ao link

Dairy, soybean, sugar prices to fare best among ags, key report says

TwitterLinkedineCard

Dairy, soybean and sugar have the best price outlooks among agricultural commodities over the next decade, a much-watched annual briefing said, while seeing a particularly poor prospects for meat values as consumers switch to “alternative” proteins.

 

A joint report from the United Nations Food and Agriculture Organization and OECD, forecasting the farm sector outlook for the rest of the decade, said that in real terms, most major agricultural commodities would see “price declines”.

 

“Price reducing-factors (mainly productivity improvements) will dominate factors that lead to higher prices, such as resource constraints and higher demand induced by population and income growth,” the briefing said.

 

Beef prices, for instance, while increasing by some 1-2% in nominal terms by 2029, compared with 2020, will fall by more than 15% in the key Brazilian, EU and US markets once inflation is taken into account, with pigmeat values dropping by 15-20%, and chicken values by a more modest 7-9%.

 

“Real meat prices are projected to continue to trend downwards due to slower growth in meat consumption, combined with an expanding supply supported by low increase in feed grain prices,” the briefing said, while highlighting the trend towards plant-based proteins.

 

“Environmental and health concerns in high-income countries are expected to support a transition from animal-based protein towards alternative sources, as well as the more immediate substitution away from red meat, notably beef, towards poultry and fish.”

 

Chinese crush

However, soybean prices will, in gaining 20% to $474.3 per tonne by 2029, achieve growth even in real terms – just.

 

“The assumed stable real price of crude oil and sustained economic growth should support the price of oilseed and oilseed products over the projection period,” the FAO-OECD briefing said.

 

China’s soybean crush was forecast increasing by 22m tonnes, “accounting for about 40% of the world’s additional soybean crush”, with “the bulk” of expansion coming from imported soybeans, although this would be below the rate of growth seen in the previous decade.

 

The global crush “is projected to expand by 56m tonnes over the outlook period, well below the 103m tonnes of the previous decade.”

 

‘Tighter market balance’

Raw sugar values will also, in gaining 21% to $385.7 a tonne by 2029, achieve price growth a little higher than that in general inflation.

 

Expecting a “tighter world market balance than in the past decade,” the briefing said that “the relatively small white sugar premium is projected to increase slightly in absolute terms to 83 per tonne by 2029”, compared with a $70-per-tonne average from 2017-19.

 

The briefing flagged the prospect of increasing global demand, driven by developing countries, in particular in Asia and Africa, more than offsetting declines in more mature markets.

 

“The higher growth rate in Asia will stem from a higher demand in sugar-rich confectionery products and soft drinks, generally in urban areas, while that of Africa will come from a higher direct consumption largely driven by population growth.”

 

Dairy products

Many dairy commodities will also achieve managed inflation-beating price gains – notably cheese and skim milk powder, both of which will see values rise by 21% by 2029.

 

“World per capita consumption of fresh dairy products is projected to increase by 1.0% per annum over the coming decade, slightly faster than over the past 10 years, driven by higher per-capita income growth.”

 

For skim milk powder, “the dominant use… will continue to be in the manufacturing sector, notably in confectionery, infant formula, and bakery products”.

 

Cheese, meanwhile, will see continued increases in per capita consumption in the key European and North American markets, and in countries too “where it was not traditionally part of the national diet.

 

“This is the case, for example in South East Asian countries urbanisation and income increases have resulted in more away-from-home eating, including fast food such as burgers and pizzas.”

 

‘Limited biofuel growth’

Among grains, corn will achieve price growth of 17.5% by 2029, an insufficient level to keep up with projected inflation.

 

Factors such as “expected slower growth in export demand compared to the previous decade will limit real gains in the international maize price,” the FAO said, noting that “global maize consumption is projected to increase at slower rates than in the past decade.

 

“Accordingly, while the nominal price is projected to increase to $201 per tonne by 2029, this increase will lag behind inflation.”

 

The report factored in a slowdown in corn use in many countries for making ethanol, saying that “growth of maize for biofuel production is expected to be limited as current biofuel policies will not likely support further expansion in major producing countries”.

 

Wheat price outlook

For wheat, prices as measured by US No 2 hard red winter exports from Gulf ports, were forecast growing by 16.8% to $253.4 per tonne by 2029, again insufficient to keep up with broader inflation.

 

“The world wheat price is projected to decline in real terms over the outlook period… a result of assumed low (and flat) real oil prices, average harvest expectations, and moderate growth in exports.”

 

The briefing highlighted that “as global livestock production slows and maize feed becomes more competitive, feed use of wheat is projected to increase more slowly than in the past decade”.

TwitterLinkedineCard
Related Stories

Evening markets: Grains suffer touch of late-week profit taking

The likes of corn and wheat trade lower in closing deals of a positive week. But the vegetable oil complex, and canola, stay strong

Soybeans vs corn deadlock breaks in battle for acres

There has been some movement at last in the new soybeans-versus-corn price ratio, seen as an influence on sowing area. Cotton stakes its claim too

Weekly grain and oilseeds market view from Europe, April 16

UK wheat import needs to extend into early 2021-22... Cold European temperatures... "Rapeseed prices may be firm for a while"...

India's monsoon rains forecast to be average in 2021 - weather office

Monsoon rainfall is expected to total 98% of the long-term average, the Ministry of Earth Sciences says
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2021

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069