Factors Affecting Global Agricultural Markets. Fred Giles Director, Agricultural Trade Office USDA / SP

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1 Factors Affecting Global Agricultural Markets Fred Giles Director, Agricultural Trade Office USDA / SP

2 Factors Impacting Global Agricultural Markets Commodity Prices Energy Prices Value of the U.S. Dollar Global Economic Growth The Middle Class in Developing Countries Expanding Global Trade Restrictive Government Policies Production Growth

3 Agricultural Commodity Prices Expected To Remain High for Next 1 Years $ per bushel (per CWT for rice) Source: 211 USDA Baseline projection Wheat Soybeans Corn Rice ($/cwt)

4 Livestock Prices Also Expected To Remain High for Next 1 Years $/cwt & c/lb Cattle Hogs Broilers Source: 211 USDA Baseline projection Beef cattle, farm (prices for steers & heifers), Hogs, National base, live equiv, 51-52% Lean, Broiler 12 city composite wholesale price

5 Energy Price Remains High 21 Crude oil All Commodities Food Index: 25 = 1 Source: International Monetary Fund: International Financial Statistics

6 Strong Economic Growth In Emerging Markets Foreign households middle class (in millions of households) Developing countries Developed countries (ex US) Source: Global Insight s Global Consumer Markets data as analyzed by OGA

7 Middle Class in Developing Countries Could Reach 73 Million Middleclass households (in millions) China India Brazil Indonesia Russia Egypt Mexico Thailand Turkey Vietnam Colombia Philippines South Korea Malyasia Taiwan levels Proj gains by 22 Source: Global Insight s Global Consumer Markets data as analyzed by FAS/OGA

8 Value of the Dollar Expected to Ease Further Keeping Upward Pressure on Commodity Prices Indexed Value of U.S. Dollar (25=1) Source: USDA, Economic Research Service; Foreign Agricultural Service

9 Global Trade Rises 8 Global Agricultural Imports in Billion $ 6 4 All Other Importers 2 China U.S.A. EU Source: Global Trade Atlas

10 Restrictive Government Policies Export restrictions Import barriers Trade Distorting World price uncertainty

11 Additional Crop Land South America will likely lead in land expansion (largely Brazil) Russia and Ukraine Land tenure issues, laws governing foreign investment, and the degree of price transmission Transportation/storage infrastructure and marketing costs to global markets However, most of the increased production will come from higher yields

12 Technology Is Key to Meeting Future Demand Use of biotechnology and innovation is key to boosting yields and production 12 1 Corn Tons per Hectare Source: USDA PS&D Database United States EU Southeast Asia China Brazil

13 Corn 9, 8, 7, Corn World Overview (1 MT) Exports 12, 1, 21/211 Exports USA 46,599 Argentina 16, 6, 8, Brazil 8,44 5, 4, 3, 2, 1, 6, 4, 2, Ukraine 5,8 21/211 Imports Japan 15,655 Mexico 8,257 Korea, South 8,17 Egypt 5,83 Production Total Consumption MY Exports Source: USDA PS&D Database

14 Corn - Imports Corn Imports Projection (MMT) 221/222 Projections China 45% of World Trade Mexico 16% of World Trade /222 Imports Projections China 18.1 Japan 16. Mexico 15.7 South America 1.6 China Japan Mexico South America South Korea Egypt Others Source: USDA Long Term Projections

15 Corn - Exports Corn Exports Projection (MMT) 221/222 Projections USA 45% of World Trade Argentina 8% of World Trade (2nd) Brazil 16% of World Trade EU 5% of World Trade (Ethanol Prod) 221/222 Exports Projections United States 61.6 Argentina 22.6 Former Soviet Union 17.4 Brazil 13.7 United States Argentina Former Soviet Union Brazil Others Source: USDA Long Term Projections * Covers EU-27. Excludes intra-eu trade.

