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Exim trade the grubstakers wheat


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An analysis of Export and Import of Wheat around the world and in India and a description of how the trade actually takes place.

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Exim trade the grubstakers wheat

  1. 1. EXIM Trade Abhijit Gaurav | Animesh Swain | Divyansh Vashishth | Jyotin Bhatt | Saurabh Tomar |Vivek Gupta Commodity: Wheat GRUBSTAKERS Analysis By:
  2. 2. India’s Export Major Exchanges Trading Markets Analysis of Global Trade India’s Import Analysis of Arrivals Global Imports S Country : Canada Share in world Export :16 % Quantity Produced:27,600,000 metric tons. Shipments Value: $ 6.2 Billion Shipment Quantity: 24.8 Million Tonnes Wheat is the staple crop in Canada. To help homesteaders attain an abundance harvest in a foreshortened growing season, varieties of Wheat were developed at the beginning of the twentieth century. And since then wheat Is one of the majorly produced crop. Country: United States Share in World Export: 14.5 % Quantity Produced: 55,840,000 metric tons Shipments Value: $ 5.6 Billion Shipment Quantity: 21.1 Million Tonnes Wheat is produced in almost every state in the United States, and is the principal Wheat is produced in almost every state in the US. Consequently the surplus results in heavy exports. Country: Australia Share in World Export: 11.4 % Quantity Produced: 26,000,000 metric tons Shipments Value: $ 4.4 Billion Shipment Quantity:16.9 million tons Wheat is the major winter crop grown in Australia with sowing starting in autumn and harvesting, depending on seasonal conditions, occurring in spring and summer. This throughout the year harvesting leaves a surplus to be exported 1 2 3 4 5 Country: France Share in World Exports: 11.1 % Quantity Produced: NA ( Available for EU as a whole) Shipments Value: $ 4.3 Billion Shipment Quantity: 18.35 Million Tonnes France has the most productivity of wheat per hectare at 7.45 metric Tonnes per hectare. As a result despite of its less geographical area, It features among the major wheat producers. Country: Russia Share in World Exports: 10.1 % Quantity Produced: 60,500,000 Shipments Value: $ 3.9 Billion Shipments Quantity: 22.8 Million Tonnes Russia has larger areas under production of wheat leaving it with a surplus to export. 16%, 16% 14.50%, 16% 11.40%, 11%11.10… 10.10%, 10% 36.90%, 37% Export Share Canada United States Australia France Russia Others 6.2 5.6 4.4 4.3 3.9 0 2 4 6 8 Canada United States Australia France Russia Export Value( in Billion $) Global Exports Sources:
  3. 3. Global Exports India’s Export Major Exchanges Trading Markets Analysis of Global Trade India’s Import Analysis of Arrivals Country: Egypt Quantity Imported: 8,667,527 Tons Value of Imports: $ 1.8 Billions Egyptians are among the highest per capita consumers of wheat with 72% of Egyptian diets consisting of wheat corn and rice. With a quarter of Egypt’s 84 million people living below the poverty line of $1.65 a day, millions depend on subsidized bread that sells for less than 1 U.S. cent per loaf.This Supply is due to the imported wheat. Country: Algeria Quantity Imported: 8,108,549 Tons Value of Imports: $ 1.95 Billions Wheat is the staple grain of food and accounts for about 75% of the calories Consumed. Algerian wheat consumption has risen slightly in recent years as a result of increased urbanization, population growth as well as increased milling capacity Country: Italy Quantity Imported: 7,148,349 Tons Value of Imports: $ 2.03 Billions Italians include more wheat products such as bread and pasta in their diet .Italy is known the world over as the home of pasta, and Italy’s grains sector is notable for the importance of durum wheat processing. Italy maintains the primacy as ‘The Pasta Country, which also results in higher export related consumption of wheat. Country: Indonesia Quantity Imported: 7,412,019 Tons Value of Imports: $ 2.08 Billions At least since the early 1970s, processed wheat-based foods have become part of daily consumption in Indonesia. Instant noodles are the most popular processed wheat-based food item, not only in urban but also in rural areas. Thus, it becomes I Imperative for this country to import wheat . Country: Japan Quantity Imported: 5,530,693 Tons Value of Imports: $ 1.65 Billions Japanese were fond of rice initially, But in the aftermath of world war 2, The US propaganda and various projects run By the US government in disguise of aid led to A larger acceptance and later demand of wheat By Japan. 1 2 3 4 5 5%5%5% 5% 4%76% Share in world Imports Indonesia Italy Algeria Egypt Japan Others 2.08 2.03 1.95 1.8 1.65 0 1 2 3 Indonesia Italy Algeria Egypt Japan Import Value(In Billion $) Global Imports Sources:
  4. 4. Major Exchanges Trading Markets Analysis of Global Trade India’s Import Analysis of Arrivals Global Imports Global Imports India’s Export Data Source: 19 7.5 7 4.5 2.5 2.5 2 1.6 1 0.8 0 5 10 15 20 TOP 10 EXPORTERS DESTINATIONS (IN LAKH TONNES) 2013 -14 17 10.5 5 4.7 4.8 5 2.2 0 0.5 1.5 0 5 10 15 20 TOP 10 EXPORTERS DESTINATIONS (IN LAKH TONNES) 2012 -13 3.41 1.19 0.99 0.15 0.07 0.07 0.04 0.03 0.04 0.36 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 TOP 10 EXPORTERS DESTINATIONS (IN LAKH TONNES) 2015 -16 11.23 3.91 3.48 1.9 1.12 1.03 1.04 1.11 0.81 0.79 0 2 4 6 8 10 12 TOP 10 EXPORTERS DESTINATIONS (IN LAKH TONNES) 2014 -15 India’s Export • Wheat Production has come down to 88.94 million tonnes from 95.85 million tonnes achieved in the previous year because of drought and unseasonal rains • The exports have also decreased in the same ratio • Highest export to Bangladesh fell to 3.41 LT in 2015 compared to 11.23 in 2014
  5. 5. Major Exchanges Trading Markets Analysis of Global Trade Analysis of Arrivals India’s Export Global Imports Global Imports India’s Import Data Source: Business Standards 2010 2011 2012 2013 2014 2015 Fig in Tonnes 272000 15000 16000 25000 45000 2000000 0 500000 1000000 1500000 2000000 2500000 India’s Import • Between 2012 and 2014, India reached wheat production volumes near 95 million tonnes per season, and it is the world’s second-largest, single-country wheat producer behind China. • Due to severe drought in 10 states in 2015-2016 the area under wheat has reduced by 4.38% • Production has come down to 88.94 million tonnes from a record 95.85 million tonnes achieved in the previous year because of drought and unseasonal rains • In above graph we can see that the import increased almost 45 times compared to last year owing to low production and increased domestic consumption. High dependence on Monsoons • Indian wheat farming relies heavily on a sufficient monsoon prior to the start of planting in October • The monsoon, or rainy season, typically lasts from July through September • Following the second consecutive below-average monsoon, India has been facing dry conditions for last two year’s wheat crop Poor storage facilities • In order to protect food security and sustain the price support program, the government-owned Food Corporation of India (FCI) buys and stores a lot of the country’s wheat crop • In the last two years food grain wastes has increased to 40,000 tonnes owing to poor storage facilities, pilferage and transit loss Hoarding • Hoarding by traders and farmers expecting price rise in the market is also contributing to the wastage and rise of inflation in India. Reasons of rising Imports India’s Imports (in Tonnes) Source: tonnes-of-grain-went-down-the-drain/articleshow/47669621.cms
  6. 6. Major Exchanges Trading Markets Analysis of Arrivals India’s Import India’s Export Global Imports Global Imports Analysis of International Trade in Wheat Source: Analysis of Global Trade Global production in 2016/17 is expected to rise to a new record despite a sharp reduction in the EU. A record crop in Russia as well as larger crops in Australia, Canada, Kazakhstan, Ukraine, and the United States more than offset the significant decline in the EU crop and a slight reduction in Argentina. Global trade is up month-to-month, but remains fractionally below the previous year’s record. The upward revision is based upon larger projected imports for the EU and growing demand across much of Asia and Africa. Imports by the developing countries are expected to fall most, whereas total imports by the developed countries are likely to remain at the same level as in 2015 Expected good monsoon in India will contribute to rise in Wheat Exports globally. Following two consecutive years of low production trends are set to change from this year.
