong Jiangshan (~$440 m.) – 50% herbicides
• Jiangsu Changqing (~$420 m.) derives a notable proportion of sales from insecticides including organophosphates and neonicotinoids
• In contrast India is by far the leader in fungicides with molecules such as mancozeb driving this
• UPL the largest global manufacturer of the molecule
17
Historical pesticide exports from China
• Export volumes and value have grown strongly over the last decade
• High levels of production in 2015 and 2016 flooded market and

suppressed prices of generic active ingredients
• Higher pricing environments experienced in 2018 and 2021 boosted

value despite lower volumes
• 2018 due to crackdown on production in country due to
mandate by Ministry of Environment
• 2021 due to carbon neutrality initiative, to be discussed in later
slide
• Export volumes in 2020 increased significantly despite the pandemic

leading to some port closures in Q1
• Jan-Feb declined double digits but growth in March resulted in
Q1 trade being in line with previous year
18
Agrochemical industry structure - dominance of Chinese players (2020 market)
Structure of leading agrochemical companies
• Of the top 50 CP players from sales value, 27 are located in

Number of
companies mainland China – ~54%
• Many are smaller players and so the combined sales of these is not
as significant as the MNCs - ~24%
• Combined sales of given Chinese companies ~$15bn whereas
Bayer alone achieved CP sales of ~$12bn during year
• Definition here excludes the companies acquired by ChemChina in

Combined sales recent years
• Syngenta categorised under Europe
• ADAMA categorised under RoW
0% 20% 40% 60% 80% 100%
Europe China (mainland) USA Japan RoW India
Note: Distribution of top 50 players ranked by sales value

Source: IHS Markit Crop Science © 2022 IHS Markit
19
Major Chinese agrochemical players (2020 market)
Sino-Agri Leading
Biosciences
Nutrichem
• The 27 companies are generally based along eastern
Rainbow
Chemical seaboard of China, benefitting from major shipping ports
along the Pacific Ocean
• Jiangsu Province in particular is home to 8 companies

• Yangnong (2020 sales of $1.41 bn), the largest domestic
Jiangsu Yangnong
player and ranked 10th position in global agrochemical list
by sales
• Unlike many peers, insecticides are the most important
product sector for Yangnong at around half of sales
Wynca
• Shandong Province also notable with 5 players in top 50

• Rainbow Chemical most notable (2020 sales of $1.01 bn)
• Vast majority herbicides, in particular glyphosate and 2,4-D

Correlation between Chinese export prices and global CP market
Trends in global CP market growth and Chinese export prices • Given the significance we have discussed in previous slides
Chinese trade has a notable influence on performance of global
USD billion USD/Kg CP market
• R2 of nearly 0.5
70 6,0
• As we discussed before high levels of production in 2015 and

65 5,0
2016 flooded market and brought down pricing
• This in turn had a negative effect on global market
60 4,0
• Similarly, the higher pricing environment in 2021 helped boost

55 3,0
global market growth
50 2,0 • Coming into 2022, we see a significant rise in the price of

Chinese generics
45 1,0 • In turn Q1 sales of MNCs generally up double digits, boosted by
pricing environment
40 0,0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • As the year goes on, the Crop Science team will continue to
review the situation and share estimates on performance of
Global CP market estimate ($bn.) USD/Kg
global CP market
Note: HS Code 3808
Source: IHS Markit Crop Science, IHS Markit Global Trade Atlas © 2022 IHS Markit
• What is driving the rise?
Chinese glyphosate price
• Chinese government’s carbon neutrality initiative leading

to a curtailment on power use which hit glyphosate
production hard
• Particularly for key raw materials such as yellow
phosphorus
• Price increased from around $4.5k/tonne in Jan 2021 to

over $13k/tonne in Dec 2021 – abnormally high
• Naturally, prices into Jan and Feb 2022 fell slightly, down
to below $12k/tonne
• Although below the peak of Dec, prices expected to

remain high in short term
• Carbon neutrality long term goal for Chinese government
• Bayer production remains below normal levels
• Demand for molecule remains high and exceeds supply
• We can’t discuss glyphosate without mentioning

regulation given the legal battles it has faced in recent
years
• Vulnerability in agrochemical supply – a regulatory and legal perspective