16 Cotton 14, 12, 1, 8, 6, 4, 2, Cotton World Overview (1 48 lb. Bales) Exports 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, 21/211 Exports USA 14,376 India 5,35 Brazil 2, Australia 2,59 21/211 Imports China 11,979 Bangladesh 3,7 Turkey 3,35 Indonesia 2,1 Production Total Dom. Cons. Exports Source: USDA PS&D Database

17 Cotton - Imports Cotton Imports Projection Million Bales 221/222 Projections China 35% of World Trade Bangladesh 15% of World Trade Pakistan 11 % of World Trade /222 Imports Projections China 17.9 Bangladesh 4.2 Pakistan 2.1 China Bangladesh Turkey Indonesia Pakistan Others Source: USDA Long Term Projections

18 Cotton - Exports Cotton Exports Projection Million Bales 221/222 Projections USA 45% of World Trade Former Soviet Union 17% of World Trade Brazil 24% of World Trade /222 Exports Projections United States 14.8 Former Soviet Union 5.6 Brazil 5.4 India 4.8 United States Former Soviet Union Brazil India Australia Others Source: USDA Long Term Projections

19 Soybean 3, 25, Soybean World Overview (1MT) Exports 1, 9, 8, 21/211 Exports USA 4,859 Brazil 29,951 2, 7, Argentina 9,25 6, Paraguay 6,7 15, 5, 1, 4, 3, 21/211 Imports 5, 2, 1, China 52,339 EU-27 12,482 Mexico 3,498 Japan 2,917 Production Domestic Consumption Exports Source: USDA PS&D Database

20 Soybean - Imports Soybean Imports Projection (MMT) 221/222 Projections China 83% of World Trade N. Africa & Middle East 4% of World Trade EU Decline of 1.4 MMT /222 Imports Projections China 9. European Union 11.5 Mexico 4.3 China European Union N. Africa & Middle East Mexico Taiwan Others Source: USDA Long Term Projections * EU - Covers EU-27. Excludes intra-eu trade.

21 Soybean - Exports Soybean Exports Projection (MMT) 221/222 Projections Brazil 55% of World Trade USA 14% of World Trade Argentina 14 % of World Trade 221/222 Exports Projections Brazil 59.2 USA 43.4 Argentina 16.9 Other South America Brazil United States Argentina Other South America Others Source: USDA Long Term Projections

22 Soybean Meal 2, Soybean Meal World Overview (1MT) 7, 21/211 Exports 18, 6, Argentina 27,615 16, Brazil 13,987 14, 5, USA 8,259 12, 4, India 4,635 1, 8, 3, 21/211 Imports 6, 2, EU-27 21,71 4, 2, 1, Indonesia 3,69 Vietnam 2,545 Thailand 2,318 Production Domestic Consumption Exports Source: USDA PS&D Database

23 Soybean Meal - Imports Soybean Meal Imports Projection (MMT) 221/222 Projections EU 16% of World Trade North Africa & Middle East 15% of World Trade Southeast Asia 33% of World Trade /222 Imports Projections European Union 24.6 Southeast Asia 14.4 North Africa & Middle East 8.1 Japan 2.6 European Union Southeast Asia North Africa & Middle East Japan Mexico Others Source: USDA Long Term Projections * EU - Covers EU-27. Excludes intra-eu trade.

24 Soybean Meal - Exports Soybean Meal Exports Projection (MMT) 221/222 Projections Argentina 8% of World Trade Brazil 25% of World Trade USA 11% of World Trade India Decline of 2.2MMT /222 Exports Projections Argentina 39. Brazil 17.7 USA 9.2 India 1.5 Argentina Brazil United States India Others Source: USDA Long Term Projections

25 Soybean Oil 45, Soybean Oil World Overview (1MT) 12, 21/211 Exports 4, Argentina 4,561 35, 1, Brazil 1,668 3, 8, USA 1,466 25, EU , 2, 15, 1, 4, 2, 21/211 Imports China 1,319 India 945 5, EU Algeria 516 Source: USDA PS&D Database Production Domestic Consumption Exports

26 Soybean Oil - Imports Soybean Oil Imports Projection (MMT) 221/222 Projections North Africa & Middle East 39% of World Trade Latin America 36% of World Trade /222 Imports Projections North Africa & 2.6 Middle East Latin America 2.2 India 1.2 China.7 North Africa & Middle East Latin America India China Others Source: USDA Long Term Projections

27 Soybean Oil - Exports Soybean Oil Exports Projection (MMT) 221/222 Projections Argentina 39% of World Trade Brazil 41% of World Trade /222 Exports Projections Argentina 5.4 Brazil 2. USA.5 European Union.3 Argentina Brazil United States European Union Others Source: USDA Long Term Projections

