Cme Group Inc. · NASDAQ:CME
Cme — Grain & Oilseed Commodity Conference 2010
23 slides from Cme's conference presentation, December 2010
Slide 1: Brazilian Agriculture Situation and Outlook
Brazilian Agriculture Situation and Outlook Grain & Oilseed Commodity Conference Managing Risk and Opportunity from a Latin America Perspective December 1-3, 2010 Miami, FL
Slide 2: Brazil Overview
Brazil Overview • World’s eighth largest economy (about US$1.3 trillion) and largest in Latin America • Largest population in Latin American and world’s fifth most populous nation with about 200 million people • World’s fifth largest country in terms of land area and the largest in South America and
Slide 3: Brazil Elections
Brazil Elections • Lula constitutionally prohibited from running for third consecutive term for president – Record 83% Approval • Dilma Rousseff of Workers’ Party (PT) elected 56% to 44% - referendum on Lula – Hand-picked successor of Lula - promises continuation of social and monetary policies – Fi
Slide 4: Industry and Consumer Confidence
Brazil Industry and Consumer Confidence Consumer Confidence Index (points, seasonally adjusted) Industry Confidence Index (points, seasonally adjusted) 130.0 140.0 122.5 120.4 120.0 115.8 116.5 113.4 113.6 116.1 115.3 112.9 120.0 117.0 117.4 115.3 115.5 116.4 109.6 113.6 113.4 114.5 114.1 113.0115.3
Slide 5: Job Growth & Percent in Poverty
Brazil Job Growth & Percent in Poverty Brazil: Percent in Poverty Brazil: Jobs Created 30 3.0 27.5 28.1 Lula Presidency 26.7 25.4 2.452 2.5 2.350 25 22.8 20 19.3 2.0 1.863 1.831 1.917 1.834 18.3 1.766 Million 16.0 1.494 Percent 15.3 1.5 15 1.235 1.0 0.861 0.861 10 0.502 0.5 0.387 5 0.274 0.088 0.075
Slide 6: Exchange Rate Trends
Exchange Rate Trends • New President’s most pressing • Since January 2003 R$ per US$ economic concern – overvalued decreased from 3.5 to about 1.7 real reducing Brazil’s export currently competitiveness. Brazil Real/US Dollar Exchange Rate • Changes in exchange rate 4.50 impact farmer profitability
Slide 7: Importance of Agriculture
Importance of Agriculture • Some Brazilians call agriculture the “green anchor” of the economy • Depending on how agribusiness is measured: – Primary agriculture contributes about 6.5% of GDP – Whole agribusiness sector (upstream and downstream industries and services) contributes 26.5% of GDP. • 70
Slide 8: Agricultural Rankings
Brazil Agricultural Rankings Commodity Production Exports Export Share Sugar 1st 1st 67% Coffee 1st 1st 58% Orange Juice 1st 1st 99% Beef 2nd 1st 18% Soybeans 2nd 2nd 58% Ethanol 2nd 1st 17% Chicken Meat 3rd 1st 29% Pork 4th 4th 23% Soybean Meal 4th 2nd 50% Corn 4th 3rd 14% Soybean Oil 4th 3rd 22% C
Slide 9: Farm Structure
Farm Structure Brazil: Number of Farms and Area by Farm Size 29.8 Mega (>2,500) 0.3 Total 2006: 25.8 4.9 Million Farms Large (500 to <2,500) 330 Million Hectares 1.7 23.0 Medium (100 to <500) 7.5 19.1 Small (10 to <100) 40.1 2.4 Subsistence (<10) 50.3 0 10 20 30 40 50 60 Percent Farms Hectares • Bra
Slide 10: Farm Gross Value of Production
Brazil: Farm Gross Value of Production • Agribusiness has shown Brazil GVP Trends 200 significant growth in recent 180 years 160 140 Crops – Value of crop and livestock R$ Billion 120 100 production increased from R$73 80 60 billion in 1998 to R$272 billion 40 Livestock in 2009 (crops-R$172 billion;
Slide 11: Importance of Agribusiness Trade
Brazil: Importance of Agribusiness Trade Brazil Agribusiness Exports • Agribusiness exports more 80,000 Agribusiness Agribusiness Share 44.00 than tripled from 2000 to 71,837 42.6 70,000 41.9 64,78542.00 41.2 41.1 2009 60,000 40.4 49,474 58,430 40.00 – Jan-Sep 2010 exports $11 50,000 43,626 $Million
Slide 12: Agribusiness Export Share
