Short Version: The expectations for the global market development for: plant, meat & dairy products - in the short and long term

Transcription

1 Short Version: The expectations for the global market development for: plant, meat & dairy products - in the short and long term Danish Farmers Abroad 19 th June 14 By Rupert Claxton rclaxton@girafood.com

2 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 2

3 Weather Greater global variation, stresses grain supply balance US 2013 recovery from 2012 heatwave & drought US 3Q12 heatwave was dramatic, Exacerbated an already bad North Hemisphere grain outlook and resulted in massive feed costs increases Damaged pasture conditions: forcing destocking of breeding cows and also cattle The US situation improved dramatically in 2013 with significant global impact in reducing feed costs A bumper crop dramatically reduced feedgrain costs (especially corn) Situation remains fragile in the high plains South America had largely benign weather: with good grazing conditions and harvests More cattle off grass, as grain feeding costs were still high Australia and NZ recovers from serious drought Continuing in AU: high slaughter Impacting future BF/SH supplies 3

4 El Niño What's the global impact and are we hedging already? El Niño is a warming of the Pacific surface temperature 2014: 5 June 14 NOAA - Chance is 70% for N. Hemisphere summer 80% by winter Is expected to impact on crop production: Reduce yields of; maize (-2.3%), rice (-0.4%) and wheat (-1.4%) Boost soybeans (+3.5%), with increased rain favouring US & BR But regional differences S / N hemisphere La Nina a cooling of the Pacific surface temperatures Yields of all 4 crops fall So what There is a global awareness that these events have an impact Grain buyers are starting to hedge, based on forecasts, pushing prices prematurely But importantly plantings could be adjusted still under development Needs regional / crop development work Modelling for future weather planning will improve 4

5 (USD/tonne) Main Assumptions: Lower feed costs Sharp improvement compared to 2012/2013 situation CBOT SPOT PRICES & FUTURES Wheat Maize Soybean Meal Source: GIRA from HGCA Very strong price increase in July 2012 drop back in 2H13 except Soybean meal Price decrease led to meat industry optimism 2014 uncertainty renewed as Ukraine and El Niño grab headlines soy stays high! But Rapeseed prices are low 5

6 Mid/Long-term outlook is for: greater demand + greater costs Growing global demand for crops, 3 strongly competing markets: Animal feed often discussed, lower value, growing fast, tradable Human food highly political, largely domestically supplied, politically sensitive in parts of the world where it is important Energy bio fuel market politically driven influenced by global oil price not food Both markets will increase demand significantly over the next 5-10 years, growth to be met by: More land cultivated limited availability Scaling up of farms to become commercial enterprises China s urban migration Better use of current farm land Kenyan tax on underproductive land Better technology GM, Irrigation, Satellite planting, etc Global cost of production will increase Energy, Chemicals, Labour, Land etc Future focus will be on application of suitable technology to solve local needs & supply a global market 6

7 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 7

8 Animal disease outbreaks 2013: ASF, PEDv and HPAI Key trade barriers PRRS ASF FMD (swine) FMD (cattle) Rift valley fever HPAI LPAI Newcastle disease Source: OIE Russian ASF is not under control with consequences Asia (especially CN) is always at risk HPAI outbreaks in Mexico and CN serious impact PEDv concern in US and significant impact on 2014 PK supply FMD seemingly under control in S.America, 8

9 Profusion of FTAs in place of moribund WTO DDR stretching into some mega-fta discussions WTO Doha Round stalled Bali face saving Overtaken by many bilateral FTA negotiations: Important in the detail of what is agreed New wave of regional FTA s: new political ambitions, but little progress TPP (Trans-Pacific Partnership) : US led, but stalled on US/JP agri sensitivities: between 12 Asian & Pacific countries (without China) = 26% of world trade, a way for US to strengthen Asian relationships and balance China in the region RCEP (Regional Comprehensive Economic Partnership): China-led regional free trade pact to counter the TPP, little progress till now The 10 ASEAN countries + AU, CN, IN, JP, KR, NZ = 40% of world trade TTIP (Transatlantic Trade and Investment Partnership) : US-EU, just started

