A news launch on Monday from the Meals and Agriculture Organization of the United Nations said that, “Global demand for agricultural products is projected to develop by 15 % over the coming decade, whereas agricultural productivity progress is predicted to improve barely quicker, inflicting inflation-adjusted costs of the key agricultural commodities to stay at or under their current levels, in accordance to an annual report by the Organisation for Economic Co-operation and Improvement and the UN’s Meals and Agriculture Group.
“This year’s edition of the OECD-FAO Agriculture Outlook, presented in Rome today, provides a consensus assessment of the 10-year prospects for agricultural and fish commodity markets at national, regional and global levels.”
In the present day’s update highlights parts of the Agriculture Outlook associated to cereals (corn) and oilseeds (soybeans).
Cereals- Corn (Maize)
The Outlook noted that, “Following several years in which growth in production outpaced that of consumption, resulting in large stocks, international cereal prices in the near term are expected to remain low.”
“Global cereal production is projected to grow by 1.2% p.a. between the base period and 2028, reaching 3 053 Mt in 2028; with much of the growth due to gains in yields. Over the outlook period, the global average of cereal yields is projected to increase by 1.1% per year (slower than the 1.9% seen in the previous decade), driven by advances in biotechnology, structural changes towards larger farms, and improved cultivation practices.”
“Global wheat production is projected to increase by 86 Mt to 838 Mt by 2028, a more moderate pace compared to the last decade,” the Outlook stated, while including that, “Global maize production is projected to grow by 183 Mt to 1311 Mt over the subsequent decade, with the most important will increase in China (+47 Mt), america (+31 Mt), Brazil (+25 Mt), Argentina (+17 Mt), and Ukraine (+6 Mt).
“Maize production in China is projected to grow more slowly (2.1% p.a.) than over the previous decade (4.5% p.a.) as policy changes in 2016 eliminated maize price support and the concurrent stockpiling programme; these were replaced with direct farm subsidies and market-oriented purchasing.”
Extra narrowly, the Outlook explained that, “In the United States, maize planted area will remain stable and production increases due mainly to higher yields. Increased production in Brazil and Argentina will be sustained by both larger planted area (new agricultural land and multi-cropping) and productivity increases, motivated by favourable domestic policies (e.g. loans at preferential rates) and the depreciation of national currencies.”
With respect to demand, the Outlook indicated that, “Global consumption of cereals is projected to grow at 1.2% p.a. over the outlook period. This growth is less than the 2.1% p.a. seen in the previous decade as demand in China, which was responsible for 32% of the growth in the last decade, is expected to be slower and to account for only 22% of the projected increase.”
On the feed aspect, China is stll expected to account for a substantial share (25%) of the additional demand; nevertheless, the Americas, a leading producer and exporter of meat, is predicted to improve its feed uptake significantly and to contribute 17% of the extra demand. Southeast Asia, the Middle East, North Africa, and Japanese Europe will see greater feed consumption, pushed by expanding livestock and dairy sectors.
Extra specifically on corn demand, this week’s report identified that, “Global maize consumption is projected to improve by 189 Mt over the projection interval, a smaller improve in contrast to the 265 Mt of the previous decade. As maize is principally a feed crop (59% share in the base interval), this slower progress is linked to developments in feed demand, which in the course of the outlook interval is characterised by positive factors in feed-use efficiency and slower progress in livestock manufacturing.
“In addition, growth of maize for biofuel production, which more than doubled over the last decade, is expected to be limited, as current biofuel policies will not likely support further expansion in major producers. Of the projected increase, feed use accounts for the largest share (63%), owing to the expanding livestock sectors in China, the Americas, and Southeast Asia.”
While discussing trade, the Outlook said that, “Maize exports are projected to grow by 33 Mt to 193 Mt in 2028.
The export share of the highest 5 exporters – america, Brazil, Ukraine, Argentina, and the Russian Federation –account for 89% in the course of the base interval and will improve to 91% in 2028 due to anticipated larger exportable provides in Brazil, Argentina, and the Ukraine.