Glyphosate (Europe)
• Current approval ends on December 15th
• ECHA’s RAC conclusion (May 30): glyphosate should not be classified as carcinogen
• Opinion consistent with proposal of Assessment Group on Glyphosate
• EFSA/ECHA push their evaluation timeline
• July 2023: EFSA’s peer review conclusions forwarded to Commission and MS
• Expected extension of at least a year

Glyphosate (US)
• “The court’s errors mean that a company can be severely punished for marketing a product without a
cancer warning when the near-universal scientific and regulatory consensus is that the product does not
cause cancer, and the responsible federal agency has forbidden such a warning.”
• August 2021 – Bayer asked US Supreme Court to reverse a federal jury verdict
• December 2021 – Supreme Court asked DOJ to weigh in
• May 2022 – Solicitor General asked Court to deny Bayer’s request to reverse the verdict
• May 2022 – 50 US ag groups sent letter to President Biden asking him to withdraw opposition

Active ingredients banned or restricted (including proposals) since Jan 2019
40% of top 20 molecules from a value perspective

have faced some regulatory/legal scrutiny – • EU
glyphosate, mancozeb, imidacloprid, 2,4-D, atrazine, • 7 herbicides, including glyphosate and
paraquat, chlorpyrifos, epoxiconazole sulfoxaflor
• 14 insecticides, including imidacloprid,
chlorpyrifos and thiacloprid
• Canada • 10 fungicides including mancozeb,
• 7 insecticides, including chlorpyrifos and chlorothalonil and propiconazole
neonicotinoids
• US
• India • Chlorpyrifos
• Proposed ban of 27 pesticides • Dicamba
26
Europe – Regulatory roadmap
F2F (Farm to Fork)
• Reduce “overall use and risk” of chemical pesticides by 50% by 2030
• Reduce use of more hazardous pesticides by 50% by 2030
SUD (Sustainable Use Directive)
• Options: “Aspirational targets” – voluntary
• “Moderately ambitious” – binding targets at EU level
• “Most ambitious” – binding targets at MS level

Way forward
• Phasing out actives
• Biologicals – new criteria in Q4 for microbial pesticides
• Precision farming
• New breeding techniques – consultation on possible new regulatory framework for NGTs

Time for registration for biological
Biocontrol market products
Source: ABIM 2021

Reality bites
• Glyphosate
• Neonicotinoids
• France – ban in 2018; but 2020 bill allowed ST use on sugar beets until 2023
• Emergency authorisations – over 20
• Changing the narrative – IPM/sustainable ag (not excluding chemical ais)
Industry initiatives
• Biologicals - €4 billion investment by 2030
• Precision farming - €10 billion by 2030
• Chemical active discovery process – sustainability as a benchmark

Questions:
Darren Stobbart, Senior Research Analyst, Crop Science

Darren.Stobbart@spglobal.com
Sanjiv Rana, Editor-in-chief, Crop Science
Sanjiv.Rana@spglobal.com
Customer Care
CustomerCare@ihsmarkit.com
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Japan: +81 3 6262 1887
Asia Pacific: +604 291 3600
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Americas: +1 800 447 2273
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Marina Simonova | Consulting
Director, EMEA Agribusiness
Consulting
Focus on Fertilizers Alberto Persona | Associate

Director, Phosphate and Potash
June 8th, 2022

The role of fertilizers
Nitrogen is an essential component of amino acids for building proteins,

nucleic acids, and chlorophyll which converts the sun’s energy into sugars.
It is vital for plant metabolism, growth, and health.
Phosphorus is vital for energy storage and transfer and membrane integrity
in plants. Particularly important in early growth stages, it promotes
tillering, root development, early flowering, and ripening.
Potassium has major functions in enzyme activation, transpiration, and the
transport of assimilates (the products of photosynthesis). It helps plants to
retain water during droughts, provides strength to plant cell walls and
decreases susceptibility to diseases and insects.
Key message: all nutrients are needed for optimal plant growth. While
under-application of some (e.g. P, K) can be tolerable in the short term,
crop yields and/or crop quality will suffer in the long term if even just one
nutrient is not available in sufficient quantities.

