Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — Investor Presentation (March 2016)
33 slides from Ricegrowers Ltd. Class B's investor presentation, Mar 3, 2016
Slide 1: Rice Field Day: Rice Market Update
Rice Field Day Rice Market Update Rob Gordon - Chief Executive Officer Thursday, 3 March 2016
Slide 2: Agenda
Agenda • Rice market update • Industry outlook • SunRice initiatives 2
Slide 3: Rice Market Update
e RICE MARKET UPDATE >
Slide 4: Current state of play
Current state of play Supply and demand dynamics World prices entering downward cycle but SunRice has developed resilience Rice competitiveness New pricing mechanisms 4
Slide 5: Factors impacting paddy return
Factors impacting paddy return Global supply and demand dynamics Global rice price trends Medium Grain Long Grain Fragrant varieties Foreign exchange movements Paddy milling yields Riverina crop sizes Overhead recovery capabilities 5
Slide 6: California positive rain and snowfall conditions
California positive rain and snowfall conditions Northern California precipitation 122% of average, as of 1 February 2016 Northern Sierra snowpack running at same above average rate as precipitation Source: Californian Department of Water Resources 6
Slide 7: California rainfall to increase
California rainfall to increase 30 day forecast calling for 30-Day Precipitation Outlook slightly above average (Northern CA) to above average (Southern CA) rainfall Source: National Oceanic and Atmospheric Administration, US Department of Commerce 7
Slide 8: California seasonal outlook
California seasonal outlook While California is not expected to officially emerge from multi-year drought deficit, it has received much needed above average snowpack and precipitation Official water allocations will not be made until April 2016, however, current expectation is that sufficient su
Slide 9: C15 Global pricing – Government Tender Markets
9 $USD/mt FOB Origin Port $600 $650 $700 $750 $800 $850 $900 $950 $1,000 $1,050 November-13 December-13 January-14 Source: SunRice 2013-14 $USD 715 Minimum Access January-14 March-14 $USD 1,030 April-14 May-14 May-14 June-14 July-14 August-14 September-14 October-14 November-14 December-14 2014-15 M
Slide 10: C15 Global pricing – Medium Grain
10 $USD per tonne $350.00 $400.00 $450.00 $500.00 $550.00 $600.00 $650.00 30/07/2014 29/08/2014 28/09/2014 2013 Crop USA 28/10/2014 27/11/2014 27/12/2014 26/01/2015 25/02/2015 27/03/2015 26/04/2015 26/05/2015 2014 Crop USA California 25/06/2015 25/07/2015 Cash Trading Date 18-Month Cash Paddy Prices
Slide 11: Supply: Demand summary
Supply: Demand summary Global prices softening Potential oversupply as Thailand and China look to offload stockpiles 11
Slide 12: Asia to offload stockpiles
Asia to offload stockpiles The Thai Government plans to clear 13 million tonnes of stockpiled rice by 2017 Last month 245,262 tonnes of Thai stockpile sold China’s endings stocks forecast to increase to around 50.6 million tonnes, an increase of about 6% on previous year As Chinese rice stor
Slide 13: C15 Global pricing – Long Grain
C15 Global pricing – Long Grain *Creed Thai LG 100% B *Selling prices listed are in U.S. dollars per tonne and for Finished Product tonnes (includes costs for milling and yield losses, packing, distribution and administrative charges). 13
Slide 14: C15 Global pricing – Thai Hom Mali Long Grain
C15 Global pricing – Thai Hom Mali Long Grain Prices over time Source: Live Rice Index, UK 14
Slide 15: C15 Global pricing – Pakistan Basmati Long Grain
C15 Global pricing – Pakistan Basmati Long Grain Prices over time Source: Live Rice Index, UK 15
Slide 16: C15 Global pricing – Indian Basmati Long Grain
C15 Global pricing – Indian Basmati Long Grain Prices over time Source: Live Rice Index, UK 16
Slide 17: C15 Global pricing – Stocks-to-use ratio
C15 Global pricing – Stocks-to-use ratio Despite downward price Top five exporters rice stocks vs. stock-to-trade ratio trends, some indicators India, Thailand, Vietnam, Pakistan and the United States* point to the market tightening in the medium term Is the bottom of the cycle near? *Source: PS
