Canadian Grain OverviewCasey McCawleyOctober 2019Vancouver, BC

VANCOUVER SHIPINVEST

The State of Agricultural trade in the world today

Canadian Grain Overview

A. Macro OverviewB. Prairie Crop Production

Macro Overview

MAJOR DEMAND FACTOR

• Asian Swine Flue

• On going trade war between US and China impacting global trade patterns. Impact on soybean market is significant with stocks piling up in the US

• Reduced Ethanol Inclusion.

MAJOR DEMAND FACTOR: Canadian Focus

• Chinese Canola Restrictions

• Indian Pea Tariffs

• Italy: Country of Origin pasta labelling requirements

• Vietnam: Zero tolerance for thistle in Canadian wheat to Vietnam

World Wheat Stocks2019/20 Global Wheat Ending Stocks equal to 139 Days of Demand4source: OCTOBER 2019( WASDE (USDA) and USDA PSD Online database

1 Algeria, Egy pt, Liby a, Morocco, and Tunisia. 2 Indonesia, Malay sia, Philippines, Thailand, and Vietnam. 3 Lebanon, Iraq, Iran, Israel, Jordan, Kuw ait, Saudi Arabia, Yemen, United Arab Emirates, and Oman. 4 domestic consumption plus ex ports for ex port regions and domestic demand for all other regions

Canada58 days

U.S.180 days

Brazil36 days

Argentina32 days

Australia104 days

Russia38 days

Kazakhstan49 days

China

411 days

India77 days

E.U.28 days

North Africa1

108 days

Ukraine18 days

S.E. Asia2

70 days

MidEast3

104 days

Pakistandays

including Chinaexcluding China

Wheat Ending Stocks

HRWHRSSRWwhite

durum

208198138110158

Japan56 days

Nigeria14 days

96

97

79

66

67

80

87

82

88

97

80

71

85

84

67

64

85

100

94

92

81

83

90

91

87

88

82

83

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

World Soybeans Stocks2019/20 Global soybean Ending Stocks equal to 99 Days of Demand1source: OCTOBER 2019 WASDE (USDA) and USDA PSD Online database

1 Indonesia, Malay sia, Philippines, Thailand, and Vietnam. 2 domestic consumption plus ex ports for ex port regions and domestic demand for all other regions

ChinaMMT

U.S.42days

Brazil166 days

Argentina166 days

China68 days

E.U.22 days

49 days

Mexico49 days

including China

Soy bean Ending Stocks

Paraquay86 days

68

57 6

8

51

42

68

66

69

73

74 8

6

78 8

9 94 1

05

87

75

96 1

06

81

81

84 9

5

93 1

06

107

116

99

1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 2 0 1 9

S.E. Asia1

World Corn Stocks2019/20 Global Corn Ending Stocks equal to 98 Days of Demand2source: OCTOBER 2019 WASDE (USDA) and USDA PSD Online database

1 Indonesia, Malay sia, Philippines, Thailand, and Vietnam. 2 domestic consumption plus ex ports for ex port regions and domestic demand for all other regions

ChinaMMT

U.S.50 days

Brazil30 days

Argentina42days

China258 days

E.U.38 days

Japan33 days

Mexico24 days

117

93 104

91

109

106 120

118

105

89

74

59 69

64

55

59

63

58

49

51 60

82

105

114

121

113

104

98

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

including Chinaexcluding China

Corn Ending Stocks

South Africa60 days

Canada57 days

S.E. Asia1

24 days

Ukraine8 days

Egypt44 days

South Korea64 days

Prairie Crop Production

Overall Strong YieldsMap shows variance from the 5 year avg for the five highest weekly NDVI readingssource: Statistics Canada and Parrish & Heimbecker Limited

1.25

10%

33%

55%

78%

100%

NDVI above 5 year average

NDVI below 5 year average

75 km radius

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

CROP15

CROP16

CROP17

CROP18

CROP19

CROP20

CROP21

CROP22

CROP23

CROP24

CROP25

CROP26

CROP27

CROP28

CROP29

CROP30

CROP31

CROP32

CROP33

CROP34

CROP35

CROP36

CROP37

CROP38

CROP39

CROP40

CROP41

current crop year 5 year avg +/- 1 st. dev.

Overall Prairie Region Average

Map shows variance (percentage) from the 5 year average for the average of the five highest weekly NDVI readings

scale

Prairie Grain ProductionMillion tonnessource: Statistics Canada and Parrish & Heimbecker Limited

Prairie Provinces Crop Production million tonnes

7 5 4 7 8 9 9 10 13 13 13 14 14 18 16 18 19 21 20 18

41

3123

35 38 38 35 3341 37

3033 35

48

37 3741 39 41 42

0102030405060708090

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019F

Canola Cereal Grains1 Pulse Crops2 Soybeans other Field Crops

1 includes all wheat, barley, oats, fall rye, canaryseed, triticale and mixed grains2 includes all dry peas, lentils, chickpeas and fababeans

1 8

4 9

1 3

73

5

2 3

2 7

1 93 5

2 9

4 02 5

3 0

3 6

3 7

5 4

5 11 4

9

1 32 3

3 3

2 4

1 81 3

1 31 0

1 0

4 6

3 5

3 5 5 06 0

6 5

2 5

1 1

2 4

1 0 0

Alberta Saskatchewan Manitoba

Western Canada overall

canola

spring wheat

Harvest Progress Part 1Map shows Regional Harvest progresssource: Provincial Agricultural Ministries and Parrish & Heimbecker Limited

Limited harvest progress before mid September

weather challenges resulting in limited supply of high

quality durum and spring wheat.