Key demand hubs for primary nutrients (2021 data, N + P2O5 + K2O)
Demand split by crop type
Cereals Oil crops

Microsoft product screen shot(s) reprinted with permission from Microsoft Corporation.
© 2022 S&P Global Commodity Insights. All rights reserved. Provided “as is”, without any warranty. This map is not to be reproduced or disseminated and is not to be used or cited as evidence in connection with any territorial claim. S&P Global
Fruits and vegetables Others
Commodity Insights did not create the underlying map visual and is impartial and not an authority on international boundaries, which might be subject to unresolved claims by multiple jurisdictions.

Major growth engines
N, P2O5, K2O demand by region Focus on selected regions

250 70
60
200
50
mln t nutrient
150
mln t nutrient
40
100 30
20
50
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0
WEU SEU NEU EEU EUA NAF WAF 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
EAF CAF SAF MEA CAS SAS EAS Western Europe Eurasia Southern Asia
SEA OCE NAM CAR CAM SAM UND Eastern Asia North America South America

Nitrogen fertilizers: Key producers and exporters (all N, 2021)
Production Exports
8% 14%
RUS CHN IND USA IDO EGY RUS CHN IND USA IDO EGY
PAK KSA IRN CAN Next-10 Others PAK KSA IRN CAN Next-10 Others

Nitrogen fertilizers: Russian urea exports by destination (2021)
Europe Eurasia
Africa Middle East
Central Asia Southern Asia
Eastern Asia Southeast Asia
Oceania North America
© 2022 S&P Global Commodity Insights. All rights reserved. Provided “as is”, without any warranty. This map is not to be reproduced or disseminated and is not to be used or cited as evidence in
Latin America
connection with any territorial claim. S&P Global Commodity Insights did not create the underlying map visual and is impartial and not an authority on international boundaries, which might be subject to
unresolved claims by multiple jurisdictions.

Phosphate fertilizers: Key producers and exporters (all P2O5, 2021)
Production Exports
8%
14%
RUS CHN USA MOR IND KSA RUS CHN USA MOR IND KSA
BRA EGY AUS IDO Next-10 Others BRA EGY AUS IDO Next-10 Others

Phosphate fertilizers: Russian exports by destination (2021)
Europe Eurasia
Africa Middle East
Latin America

Potash fertilizers: Key producers and exporters (all K2O, 2021)
Production Exports
21%
20%
16% 19%
RUS BLR CAN CHN DEU ISR RUS BLR CAN CHN DEU ISR
JOR CHI USA LAO Next-10 Others JOR CHI USA LAO Next-10 Others

Potash fertilizers: Russian and Belarusian exports by destination (2021)
Europe Eurasia
Africa Middle East
Latin America

Value-chain inter-dependencies
Phosphate Ore
Phosphate
Feedstock Sulphur Rock
Potash
Ore/Brine
Phosphoric
Ammonia Sulphuric Acid
Acid
Potash
Ammoniated
Nitrogen Ammonia
phosphates
NPK
Potash
complexes

Ammonia: Key producers and exporters (2021)
Production Exports
10%
23%
RUS CHN USA IND IDO KSA RUS TTO IDO ALG KSA CAN
TTO EGY CAN IRN Next-10 Others EGY MYS QAT IRN Next-10 Others

Ammonia: Russian exports by destination (2021)
Europe Eurasia
Africa Middle East
Latin America

Sulphur: Key producers and exporters (2021)
Production Exports
6%
9%
11%
6%
RUS KAZ CHN UAE KSA USA RUS KAZ UAE CAN QAT KSA
CAN QAT IRN IND Next-10 Others IRN SKO USA KUW Next-10 Others

Sulphur: Russian exports by destination (2021)
Europe Eurasia
Africa Middle East
Central Asia South Asia
East Asia Southeast Asia
Latin America

“Green” projects gain a further dimension: reducing the dependency on inputs
Fossil Fossil
Feedstock Feedstock
CO2 H2 CO2 H2
For urea
Ammonia Ammonia Ammonia
Nitrogen Nitrogen Nitrogen
“Green” nitrogen has been so far a story about C and H: green ammonia as a way to move H while avoiding emitting C
Now, green investments also gain a new dimension: reducing reliance on fossil feedstock

