1/ Could you tell me a little about Cefetra?
We are a European company and part of the publicly listed BayWa Group, a German company.
Cefetra was initially owned by the Dutch cooperative compound feed producers, which sourced feed ingredients for the country’s compound feed industry. In the 1990s, we expanded that model into the rest of Europe.
The EU produces 160-165 million mt of compound feed annually, but its growth potential is limited.
Highly populated countries in Northwest Europe want to reduce livestock herds to reduce nitrogen emissions. Some project the EU compound feed production to remain unchanged, but we could see a shift within Europe, with production declining in northwest Europe and growing, for example, in Spain, Poland and the Balkans.
Eight years ago, we reviewed our business and decided to move into what we call “Beyond Compound Feed.” We have grown in the food ingredient business and are no longer just a company that sources feed ingredients for the European compound feed industry.
I have been with the company for nearly 16 years and, along with another colleague, am responsible for market research within the Cefetra group. We forecast price direction for the broad range of commodities we trade, including grains, oilseeds, meals, vegetable oils, biofuels, co-products like beet pulp pellets, citrus pellets, and, nowadays, dairy products.
We initially provided research exclusively for Cefetra, but we invested in our team to be good in research tomorrow. We hired data engineers, quants, and biofuel specialists. As the quality of our research increased, we experienced a growth in demand for our research from our supply chain network. Based on this growing demand, we decided to sell some of our market research to external parties under the name of Ceras-Analytics. We launched our platform in October 2022 at the ECE in Valencia.
We offer standardized research on a one-stop-shop platform with weather and crop forecasts and detailed S&D balance sheets for grains, seeds, meals, vegetable oils, and biofuels. We then translate our S&Ds to fundamental fair values. As fundamentals are not the only price drivers, we also provide technical and seasonality analysis—and much more.
We are experimenting with AI and using it to improve specific components of the models, but we want to avoid AI producing a forecast that we can’t explain.
2/ You’re speaking at GrainCom24 in Geneva on the outlook for EU and Black Sea grains and oil seeds. What will you bring to the table?
I attended the conference last year for the first time and felt that although it covered the global markets well, it focused insufficiently on the EU and the Black Sea.
Despite the war in Ukraine, US exports as a percentage of world exports have declined sharply in the last ten years for critical commodities like wheat, corn, and soybeans. Therefore, the US corn and wheat prices depend more on the US domestic situation. The US still plays a crucial role in price-setting, but we must relate it to the international situation and what it means for Europe and the Black Sea.
I aim to translate global events into how they could impact the EU.
3/ What are the current issues facing the European grain and oil seed markets?
Weather and politics are our key focus today. Dutch farmers started protesting in 2019, but since early this year, we have seen widespread protests from farmers across the EU. As a result, we have seen a recent change in EU policies – for example, the proposed import duties on oilseeds, oilseed products and grains from Russia and Belarus and the withdrawal of the ban on certain insecticides.
Weather is getting more extreme in recent years. For example, North EU has been extremely wet since October last year, hampering spring planting and resulting in disappointing winter crop conditions.
4/ Would Trump’s re-election significantly change your price forecasts?
I am a fan of making scenarios. When you make a forecast, you limit yourself to the current status quo. If you create scenarios, you become more open-minded about what might happen and the potential implications.
We have had Trump in office before, so we know what to expect to some extent. In his current campaign, he has already threatened to impose import tariffs on Chinese goods, and it’s not unthinkable that China will retaliate against US agricultural exports, as they did in 2018.
Interestingly, one could argue the Chinese have been building government stocks over the last two years, and that they may have been preparing for an eventual Trump re-election.
Trump is threatening to be less supportive of Ukraine. However, it is not only Trump who is showing less support. We also see less support from some European countries.
The resilience of the Ukrainian people is inspiring. Before the Russian invasion, the country exported 300,000 mt of agricultural products via the EU. Everybody thought they could increase that to one million mt, but they increased it to three million mt. It is truly impressive.
The same applies to the Ukrainian farmers. It is incredible how they managed to grow their crops in the face of immense challenges. The Ukrainian wheat yield last year was close to record.
5/ What are you hoping to get out of the conference?
We are proud of what we do at Ceras-Analytics and would like to share this with a broader audience.
Furthermore, we always like catching up with our network and discussing markets.
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