Mid September Avg: 50%

3 5

7 9

2 4

1 81 9

1 6

4 7

4 6

3 35 4

5 1

4 84 4

6 3

7 0

7 2

8 2

7 62 5

2 8

4 34 6

5 7

4 4

5 44 5

5 33 4

3 3

6 7

7 0

5 8 7 37 0

6 5

4 7

2 8

4 9

1 0 0

Alberta Saskatchewan Manitoba

Western Canada overall

canola

spring wheat

Harvest Progress Part 2Map shows Regional Harvest progresssource: Provincial Agricultural Ministries and Parrish & Heimbecker Limited

Need good October harvest weather to

complete 2019 harvest. Quality issues have already occurred specifically on cereals

grains

End of September Avg: 75% End of October Avg: 95%+

P r o j e c t e d G r o s s M a r g i n ( d o l l a r s p e r a c r e ) o f S e l e c t e d C r o p s r a n g e i s + / - 1 0 % o f b a s e y i e l d a n d / o r p r i c e

$ 0 $ 2 5 $ 5 0 $ 7 5 $ 1 0 0 $ 1 2 5 $ 1 5 0 $ 1 7 5 $ 2 0 0

f e e d w h e a tr e d l e n t i l s

f e e d b a r l e y2 C W R S 1 2 . 5

1 C P S R 1 1 . 5p e a s ( y e l l o w )1 C W R S 1 3 . 5

o a t ss o y b e a n s

c a n o l a1 C W A D 1 3 . 0

f i x e dc o s t s

2019 Crop Margins source: Parrish & Heimbecker Limited

#1 Durum & Canola

Feed Wheat & Lentils

M a j o r A s s u m p t i o n s

1 C W R S 1 3 . 5 : 4 5 . 0 b u / a c @ $ 5 . 9 5 / b u ; $ 1 7 5 o p e r a t i n g c o s t p e r a c r e

2 C W R S 1 2 . 5 : 4 5 . 0 b u / a c @ $ 5 . 7 0 / b u ; $ 1 7 5 o p e r a t i n g c o s t p e r a c r e

1 C P S R 1 1 . 5 : 5 5 . 0 b u / a c @ $ 4 . 8 0 / b u ; $ 1 8 0 o p e r a t i n g c o s t p e r a c r e

1 C W A D 1 3 . 0 : 4 5 . 0 b u / a c @ $ 7 . 5 0 / b u ; $ 1 8 5 o p e r a t i n g c o s t p e r a c r e

f e e d w h e a t : 4 5 . 0 b u / a c @ $ 4 . 5 0 / b u ; $ 1 8 5 o p e r a t i n g c o s t p e r a c r e

o a t s : 9 0 . 0 b u / a c @ $ 2 . 8 5 / b u ; $ 1 5 0 o p e r a t i n g c o s t p e r a c r e

f e e d b a r l e y : 7 0 . 0 b u / a c @ $ 3 . 2 5 / b u ; $ 1 5 5 o p e r a t i n g c o s t p e r a c r e

c a n o l a : 3 7 . 5 b u / a c @ $ 9 . 7 0 / b u ; $ 2 4 0 o p e r a t i n g c o s t p e r a c r e

r e d l e n t i l s : 1 , 4 0 0 l b s / a c @ $ 0 . 1 6 / l b ; $ 1 7 0 o p e r a t i n g c o s t p e r a c r e

p e a s ( y e l l o w ) : 4 0 . 0 b u / a c @ $ 5 . 9 0 / b u ; $ 1 5 0 o p e r a t i n g c o s t p e r a c r e

s o y b e a n s : 3 0 . 0 b u / a c @ $ 9 . 8 0 / b u ; $ 1 7 5 o p e r a t i n g c o s t p e r a c r e

durum quality lottery

Canola: Product Flow2019 crop year in Million tonnessource: Statistics Canada, Canadian Grain Commission and Parrish & Heimbecker Limited

China

west coast exports east coast

exportsJapan

Pakistan & Middle East

other Asia

0.7

3.1

2.1

1.2

0.3 1.0

0.6

0.2

7.9 9.3

domestic crush

0.5

Europe

Wheat1: Product Flow2019 crop year in Million tonnessource: Statistics Canada, Canadian Grain Commission and Parrish & Heimbecker Limited

1 all wheat excluding durum

China

-west coast

exports

1.2

east coast exports

Japan

Bangladesh

Indonesia

Mexico

4.0

0.9

2.1

1.5

1.2

2.3

0.3

0.8

0.6

3.4

0.7

1.4 other Asia

1.6 0.9

0.4

14.3

7.6

3.0 milling

total domestic

Europe

Africa east coast

Africa west coast

Durum: Product Flow2019 crop year in Million tonnessource: Statistics Canada, Canadian Grain Commission and Parrish & Heimbecker Limited

-west coast

exports

0.8

east coast exports

0.4

0.5

0.1

1.3

0.2

0.2

0.8

1.0

0.2 milling

total domestic

1.5 0.2

1.0 Europe/N. Africa

2.2

Asia/Middle East(Japan and UAE)

Europe

North Africa

Questions?