Russia is not the only factor of risk to the global value chain
• Increased protectionism in the United States (e.g. countervailing

duties on phosphates and nitrogen)
• Export restrictions on nitrogen and phosphates exports from
China
• Export restrictions also applied in Russia before the conflict with
Ukraine
• Export restrictions also applied in Turkey
• Belarusian potash cut off from key logistical assets in Lithuania
and Ukraine
• Increased subsidy allocation in India, Bangladesh and Southeast
Asia
• Trade frictions persist with Syria, Iran and Venezuela – affecting
nitrogen, phosphate and sulphur trade
Screenshot from the S&P Global Country Risk map service
• Social unrest continues in Tunisia, affecting phosphate output
© 2022 S&P Global Commodity Insights. All rights reserved. Provided “as is”, without any warranty. This map is not to be reproduced or
• Political issues prevent the re-opening of the Algeria-Spain gas disseminated and is not to be used or cited as evidence in connection with any territorial claim. S&P Global Commodity Insights did not create
pipeline via Morocco the underlying map visual and is impartial and not an authority on international boundaries, which might be subject to unresolved claims by
multiple jurisdictions.
• …and the list, unfortunately, does not stop here.

Summary and conclusions
Russia is a major actor in the fertilizers market: it is a top-10 producer for all N, P and K, and it accounts for more than 10% of global exports
in each. Moreover, it is a key exporter of fundamental raw materials supporting production elsewhere in the world – notably ammonia and
sulphur.
Significant volumes are exported to markets that applied sanctions on Russian and Belarusian entities: 35% for nitrogen, 30% for
phosphates, and 20% for potash. Yet with Latin America and much of Asia unlikely to join such sanctions, Russian producers should be able
to find an outlet for their output.
Europe is possibly in the most vulnerable position, with strong reliance on Russian fertilizers and limited alternatives – and some of said
alternatives are in turn reliant to a varying extent onto Russian raw materials.
“Green” investments (e.g. green ammonia) appear now not only as ways to fight climate change, but also as strategic investments aimed at
reducing the reliance on an increasingly vulnerable global value chain. Frictionless international trade – the prevailing economic model of the
past two decades – may be replaced by a different paradigm with stronger hints of protectionism and value-based sanctioning.
A new wave of investment is likely – candidates abound, but each face individual challenges that need to be overcome.

Constraints on Global
Crop Production Paul Hughes – Chief Agricultural
Economist
Obstacles to supply expansion at a time of demand
growth

World Grain and Vegetable Oil Production Growth
In both cases, it appears production has slowed in recent years from their long-term trends. It is hard to say if this is a short-
term phenomenon or something more lasting.
World Vegetable Oil Production: 2000/01-2021/22 (in million MT) World Grain Production: 2000/01-2021/22 (in million MT)
250 2500
Average Annual Change = 4.7% Average Annual Change = 2.5%

200 2000
150 1500
100 1000
500
50
0
0
Note: Includes palm, rapeseed, soybean, and sunflower oils Note: Includes barely, corn, and wheat

World Grain Production is mostly growing through yield improvement
Of the 2.5% production increase about two thirds of it is coming from yield improvements and the other third coming from
area expansion globally.
Area inGrain
World Production
Yields:of
2000/01-2021/22
Major Grains &(in
Oilseeds
MT/hectare)
(in million hectares) World Grains Area: 2000/01-2021/22 (million hectares)
700
5,0 500
Average Annual Change = 0.8%

600 Average Annual Change = 1.7% 480
4,5
500 460
4,0
400 440
300 420
3,5
200 400
3,0
100 380
0 360
2,5
Others Brazil Russia Ukraine Argentina


World Veg Oil Production is mostly growing through area expansion
Unlike grains, area expansion accounts for the largest portion of annual production increases. That expansion has largely
been in Indonesia (palm oil) and Brazil (soybeans/soy oil). Area expansion has slowed significantly in Indonesia.
World Vegetable Oil Yields: 2000/01-2021/22 (MT/hectare) World Vegetable Oil & Oilseed Area: 2000/01-2021/22 (in million hectares)
1,00 250
0,95
0,90 200
0,85
0,80 150
0,75
0,70 100
0,65
0,60 50
0,55
0,50 0

