Farmland Investments

Growing consumption

Global grain consumption has consistently risen over the past 50 years and is expected to continue, driven by population growth and rising per capita incomes in emerging economies. Grain consumption is forecast to increase by 13% over its current level to reach 3.49 billion tonnes consumed by 2027.

Bottom of the cycle

The inflation adjusted price of wheat per tonne ($US)
is currently among the lowest it has ever been on record (since 1866), reflecting high supply. However, according to independent reports from sources such as The World Bank, soft commodity prices are
now in the early stages of a new cycle – the upward leg. Driven by the structural imbalance in the global markets, The World Bank predicts a 23% increase in nominal wheat prices over the next 8 years. This cyclical turnaround in prices over the longterm suggests an opportune time for investment in agriculture, including grains.

Global demand for grains is expected to increase over the next five years. By 2027, global grain consumption is forecast to increase by 13% over its current level, to reach 3.49 billion tonnes consumed

Global Demand

This growth in demand is likely to continue to be driven by population growth, and a substitution of wheat for traditional grains
in emerging regions such as Asia and Africa. It is our belief that this growth will result in over 150 million new mouths to feed every
year. Based on this forecast, it is expected demand will outstrip supply. Australia with its strong export market and close proximity
to Asia is extremely well positioned to capitalise on this trend.

Growth in demand

Supply and Demand Trends for the Global Grain Industry

Worlds Wheat Exports By Region (value)

In 2017, wheat prices increased 36%
following a reduced crop outlook
in the major grain trading regions6.
Wheat prices are forecast to increase
17.1% to reach USc603.4/bushel
by 20207. Driven by the structural
imbalance in the global markets, the
World Bank predicts a 23% increase
in wheat prices over the next 8
years. This cyclical turnaround in
prices over the long term suggests
an opportune time for investment in
agriculture, including grains.
In 2017, wheat prices increased 36% following a reduced crop outlook
in the major grain trading regions6. Wheat prices are forecast to increase
17.1% to reach USc603.4/bushel by 20207. Driven by the structural
imbalance in the global markets, the World Bank predicts a 23% increase
in wheat prices over the next 8 years. This cyclical turnaround in
prices over the long term suggests an opportune time for investment in
agriculture, including grains.

Global Grain Production and Consumption (million tonnes)

The grain industry is categorized
by four types of products: wheat,
coarse grains (which includes
barley, sorghum, corn, oats and
triticale), legumes and oilseeds. As
at September 2018, the top three
producers of grain were the United
States (568.4 million metric tonnes),
China (559.6 million metric tonnes)
and India (292.5 million metric
tonnes)1. Approximately 15% of annual
global grain production is traded
on the global market2. Of this trade,
wheat is the most important. In 2017,
global wheat exports were valued
at approximately US$39 billion3. As
shown in the graph, Australia is the
4th largest exporter of wheat, after
Canada, the US and Russia.
The grain industry is categorized by four types of products: wheat,
coarse grains (which includes barley, sorghum, corn, oats and
triticale), legumes and oilseeds. As at September 2018, the top three
producers of grain were the United States (568.4 million metric tonnes),
China (559.6 million metric tonnes) and India (292.5 million metric
tonnes)1. Approximately 15% of annual global grain production is traded
on the global market2. Of this trade, wheat is the most important. In 2017,
global wheat exports were valued at approximately US$39 billion3. As
shown in the graph, Australia is the 4th largest exporter of wheat, after
Canada, the US and Russia.

Pricing Trends for the Global Grain Industry

Grain prices are typically driven by international supply; the greater
 the supply of grains, the lower the price. Following favourable growing
 conditions in 2016/17, global grain production reached 2.6 billion tonnes,
 exceeding the previous record high by 139 million tonnes set in 2015/164.
 These high levels of world grain supply and high volumes of opening
 stocks placing downward pressure on prices5: The world wheat indicator
 price fell from US$348 a tonne in 2012/13 to US$194 a tonne in 2016/17.
Grain prices are typically driven by international supply; the greater
the supply of grains, the lower the price. Following favourable growing
conditions in 2016/17, global grain production reached 2.6 billion tonnes,
exceeding the previous record high by 139 million tonnes set in 2015/164.
These high levels of world grain supply and high volumes of opening
stocks placing downward pressure on prices5: The world wheat indicator
price fell from US$348 a tonne in 2012/13 to US$194 a tonne in 2016/17.
The world price for barley was an average of 44% lower in 2016/17
 compared to 2012/13 at US$142 a tonne. However, according to
 independent reports, from sources such as the World Bank, global grain
 prices are now in the early stages of a new cycle – the upward leg.

The world coarse grains indicator price was an average of 48% lower in 2016/17 compared to 2012/13 at US$154 a tonne.
The world coarse grains indicator price was an average of 48% lower in 2016/17 compared to 2012/13 at US$154 a tonne.


The world price for barley was an average of 44% lower in 2016/17
compared to 2012/13 at US$142 a tonne. However, according to
independent reports, from sources such as the World Bank, global grain
prices are now in the early stages of a new cycle – the upward leg.

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