  7. 7. Major Exchanges Analysis of Arrivals Analysis of Global Trade India’s Import India’s Export Global Imports Global Imports Source: International Trading Market of WheatDomestic Trading Market of Wheat Uttar Pradesh • Meerut • Hathras • Saharanpur • Barreily Punjab: • Amritsar • Moga • Ludhiana • Jalandhar • Bhatinda • Japan • Australia • Bulgaria (Sofia Comm. Exchange) • China Globally wheat is traded at • Chicago (CBOT) • Canada (Winnipeg Commodity Exchange) • Kansas (Kansas City Board of Trade) • Missouri • In Domestic market, wheat is generally traded in places close to its production to reduce the transportation cost. • Punjab and Uttar Pradesh are the major trading market of India. • Uttar Pradesh is the leading producer state in India followed by Punjab and Haryana. • Most wheat is consumed within the country where it is produced, roughly one-fifth of the annual crop is exported • World wheat trade was estimated at 108 million tonnes in 1995, most of which was imported by developing countries • China, the world’s largest wheat producer, is also the world’s largest wheat importer Trading Markets
  8. 8. Analysis of Arrivals Trading Markets Analysis of Global Trade India’s Import India’s Export Global Imports Global Imports • European benchmarks for products including Milling Wheat, Rapeseed and Corn • High levels of liquidity combined with the price volatility inherent in the underlying markets provides a wide range of trading opportunities over both the short and long term • Euronext’s Milling Wheat No. 2 futures is relied upon as the European benchmark for the pricing of physical milling wheat • European Milling Wheat is used mainly in the milling, starch and food industries • Primary products traded at the exchange were futures contracts on hard red winter wheat • Facilitated the transfer of ownership of the futures and options contracts through the open outcry system • In 1982, the exchange introduced Value Line futures, making it the first exchange offering a stock index futures contract • Electronic-trading platform since 2014 • On October 17, 2012, CME Group announced it would acquire the exchange for $126 million in cash • Abides by the principle of openness, fairness, justness and good faith, provides a marketplace with associated facilities and services for the futures trading and regulates the futures trading • Functions according to Futures Trading Management Ordinance, Futures Exchanges Regulation • Carries out futures trading systems such as Margin Requirement System, Daily Price-limit System, Mark-to-the-market System, Physical Delivery System • Fully functional electronic system, including trading, delivery, clearing, risk control, news release, member services • Member of International Options Market Association since June 1995 • Established, liquid Wheat futures markets • Tight bid-ask spreads • Robust Wheat options markets, for event more flexibility in hedging and trading strategies • Availability of Wheat Calendar Spread Options (CSOs) for a more efficient roll strategy • Spreading opportunities with other CBOT grain and oilseed markets • Access to Minneapolis (MGEX) via the fast, efficient CME Globex electronic platform Major International Exchanges Major Exchanges
  9. 9. Trading Markets Analysis of Global Trade India’s Import India’s Export Global Imports Global Imports Analysis of Arrivals Major Domestic Exchanges National Commodity & Derivatives Exchange Ltd. (NCDEX) • National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally managed on-line multi commodity exchange. •The shareholders of NCDEX comprises of large national level institutions, large public sector bank and companies. •NCDEX is the only commodity exchange in the country promoted by national level institutions. •NCDEX is a public limited company incorporated on April 23, 2003 under t the Companies Act, 1956 • NCDEX is regulated by Securities and Exchange Board of India Indian Commodity Exchange •Indian Commodity Exchange Limited is deemed recognized Stock exchange under the SCRA,1956 in terms of Section 131(B) of Finance Act, 2015 •Providing a nation-wide on-line trading platform in commodity derivative. •Put in place assaying and warehousing facilities in order to facilitate deliveries •Encourages participation of actual users to benefit from the opportunities of hedging, risk management and supply chain management in the commodities markets •The Exchange is a public-private partnership with Reliance Exchange next Ltd., MMTC Ltd., Indiabulls Housing Finance Ltd., Indian Potash Ltd., KRIBHCO and IDFC Bank as major shareholders. Multi Commodity Exchange • India’s first listed exchange •State-of-the-art, commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions •Started operations in November 2003, operates under the regulatory framework of Securities and Exchange Board of India •Offers facilities such as calendar-spread facility • Certified in ISO 9001:2008 Quality Management System, ISO 27001:2015 Information Security Management Standard and ISO 14001:2004 Environment Management Standard Major Exchanges
  10. 10. Major Exchanges Trading Markets Analysis of Global Trade India’s Import India’s Export Global Imports Global Imports Analysis of Arrivals • For domestic arrivals roadways are the primary means of transportation • Arrivals come into local mandi’s only after permission from the local mandi officer • Farmers reports their produce at the APMC gate where it is recorded for statistical purpose. • Traders contact commission agents and negotiate quantity and price. • Local taxes like Octroi, mandi tax, etc. also apply in states like Maharashtra, U.P. etc. • Bags used for Wheat packaging are generally jute and fiber bags • Delivery from mandi to buyer is done generally via roads or rails. Exporter/ Trader Mandi 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 9000000 AndhraPradesh Assam Bihar Chattisgarh Gujarat Haryana Jharkhand Karnataka Kerala MadhyaPradesh Maharashtra Mizoram NCTofDelhi Orissa Punjab Rajasthan Telangana UttarPradesh Uttrakhand WestBengal Arrivals (Tonnes) Arrivals Source: Domestic arrival Transport to port via cargo rail Exported in cargo ship in Tramps Exported receives the goods Analysis of Arrivals 41.82 4.28 12.76 15.83 0.01 18.56 58.54 214.08 287.68 -6.6 -8.71 84.83 703.86 -1.14 -100 0 100 200 300 400 500 600 700 800 Arrival analysis of last two years % Change(Over Previous Month) % Change(Over Previous Year) Importer - Wheat is a Rabi crop that is grown in the winter season - Usually the arrival of wheat crop starts in the first week of April - Wheat production in the states of Uttar Pradesh and Madhya Pradesh have increased and decreased respectively over the last years and so the arrivals at local mandis have also changed comparably in these states (compared in above graph) - The production increased mainly due to increase in acreage area, use of pesticides etc. - The forecasted arrivals for the next year is also high since a good monsoon is expectedGlobal Trade