Palm Oil Production Has Changes Going Forward
Palm oil yields have stagnated the past 10 years or so. At the same time, area expansion has slowed due to environmental
concerns. This is occurring while the world is increasingly looking to veg oils in the motor fuel space.
Palm Oil Yields: 2000/01-2021/22 (in MT/hectare) Palm Oil Area: 2000/01-2021/22 (in million hectares)
3,90 20 20
3,80 18 18
16 16
3,70
14 14
3,60
12 12
3,50
10 10
3,40
8 8
3,30
6 6
3,20 4 4
3,10 2 2
3,00 0 0
Source: IHS Markit © 2022 IHS Markit Source: IHS Markit Indonesia Malaysia © 2022 IHS Markit

EU Grain and Oilseed Production has Stagnated
EU area under production of major grain and oilseeds has declined modestly since 2000. Upward trending yields has allowed
production to grow modestly, but the average annual growth has been less than 1%.
EU Area Under Production for Key Crops (in million hectares) EU Production of Key Crops (in million MT)
70 350
60 300
50 250
40 200
30 150
20 100
10 50
0 0
Barley Corn Rapeseed Sunflowerseed Wheat Barley Corn Rapeseed Sunflowerseed Wheat

US Area Under Production has Declined, but Production has Increased
US area increased during the biofuels induced rally (2006-2013). Barring that, the trend in area has been modestly lower.
Despite that, production has generally trended higher due to a shift to corn/soybeans with strong upward trends in yields.
Total US Area Under Production & Prevent Plant (in million acres) US Production of Key Crops (in million MT)
350 700
300 600
250 500
200 400
150 300
100 200
50 100
0 0

Brazil in a Country of Tremendous Growth.
Brazilian production has grown through area expansion and increases in yields. However, there are limitations short and long
term on the horizon.
Brazilian Corn & Soybean Production (in million hectares) Brazilian Corn & Soybean Area Under Production (in million hectares)
300 300,0 70 70,0

60 60,0
250 250,0
50 50,0
200 200,0
40 40,0
150 150,0
30 30,0
100 100,0
20 20,0
50 50,0
10 10,0
0 0,0 0 0,0
Source: IHS Markit Corn Soybeans © 2022 IHS Markit Source: IHS Markit Corn Soybeans © 2022 IHS Markit

Cropland’s potential expansion in Brazil
Pasturelands constitute the overwhelming majority of farmland in Brazil but are steadily being converted to cropping.
Increasing double cropping of soybeans expands land use beyond total area under production.
Land Use in Brazilian Agriculture Agricultural Land Use by Crop
Others, 15%
Rice, 2%
27%
66,4 million Coffee, 2%
hectares Edible
Beans,
4%
Fruits, 6%
Soybeans,
73% 54%
180,4 million hectares
Corn, 6%
Sugarcane,
11%
Source: IHS Markit, IBGE, CONAB

Pasture Crops © 2022 IHS Markit Source: IHS Markit © 2022 IHS Markit
A Risk from the Russia/Ukraine Conflict
After the fall of the Soviet Union, wheat yields in Russia & Ukraine stagnated/fell due to a lack of investment. In the more
recent past, yields have grown rapidly. Will investment dry up in these two countries after the conflict like 1990-2005?
Russian Wheat Yields: 1990-2005 (in MT/hectare) Russian Wheat Yields: 2006-2021 (in MT/hectare)
2,2 3,5
Average Yield Change + 0.4% Average Yield Change + 2.6%
2,0
3,0
1,8
2,5
1,6
1,4 2,0
1,2 1,5
1,0
1,0
Ukrainian Wheat Yields: 1990-2005 (in MT/hectare) Ukrainian Wheat Yields: 206-2021 (in MT/hectare)
4,5 5,0
4,0
Average Yield Change -2.4% 4,5 Average Yield Change +3.3%
3,5 4,0
3,0 3,5
3,0
2,5
2,5
2,0 2,0
1,5 1,5
1,0 1,0
Current challenges for sugar Stefan Uhlenbrock / Senior
Analyst
and coffee Luciana Silveira / Global