Slide 18: Foreign exchange movements – US$
Foreign exchange movements – US$ Lower A$/US$ exchange rate benefits international rice sales Anticipate A$/US$ exchange rate to be ‘range bound’ over the short term Source: Bloomberg 18
Slide 19: Foreign exchange movements - PGK
Foreign exchange movements - PGK Weakening PGK/US$ exchange rate is likely to continue Volatile economic and political environment in PNG A weaker PGK dilutes returns PGK illiquidity is of concern for foreign businesses operating in PNG Source: Bloomberg 19
Slide 20: Paddy quality stabilised at levels above average historically
Paddy quality stabilised at levels above average historically 1200 65% 63% 63% 63% 62% 1000 60% 60% 62% 61% 59% 59% 800 57% 56% 56% 600 1161 55% 1038 963 53% 900 400 829 690 51% 49% 200 205 47% 167 47% 19 66 0 45% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Tonnes 000's W/G Yield 20
Slide 21: Overhead recoveries
Overhead recoveries In response to the significantly reduced Riverina C16 rice crop and to ensure long-term business sustainability, we have reconfigured milling operations in Deniliquin and Leeton We have limited job losses to 38 permanent positions by pursuing all available options with employ
Slide 22: International sourcing filled Riverina shortfall in recent years
International sourcing filled Riverina shortfall in recent years 22
Slide 23: The minimum demand for Riverina rice is ~550-600 kt paddy
The minimum demand for Riverina rice is ~550-600 kt paddy Today, we need ~600kT Total Rice Demand – 2015F vs 2021F paddy from the Riverina Total Rice Demand – FP Total Rice Demand – Paddy (000 tonnes) (000 tonnes) In 2021, we could need ~1000-kt paddy from the Riverina Our expansion plans in A
Slide 24: Potential for above average rainfall if El Nino becomes La Nina
Potential for above average rainfall if El Nino becomes La Nina Climate Model Summary March to July 2016 Our crop size forecasts may therefore be conservative The Australian climate is influenced by temperature patterns in the Pacific and Indian Oceans. This page provides information on Pacific and
Slide 25: Australian crop size versus pricing
Australian crop size versus pricing 25
Slide 26: Industry Outlook
Industry Outlook • SunRice is providing stability and maximising pricing for the future 26
Slide 27: Pricing summary
Pricing summary World Rice Prices Foreign Exchange Milling Yields Crop Size Branded Markets Smooth Pricing 27
Slide 28: Competition from other crops: prices softening
Competition from other crops: prices from alternative crops are softening Wheat & rice $AUD/mt, cotton $AUD/bale Source: Wheat: APW del Narrandera; Rice: SunRice; Cotton: market data 28
Slide 29: Rice competitiveness
Rice competitiveness On an overall farm system basis, return on capital from planting rice is compelling, particularly for the typical Riverina farm profile Rice has maintained strong returns while other crops have experienced significant volatility Rice provides cash flow resilience against d
Slide 30: SunRice Initiatives
SunRice Initiatives • Securing Riverina production while maintaining international markets 30
Slide 31: New pricing and SunRice demand
New pricing and SunRice demand We have developed markets for over 1 million tonnes Currently an annual Riverina rice crop of 600,000 tonnes would be optimal to satisfy premium markets We need Riverina rice for future growth and existing markets We want to attract water from winter crops Fo
Slide 32: Rice an attractive prospect for C17
Rice an attractive prospect for C17 SunRice pricing has been positive despite downward global trends, demonstrating the power of brands and trading in international markets Virtually all SunRice rice is now sold as branded product Fixed price commitment of $415 for C16 is likely to be suppleme
Slide 33: Questions
QUESTIONS 33
Ricegrowers Limited (SunRice) — Investor Presentation (March 2016) on 6ix