10 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 10

11 Beef & Veal Net Production by Country : striking US & EU decline for different reasons 11

12 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 12

13 Pigmeat Net Production by Country, Shows 2013 slowdown and 2014 turnaround 13

14 China s pigmeat balance a question of scale! 1% of consumption = 540,000 tonnes China pigmeat balance, f, 2019f Pigmeat still dominates the market, 65% of meat consumption Imports are now a little more than 1% of production, but that s a lot Highly likely that China s PK production is overstated but by how much? 20-30%? 14

15 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 15

16 Global Poultrymeat Net Production by Country, Breeding flock limits growth 16

17 Global Poultry Trade Balance, BR & US dominate exports - rising needs in MENA 17

18 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 18

19 Lifting of EU quota is big news but what does it mean for the EU dairy sector? Milk Production by GDC Country ('000 t), 2012 Milk Production Top 7 ('000 t), f AR 11,449 2% NZ 20,722 4% BR 30,715 5% MX 11,274 2% UA 11,378 2% AU 9,855 2% JP 7,631 1% BL 6,767 1% EG 3,302 1% DZ 3,090 1% **Others 5,971 1% EU 152,100 27% RU 31,900 6% CN 44,300 8% US 90,865 16% IN* 120,122 21% Source: Gira - *Includes milk from cows & buffaloes ** Others: SA, VE, TH, ID,VN, MY, PH EU is leading global milk producer, for now India closing the gap with herd growth + productivity gain (modernisation + scale) NZ only 7 th but biggest exporter! Balance between Fresh + Commodity products = increased Global trade China production still at a low level compared to dairy consumption ambition 19

20 ('000 tons of milk) Milk Production growth Sustained growth in almost all Gira Dairy countries Milk Production Change by GDC Country, f 630, , , , , , , ,000 The highest growth in volume terms will happen in: India (30.2 mio t), China (9.8 mio t), US (7.6 mio t), Brazil (4.0 mio t) EU (4.1 mio t) Declines in Milk production in: Russian (1.1 mio t) Japan (0.5 mio t) 550, EU RU BL UA US MX AR BR VE NZ AU IN** CN JP ID MY PH VN TH EG SA DZ2017f Source: Gira - **IN: includes cow & buffalo milk 20

21 Mid/Long-term outlook is for: greater demand supplied by increased trade Balance in dairy herd development between regions with suitable climate and developing demand. Few countries can invest at any cost (eg Saudi Arabia) but not a realistic model! High cost producers for domestic market vs low cost for commodity production & exports But even NZ is looking at feeding for year round milking! Increasing globalisation: Trade more commodity shipments, especially to developing markets Companies investing in international production / processing Affordability remains key driver for demand growth Supplementation of dairy with cheaper products will increase (eg: Fat filled Milk Powder) Specific national tastes and new market flavours New product innovation New ways of getting dairy to markets that have little exposure 21

22 1. Crop production 2. Meat a) All Species b) Beef c) Pigmeat d) Poultrymeat 3. Dairy 4. Final thoughts 22

23 Plant, meat, milk all experiencing the same global dynamics Evolution of Developing world markets is key for the development of modern agriculture Increased demand creates need Developing trade central to the future of agriculture as; Imports needed as demand outstrips agricultural development in many markets Exports key to valorising expensive production Price focused buyers, who are looking for more food Developed world demand has peaked, now about a transfer between products and closer scrutiny of food origins Consumer evolution justifies cost in modern traceable production systems, making competition with backyard simpler at added cost. But significant risk from well funded, emotional, environmental / animal welfare lobbies Will bring increased cost, complexity, and an increasingly un-level playing field. 23

24 Global opportunities in Agriculture for Danish best practice, adjusted to local environment Global need for commercial scale agriculture is clear even if unpopular with idealists Developed world agricultural opportunities exist, and are relatively low risk but have more limited returns Developing world opportunities in leap from self-sufficient to modern systems reflect Eastern EU from 20 years ago but have significant risk: Political stability, infrastructure, support Future demand growth is not just about China or India Throughout SE Asia Africa Opportunity to supply these markets from within, and at export 24

25 Thank you for your attention Hanoi wetmarket? For more information please contact Rupert Claxton 25