Manager Sugar Analytics

Global sugar S&D and trade flow surpluses increasing on prospect of good crops
in Asia, despite lower production in Brazil
GLOBAL SUGAR S&D BALANCE AND WORLD PRICE GLOBAL CUMULATIVE TRADE FLOWS: TOTAL EXP - IMP
million mtrv c/lb million mt
7,0
15 22
13,22 13,43
9,72 6,0
10
19
5,0
4,93 4,94
5 3,87
2,12 4,0
1,65 1,39 16
0 3,0
-1,89 13
-5 2,0
-4,84
1,0
-10 10
2012/13 2014/15 2016/17 2018/19 2020/21 2022/23* 0,0
Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23
Surplus/Deficit NY#11 average price
*Forecast Source: S&P Global Commodity Insights

Source: S&P Global Commodity Insights

Sugar prices to remain range-bound, trading at small discount to ethanol parity
during CS Brazil harvest
NY#11 SUGAR PRICE FORECAST
c/lb
22
21
20 20,20
20,19
19
18
out/21 abr/22 out/22
NY#11 NY#11 current Forward Curve
NY#11 Spot Forecast Hydrous ethanol sugar equivalent
India Export Parity

What could break the price range?

CS Brazil has flexibility to switch more cane to ethanol if prices incentivizes
Petrobras fuel price policy and possible changes on fuel taxes potentially impacting ethanol prices
NY #11 vs PLATTS HYDROUS IN SUGAR EQUIVALENT GASOLINE PAULINIA IMPORT PARITY vs PETROBRAS GASOLINE A
c/lb Real per cbm
Sugar Premium 5500 12% gap
4
4500
2
3500
0
2500
2
Ethanol Premium 1500
4
500
Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22
6
Mar-21 Jul-21 Nov-21 Mar-22
Gasoline Paulinia Import Parity Price BRL/CBM Petrobras Gaoline A - Paulinia
Source: ICE, S&P Global Commodity Insights Source: Petrobras; S&P Global Commodity Insights

India export restrictions to slow down the export pace in Q3 and Q4 2022
Further extension of export restrictions beyond October 31 could tighten white sugar market in Q4 2022
INDIA SUGAR EXPORT LIMIT TO 10 million mt UNTIL INDIA SUGAR EXPORTS

OCT 31
million mt
million mt 2,0
10 Forecast
8 1,5
6 requires export
permission 1,0
4
2
0,5
0
2021-22 Exports Contracted Open Total Exports
(Oct-May) Balance 0,0
Oct-21 Jan-22 Apr-22 Jul-22 Oct-22
Raws_world Raws_toll LQW+HQW_World
RAW LQW HQW HQW_TOLL
Source: Market, S&P Global Commodity Insights Source: S&P Global Commodity Insights

La Niña still playing out and expected to last until end of the year
Risk of weather being similar to 2021 in Brazil
OCEANIC NIÑO INDEX (ONI) ENSO PROBABILISTIC FORECAST - MAY 2022
°C
3,0 100%
2,0 75%
1,0
50%
0,0
25%
-1,0
-2,0 0%
2010 2012 2014 2016 2018 2020 May-Jul Jul-Sep Nov-Jan Jan-Mar
ONI El Niño threshold La Niña threshold

El Niño Neutral La Niña
Source: CPC-NOAA, S&P Global Commodity Insights Source: CPC/IRI, S&P Global Commodity Insights

Macro volatility can assume the driving seat when fundamentals are lacking
War in Ukraine still disrupting supply chains
BRENT CRUDE OIL US DOLLAR INDEX
$/bbl
130
105
120
110
100
100
90 95
80
70 90
60
85
50 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22
Apr-21 Jul-21 Oct-21 Jan-22 Apr-22

Source: ICE, S&P Global Commodity Insights

Inflation pushing cost of production higher, yields likely lower
Production downside across the world
FERTILIZERS PRICE INCREASE SINCE 2020
500
400
300
200
100
Prilled Urea FOB Yuzhnyy Nitrate - AN 34.5%N FOB Black Sea Phosphate - DAP/MAP FOB China
*Forecast
Source: Fertecon; S&P Global Commodity Insights