Brazil Agribusiness Export Share Other 15% Soybeans & Products Hides & Skins 26% 3% Tobacco Products 5% Coffee 7% Wood Products Meat 11% 18% Sugar/Alcohol 15% • Soybean products leads all exports, was a near record $17.3 billion in 2009, and is running at the same pace this year. • Sugar/alcohol Jan
Slide 13: US & Brazil Export Trends
US & Brazil Export Trends Value of US & Brazil Agriculture, Forestry & Fisheries Exports $ Billion 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 CAGR Brazil Agriculture 16.052 19.642 20.252 24.783 31.918 36.018 41.219 49.296 62.235 57.363 16.8 Forestry 4.420 4.070 4.271 5.455 6.694 7.202 7.886 8
Slide 14: Keys to Future Growth
Keys to Future Growth • Macroeconomic stability • Infrastructure development • Area and Yield growth • Brazil’s domestic food demand
Slide 15: GDP Growth
Brazil GDP Growth 8.0 7.0 7.0 6.1 6.0 5.7 5.5 5.1 5.0 4.3 4.0 4.0 3.2 3.0 2.7 2.0 1.3 1.1 1.0 0.3 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f 2011f -0.2 -1.0 Source: IBGE/Ministerio da Fazenda • Second quarter GDP up 8.8% from the same period in 2009 fueled by higher domestic co
Slide 16: Inflation Trends
Brazil Inflation Trends 14.0 12.5 12.0 10.0 8.9 9.3 8.0 Percent 7.7 7.6 5.9 6.0 5.7 5.1 6.0 4.5 4.5 4.0 4.3 3.1 2.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f 2011f • Inflation under control since Lula took office • Concerns that strong GDP growth will fuel inflation.
Slide 17: Foreign Direct Investment
Brazil - Foreign Direct Investment 50 44.6 45 40 38.0 34.6 35 32.8 30 US$ Billion 25.9 25 22.5 20 18.1 18.8 16.6 15.1 15 10.1 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F • Largest recipient of FDI in Latin America • In terms of developing countries ranked third after China and Ind
Slide 18: Logistics Limitations
Logistics Limitations Brazil: Competitiveness in Infrastructure, 2010/11 • Investment in infrastructure Category Ranking needed to sustain growth Quality of Overall Infrastructure 84 Quality of Roads 105 • Brazil ranked 84th out of 139 Quality of Railroads 87 countries in terms of overall Quality of
Slide 19: Infrastructure Investment
Infrastructure Investment Brazil: Federal Government Infrastructure Investment Brazil: Federal/State Highway Conditions - 2009 6 5.5 Excellent 5 4.7 Bad 11% 17% 4 Good Percent of GDP Very Bad 18% 3 7% 2.3 2.1 2 1 Acceptable 47% 0 1970s 1980s 1990s 2000s Brazil: Logistics Investments, Forecast 2007/1
Slide 20: Potential Expansion
Potential Expansion • Brazil has more land available to expand agricultural production than any other country and most of this land is in the cerrado and not the Amazon • Conversion of pasture to cropland • Added double-cropping • Added irrigated land • Continued yield improvements by Embrapa and th
Slide 21: Land Availability
Land Availability Brazil Land Mass: 851 million hectares Avaialble Agriculural Land by State Inapt areas 3% Cropland 7% Other States Minas Gerais 24% 18% Indian reserves and Suitable for parks agriculture Tocantins Mato Grosso 18% 49% 4% 12% Maranhao Mato Grosso Pastures 6% Piaui do Sul 23% 6% 11% P
Slide 22: Grain & Oilseed Trends
Brazil Grain & Oilseed Trends Brazil Grain & Oilseed Trends 160,000 3,500 Brazil Soybean & Corn Outlook 140,000 Area Production Yield 3,000 2008/09 2019/20P Change Soybeans Area & Production (1,000s) 120,000 2,500 100,000 Production 57.09 81.95 24.86 Yield (Kilos) 2,000 80,000 1,500 Exports 27.60 37
Slide 23: Meat Production & Export Trends
Brazil: Meat Production & Export Trends • Meat production Brazil Meat Production Trends – Up 10.8 mmt from 1998 to 2009 18,000 Beef Broilers Pork Broiler meat accounts for 60% 16,000 14,000 of growth 12,000 − AGE/MAPA projects increase of 1,000 MT 10,000 8.35 mmt from 2008/09 to 8,000 6,000 2019/2
CME Group — Grain & Oilseed Commodity Conference 2010 on 6ix