“The United States is projected to remain the top maize exporter, with exports increasing by 5 Mt to 66 Mt by 2028, but the US export share will decline (from 38% to 34%) as traders in Southeast Asia signal preferences for South American corn due to perceptions over moisture levels and kernel hardness.”
“The top five destinations for maize during the base period – Mexico, the European Union, Japan, Korea and Egypt – account for 43% of world imports,” the Outlook stated.
In a better take a look at the stocks facet of the stability sheet, the Outlook explained that, “Due to China’s efforts particularly to scale back its stockpile of maize, world cereal inventories are projected to contract over the outlook period. This is able to end in world cereal stocks- to-use ratio shrinking from 33% in the base period to 27% in 2028.
“While this decline may point to prospects for higher prices, global cereal stocks will generally still be high over the outlook horizon, even increasing for wheat and other coarse grains. China’s demands for feed, as well as its overall level of domestic supplies and associated changes in stocks are among the main uncertainties during the projection period.”
Turing to oilseeds, the Outlook said that, “Global soybean manufacturing elevated in 2018, with the USA and Brazil recording bumper crops, contributing to inventory build-ups. Demand for protein meals has tapered off given China’s imposition of further tariffs on US soybean exports and subsequent moves to lower the share of protein meal in feed rations.
“African swine fever continued to affect China’s livestock sector, curbing feed demand. The government recently also supported to decrease the minimum share of protein in feed rations, which was first proposed by a major industry association.”
Progress in world commerce of soybeans, dominated by the Americas, is predicted to sluggish significantly within the subsequent decade, a improvement instantly linked to the projected slower progress in the crushing of imported soybeans in China. In parallel, Brazil will consolidate its place as the world’s largest exporter of soybean.
When it comes to prices, this week’s report indicated that, “Real prices for soybean, other oilseed and protein meals will decline slightly as demand growth is expected to expand slightly slower than global supplies. Real prices will nonetheless remain above historical troughs.”
The Outlook noted that, “Brazil and america are at present producing comparable quantities of soybeans (around 120 Mt in 2016-18), however over the subsequent decade, the projected progress in Brazil (1.eight% p.a.) ought to be stronger than in the USA (1.2% p.a.), mainly due to the likelihood to increase space planted, primarily by way of crop intensification by double cropping soybean with maize.
“In addition, assuming that the additional tariffs China recently introduced on United States soybeans remain in place, Brazilian soybeans will enjoy a competitive advantage inthe world’s largest import market. Overall, the production of soybeans will continue to grow strongly in Latin America, with Argentina and Paraguay producing 62 Mt and 13 Mt by 2028.”
With respect to soybean stocks, the Outlook identified that, “Soybean stocks are expected to remain unchanged, which implies that the world stock-to- use ratio would decline from 12.3% in 2016-18 to 10.7% in 2028. Given the global trend to gradually concentrate oilseed production in a few major producing countries, the declining stock-to-use ratio could result in increased price volatility.”
Turning to commerce, the Outlook defined that, “Over 40% of world soybean production is traded internationally, a excessive share in contrast to other agricultural commodities. In contrast to the previous decade, the enlargement in world soybean trade is predicted to decelerate considerably through the outlook period. This improvement is immediately linked to projected slower progress of the soybean crush in China.
“Chinese language soybean imports are expected to grow by 1.5% p.a. to about 113 Mt in 2028, accounting for about two-thirds of world soybean imports. Exports of soybeans originate predominately from the Americas; america, Brazil and Argentina are projected to account for 87% of world soybean exports in 2028. Whereas the USA was traditionally the most important international exporter of soybeans, Brazil has taken that position with regular progress in its export capacity.
By 2028, it’s projected that Brazil will account for 42% of complete international exports of soybean.
“This development is favoured by the additional 25% tariffs applied by China on soybean imported from the United States. It is assumed these tariffs will remain in place throughout the outlook period.”