What‘s going on
in the coffee
market?
Arabica Prices: NY ICE “C” Futures
(US-Cents/lb)
350
Prices hit a 10-
300 year high of
259.65 cents/lb on
250 9 February amid
200 frost damage to
Brazil’s 22/23 on-
150 year crop and poor
production in
100 Colombia – the
50 world’s two largest
arabica producers
Robusta Coffee Prices: London ICE Futures
($ per tonne)
2800
2600 Robusta prices
2400 rose alongside the
2200 arabica market,
2000 but they have
1800 given back more of
1600 their gains as
1400
supply outlook for
robusta is better
1200
than for arabica
1000
NY Arabica Premium over London Robusta
(US cents per lb)
200
180
160 Arabica premium
140 strengthens to 10-
120 year high and
100 provides incentive
80 for roasters to use
60 more robusta in
40 mass market
20 blends
0
Three frosts hit Brazil‘s coffee areas in July 2021, causing extensive damage to trees
already weakended by months of drought, adverse effect on 2022 „on-year“ crop
Brazil‘s current frost watch period – things to know
• Frost was THE major threat for Brazil’s coffee production until the
1990s
• This was when Parana was still the largest producer but growing
areas have moved northwards with Minas Gerais now being the
major coffee growing state
• Drought has now become the main threat, not frost
• Earliest recorded frost damage – based on calendar date – was on
May 30 (in 1979) with the main threat being the period from late
June to early August. Last recorded frost damage occurred on
August 25 (in 1984).
• Before the 2021 frost, the last severe crop losses from frost
occurred in 1994 (June 25/26 and July 9/10) – hitting the 1995/96
crop.
• There were minor frost events in July 2000 and July 2019
Brazil: Coffee Production and the Weather
(million 60-kg bags)
- Record crop in
2020/21 (69.5 mln
bags) was followed
Arabica Robusta by very poor crop in
50
Drought
2021/22 (56.6 mln
Frost
Drought
Drought
bags) due to extreme
40
Drought
drought in 2020 and
Frost &Drought
2021.
Frost
30
Frost
- Frosts in July 2021 to
Drought
Drought
Frost
curtail arabica
20 recovery in 2022/23!!!
Frost
- Smallest on-year
10 arabica crop since
2014/15, at 39.0 mln
0
bags, up from 35.0
1969/70
1993/94
2017/18
1971/72
1973/74
1975/76
1977/78
1979/80
1981/82
1983/84
1985/86
1987/88
1989/90
1991/92
1995/96
1997/98
1999/00
2001/02
2003/04
2005/06
2007/08
2009/10
2011/12
2013/14
2015/16
2019/20
2021/22
mln last year.
Colombia – Coffee Production
Public unrest cuts

15
14,0
14,6
14,1
output in 20/21; La
13,813,9
14 13,3 13,4 Nina-induced
12,8
13 12,5 wetness leads to
12,011,7 12,012,2 12,1
12 11,5
failure of flowering
11,1
11 10,5
in 21/22 and
9,9
10
output at 8-year
9 8,7 8,5
8,1 low
8 7,7
7
6
5
2000/01
2021/22
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Vietnam’s coffee output recovers on improved weather
Vietnam’s robusta
35 output recovered
30,330,931,2 30,7
30 27,7
29,0 28,5 in 2021/22 on
26,9
26,1
24,4
25,5 better weather but
25
20,9 exports affected by
19,320,0
20 17,818,3
shipping
15,3 15,2 15,6
15 11,7
13,1
11,6
13,9 disruption, lack of
10 containers
6,9 7,2
5,7
5
0
2005/06
2013/14
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
World Coffee Production
Arabica output set
110 Total Output: 166.2 mln bags in 103,2
107,5 105,1 to fall to 6-year low
21/22, down 10.4 mln y-o-y Arabica in 2021/22
100
92,6 90,9
89,0 97,0 94,8
90 83,5 84,3 85,8 90,9
82,8 89,2
80 76,1 83,8
71,9 71,5
75,3 Robusta
69,5 76,3
70 70,3
74,7
64,3 64,3 65,0 64,2
67,7 production to hit
61,9
66,4 65,0 59,1 59,5 all-time high due to
60
51,7 52,0 52,0 52,8
Robusta
further rise in
50 46,3 47,3
44,4 42,7 43,0
41,7
45,9 Brazil, recovery in
40 Vietnam
World Coffee Balance
Sharp drop in
180 Brazil’s arabica
170 output leads to
Production
160 global deficit in
2021/22
150
140
World coffee
130 consumption
120 resumes growth
2021/22 Deficit: 5 million bags
110
100
Conclusions
• The world market has moved into deficit in 2021/22

