Global Agri Commodity Market Outlook Economic Advisor, IMC and IMC-MCX (IPF) Commodity Market Fundamentals Forum January 17, 2019. Mumbai Global Agri Commodity Market Outlook G. Chandrashekhar Economic Advisor, IMC and Director, IMC-ERTF

VUCA continues . . . . 2018 was full of uncertainties / risks; Crude prices; Fed rate hike; USD rise; Protectionism; Sanctions; Trade friction; Tariffs and counter-tariffs; and more …. 2019 will be no different – headwinds: geopolitical tensions, trade friction; changing GVCs; monetary policy; USD; Crude oil; Event risks; importantly, growth concerns (why??); incipient signs of El Nino in South Asia;

Global Cotton Fundamentals (in million tons) Year 2017/18 2018/19 Op stock 18.8 18.8 Output 26.8 26.2 Use 26.8 26.7 End stock 18.8 18.2 Output set to decline; tightening supplies; reducing stocks; market takes cognizance in advance

Global Cotton Fundamentals U.S. - China trade / tariff war China to restock after years of destocking Brazil to be largest exporter to China GVC changing Falling crude oil makes synthetics less expensive

Palm Oil Fundamentals (million tons) Year 17/18 18/19 19/20 Op stock 8.5 9.9 10.3 Output 69.3 72.3 76.3 Use 64.9 68.8 71.5 End stock 9.9 10.3 11.4 Market in clear surplus; abundant availability of vegoil globally; demand trails supplies; stocks rising;

Palm Oil Fundamentals Increase in mature palm plantations in Indonesia and Malaysia; 9-10 ml t from other origins; Record soy crop dragging palm down Impact of U.S.- China trade war and changing global supply chain Crude oil correction –ve for palm Q1 expect small price increase due seasonal factors; but Q2 onwards bearish pressure

Outlook: brace for volatility Agri markets are set to be volatile Weather is key Funds will play their role Those with exposure must hedge price risks to protect margin Review trading strategy every quarter

Thank You G. Chandrashekhar Global Agribusiness and Commodities Market Specialist Member, SEBI-CDAC Member, SEBI-RAC Phone: +91 9821147594 email: gchandrashekhar@gmail.com