1. Trends in the Global Starch Industry World tapioca Conference 2011 Presentation by Martin Todd, 28 th June 2011

2. Presentation topics Highlighting tapioca’s role in the starch world Global trends in starch production and trade Development of global starch prices and key drivers Dynamics of tapioca starch prices Challenges for the future

3. Who are the leading players? Tapioca in South East Asia is very important

4. Global starch production Primary starch vs. native vs. modified Global more than 70 million tonnes of primary starch are produced to make starches and sweeteners Of this, around 33 million tonnes is produced and sold as starches This comprises approximately 25 million tonnes of native starch and 8 million tonnes of modified starch In this presentation, I will focus on native starch

5. Tapioca and corn lead the way Corn starch: 13 million tonnes Tapioca starch: 8 million tonnes Potato: 1.5 million tonnes Wheat: 1.0 million tonnes Global native starch production by type of starch

6. Tapioca represents more than one third of global production Global native starch production by type of corn starch, average 2008-2010

7. Top 10 global native starch producing countries by type of starch, average 2008-2010 Several of the world’s top ten starch producers use tapioca as their main raw material

8. More tapioca starch is traded than any other starch Trade in potato starch is also large in relation to output Global native starch exports by type of starch

9. Tapioca starch makes up about 40% of world starch trade Global native starch exports by type of corn starch, average 2008-2010

10. Thailand is by far the largest exporter of any single type of starch Top 10 global native starch exporting countries differentiating by type of starch, average 2008-2010

11. China is the largest importer And, tapioca dominates this list Top 10 global native starch importing countries differentiating by type of starch, average 2008-2010

12. Global trends: conclusions Corn is the most widely used raw material for starch production However, traded volumes are limited, because the largest producer (USA) consumes most of its output and has limited outlets because of its GM status Wheat starch is not widely produced or traded because it is a low quality starch (especially in its native form) As a result, tapioca and potato starches are traded very heavily in relation to their production

13. Starch price trends Rising starch prices caused by higher raw material prices

14. All starch prices show a rising trend over the past ten years Potato starch prices have soared in 2011 to >$1,000 Native starch prices, differentiating by type of starch

15. Tapioca, wheat and potato have all increased relative to corn Native starch prices relative to US corn starch

16. The reason for rising prices is the upward trend in raw material prices Prices of corn, wheat and tapioca (axes are set to reflect relative starch content of tapioca and grains)

17. This is true also of net raw material prices After allowing for grain processing by-products Net raw material prices of corn, wheat and tapioca

18. Net cost of corn has increased by less than the others! This has been reflected in corn starch prices Index of net raw material prices of corn, wheat and tapioca

19. Price trends: conclusions Starch prices are rising because of higher raw material prices US corn starch prices low because of low net corn costs Despite this, US corn starch has not taken market share because of its GM status Tapioca starch prices have seen significant price inflation due to high root prices Potato starch is suffering from this problem this year

20. Dynamics of tapioca starch prices China’s dominant role

21. What drives tapioca starch prices? The key driver is China China has become increasingly dependent on starch imports, in particular tapioca starch  The link to tapioca starch is through:  China’s starch markets, which is linked to its corn market  China’s ethanol market also influences the starch market via tapioca chips

22. Meeting China’s demand China’s starch demand has been growing at an annual rate of more than 10% per annum And, it will continue to grow very rapidly in the future But, the government is limiting the use of corn for industrial uses At the same time, production from other starches is small and will not meet the future growth in demand  So, China’s has become more dependent on imports

23. China’s corn supply/demand balance China’s tightening grains sector A constraint for starch production

24. China’s increased dependence on imports China’s native starch supply/demand balance

25. China has turned to tapioca starch China’s imports of native starch by type of starch

26. And to Thailand (as well as Vietnam) China’s imports tapioca starch by origin

27. The result is a link between Chinese corn/starch and SE Asian tapioca Thai tapioca starch prices vs. Chinese corn and corn starch prices

28. But, cassava starch is a premium starch for functional reasons Chinese prices of Tapioca starch and corn starch

29. The link also exists between Chinese corn/ethanol and SE Asian tapioca Thai tapioca starch prices vs. Chinese corn and corn ethanol prices

30. The relationship between corn prices in China and the world (US) is influenced by politics (e.g. 2008, 2010) Chinese corn prices vs. world (US Gulf) prices

31. Tapioca starch prices in Indonesia, Thailand and Vietnam Tapioca starch prices are similar throughout SE Asia

32. Price dynamics: conclusions Tapioca starch prices are linked to China’s corn market via starch and ethanol (and are similar across SE Asia) Tapioca starch commands a premium over corn starch reflecting its superior qualities as a food starch China’s corn market does not track the world corn market in the short term because of government intervention

33. Challenges for the future China: meeting its demand EU: where next for potato starch? Thailand: mealy bug

34. Will China need more imports? Will corn for industrial use remain restricted? Can tapioca & potato step in? China’s starch supply/demand balance and projected demand ?

35. EU potato starch: still alive But, what will happen after the reforms? EU exports of potato starch by destination

36. Can Thailand continue to grow? Short run: mealy bug Long run: yields (land is limited in SE Asia) Thai production of tapioca roots How long will this last?

37. Conclusions

38. Tapioca starch plays a huge role in world trade and in supplying China’s import needs in particular As a result, its price dynamics are now linked to China’s corn, starch and ethanol markets Tightening supply in China’s corn market suggests its imports will continue to grow Can cassava continue to meet China’s demand? Land is scarce in SE Asia, so productivity will be key

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