28 Beef 59, 58, Beef World Overview (1 MT CWE) Exports 9, 8, 21 Exports India , 7, Australia 1,368 56, 6, Brazil 1,558 55, 5, USA 1,43 54, 53, 52, 4, 3, 21 Imports Russia 1,75 51, 2, USA 1,42 5, 1, Japan , Vietnam 223 Production Domestic Consumption Exports Source: USDA PS&D Database

29 Beef - Imports 1, 9, 8, 7, 6, Beef Imports Projection (1 MT CWE) 221/222 Projections Exports of Lower Priced Beef (India and Brazil) to Low and Middle-Income Countries USA 3% of World Trade Russia 1MMT CWE 5, 4, 3, 2, 1, 221/222 Imports Projections United States 1,54 Japan 9 South Korea 617 United States Russia Japan South Korea Other Asia N. Africa & M. East Others Source: USDA Long Term Projections

30 Beef - Exports 9, 8, 7, 6, 5, Beef Exports Projection (1 MT CWE) 221/222 Projections India 4% of World Trade Brazil 4% of World Trade Argentine (Rebuild herds) Stabilize Exports 4, 3, 2, 1, 221/222 Exports Projections Asia 2,31 Brazil 1,971 United States 1,432 Australia 1,347 New Zealand 55 Asia Brazil United States Australia New Zealand Others Source: USDA Long Term Projections

31 Poultry 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Poultry Meat World Overview (1 MT) Exports 12, 1, 8, 6, 4, 2, 21 Exports Brazil 3,666 USA 5,595 EU-27 2,875 Thailand Imports Japan 789 EU Mexico 72 Saudi Arabia 681 Production Domestic Consumption Exports Source: USDA PS&D Database * Broilers and turkeys, only.

32 Poultry - Imports 1, Poultry Imports Projection (1 MT) 221/222 Projections 9, 8, 7, Middle East 43% of World Trade Mexico 15% of World Trade 6, 5, 4, 3, 2, 1, 221/222 Imports Projections Saudi Arabia 1,16 Mexico 1,8 European Union 875 Japan 89 Other Middle East Saudi Arabia Mexico European Union Japan Others Source: USDA Long Term Projections * EU - Covers EU-27. Excludes intra-eu trade. * Broilers and turkeys, only.

33 Poultry - Exports Poultry Exports Projection (1 MT) 221/222 Projections 12, 1, Brazil 66% of World Trade USA 15% of World Trade 8, 6, 4, 2, 221/222 Exports Projections Brazil 4,813 United States 3,697 European Union 1,329 Thailand 636 Brazil United States European Union Thailand China Source: USDA Long Term Projections * EU - Covers EU-27. Excludes intra-eu trade. * Broilers and turkeys, only.

34 Swine Meat 12, 1, 8, Swine Meat World Overview (1 MT CWE) Exports 8, 7, 6, 5, 21 Exports USA 1,916 EU-27 1,755 Canada 1,159 Brazil 619 6, 4, 2, 4, 3, 2, 1, 21 Imports Japan 1,198 Russia 916 China 415 Mexico 687 Production Domestic Consumption Exports Source: USDA PS&D Database

35 Swine Meat - Imports Pork Imports Projection (1 MT CWE) 221/222 Projections 6, 5, 4, Mexico 35% of World Trade China 32% of World Trade Russia Decline (Country Policies) 3, 2, 1, 221/222 Imports Projections Japan 1,22 Mexico 92 China 87 South Korea 56 Japan Mexico China South Korea United States Russia Others Source: USDA Long Term Projections

36 Swine Meat - Exports Pork Exports Projection (1 MT CWE) 221/222 Projections 8, 7, 6, 5, USA 6% of World Trade Canada 18% of World Trade Brazil 12% of World Trade 4, 3, 2, 1, 221/222 Exports Projections USA 2,76 European Union 1,86 Canada 1,293 Brazil 658 United States European Union Canada Brazil China Mexico Source: USDA Long Term Projections * EU - Covers EU-27. Excludes intra-eu trade.

37 Source Economic Research Service USDA USDA Agricultural Projections for Thank You! Fred Giles Director, Agricultural Trade Office USDA / SP Phone: (55 11)