• Uncertainty over the extent of Brazil’s crop recovery in 2022/23, poor production in Colombia in the
current 2021/22 harvest and a drop of exchange-certified stocks to a two-decade low has lifted world
coffee futures to multi-year highs
• The biennial rise in Brazil’s arabica output in the “on year” 2022/23 was originally expected to be
strong as farmers pruned more trees than usual in response to the 2020 drought
• The recovery potential for 2022/23 has been sharply reduced by the three frosts in July 2021
• Even a test of 3$ cannot be ruled out in the long-term because the frost effects will be felt through to
the 2023/24 “off-year” crop in Brazil
• In any case, a return of the market to its usual 90-135 cents/lb trading range will not happen in the
foreseeable future
80

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Food and agriculture Lee Bridgett, Food retail and

S&P Global Commodity Insights

• More agricultural production is being traded internationally

S&P Global Commodity Insights 2

World exports as a percentage of world production

S&P Global Commodity Insights 3

United States, Brazil, 18%

S&P Global Commodity Insights 4

S&P Global Commodity Insights 5

United States, Brazil, 34%

S&P Global Commodity Insights 6

S&P Global Commodity Insights 7

European Canada, 12%

S&P Global Commodity Insights 8

Canada +34% +1% -1%

– Industrial/commercial food preparation requires United States +26% +13% -2%

S&P Global Commodity Insights 9

S&P Global Commodity Insights 10

Source: FAOStat © 2022 IHS Markit

S&P Global Commodity Insights 11

• More complex trade

• More dependent on global supply chains

S&P Global Commodity Insights 12

Vulnerable Supply Chain Sanjiv Rana

S&P Global Commodity Insights

• Vulnerability in agrochemical supply – dominance of Chinese production

• Vulnerability in agrochemical supply – a regulatory and legal perspective

S&P Global Commodity Insights 15

• China dominates in the export of herbicides and insecticides

• High levels of production in 2015 and 2016 flooded market and

• Higher pricing environments experienced in 2018 and 2021 boosted

• Export volumes in 2020 increased significantly despite the pandemic

• Of the top 50 CP players from sales value, 27 are located in

• Definition here excludes the companies acquired by ChemChina in

0% 20% 40% 60% 80% 100%

Europe China (mainland) USA Japan RoW India

Note: Distribution of top 50 players ranked by sales value

• Jiangsu Province in particular is home to 8 companies

• Shandong Province also notable with 5 players in top 50

S&P Global Commodity Insights 20

• As we discussed before high levels of production in 2015 and

• Similarly, the higher pricing environment in 2021 helped boost

50 2,0 • Coming into 2022, we see a significant rise in the price of

• Chinese government’s carbon neutrality initiative leading

• Price increased from around $4.5k/tonne in Jan 2021 to

• Although below the peak of Dec, prices expected to

• We can’t discuss glyphosate without mentioning

S&P Global Commodity Insights 23

• Current approval ends on December 15th

• Opinion consistent with proposal of Assessment Group on Glyphosate

• EFSA/ECHA push their evaluation timeline

• July 2023: EFSA’s peer review conclusions forwarded to Commission and MS

• Expected extension of at least a year

S&P Global Commodity Insights 24

• December 2021 – Supreme Court asked DOJ to weigh in

S&P Global Commodity Insights 25

40% of top 20 molecules from a value perspective

F2F (Farm to Fork)

• Reduce “overall use and risk” of chemical pesticides by 50% by 2030

• Reduce use of more hazardous pesticides by 50% by 2030

SUD (Sustainable Use Directive)

• Options: “Aspirational targets” – voluntary

• “Moderately ambitious” – binding targets at EU level