and Agriculture Organization of United Nations Economic and Social Development Department Turmoil Global Cereal Markets EBRD ROUNDTABLE DISCUSSION London, 28 October 2010 Abdolreza Abbassian Secretary of Intergovernmental Group on Gras, FAO Abdolreza.Abbassian@fao.org
Extraordary Intersessional Meetg of Intergovernmental Group (IGG) on Gras and IGG on Rice Rome, Italy, 24 September 2010 On Agenda Market Developments and Short-Term Outlook for Wheat, Rice and Coarse Gras Briefg from Delegates on ir countries strategies to cope with food price stability Lessons learnt from 2007/08 food crisis International Actions: Institutional Framework a) Information and market transparency b) Globally coordated actions c) Role of FAO and of IGGs
and Agriculture Organization of United Nations Economic and Social Development Department Wheat and barley prices rise most August, maize October! USD per tonne 325 300 Wheat Maize Barley Russian Export Ban 275 250 225 200 175 150 USDA Production Cut 125 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
and Agriculture Organization of United Nations Ma reasons are: Economic and Social Development Department Price Volatility Lower stocks than past; i.e. for cereals Growg lks with outside markets; i.e. energy More production comg from less stable ( terms of yields) regions; i.e. CIS Increased dependence on ternational trade Few exporters accountg for most of export supply Trade policies; i.e. export restrictions & but not so certa: Speculators Climate change What to do? We need to reduce price volatility as well as lowerg its impacts How? Market formation and market transparency Safety Nets
and Agriculture Organization of United Nations Economic and Social Development Department FOOD PRICES
and Agriculture Organization of United Nations Economic and Social Development Department Wheat Production... Country * 2009 2010 2010 over estimate forecast 2009 (.. million tonnes..) (. Percent.) European Union 138.5 135.2-2.4 Cha (Maland) 115.1 115.1 0.0 India 80.7 80.7 0.0 United States of America 60.4 60.5 0.2 Russian Federation 61.7 42.0-32.0 Canada 26.8 22.2-17.3 Pakistan 24.0 23.9-0.7 Australia 21.7 23.0 6.2 Ukrae 20.9 17.6-15.8 Turkey 20.6 19.5-5.3 Kazakhstan 17.0 13.0-23.5 Iran Islamic Rep. of 13.0 14.5 11.5 Argenta 7.5 11.5 53.7 Egypt 8.5 8.6 0.9 Uzbekistan 6.6 6.8 1.7 Ors 59.5 53.3-10.5 * Countries listed accordg to ir position global production 682.6 (average 2008-2010) 647.3-5.2 * Countries listed accordg to ir position global production (average 2008-2010)
Barley: production down sharply Million Tonnes 160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Ors Australia Canada CIS EU
and Agriculture Organization of United Nations Economic and Social Development Department Coarse Gra Production... Country * 2009 2010 2010 over estimate forecast 2009 (.. million tonnes..) (. Percent.) United States 349.5 335.9-3.9 Cha (Maland) 173.1 175.4 1.3 European Union 155.4 143.3-7.8 Brazil 53.7 57.9 8.0 India 34.2 37.6 10.1 Russian Federation 33.4 19.6-41.5 Mexico 30.1 30.8 2.4 Canada 22.6 22.1-2.3 Argenta 16.9 28.1 66.1 Ukrae 24.0 22.1-8.0 Nigeria 21.0 20.9-0.7 Indonesia 17.6 18.0 2.2 South Africa 13.1 14.2 8.2 Australia 13.0 12.7-2.3 Ethiopia 13.1 12.8-2.3 Ors 154.8 157.6 1.8 * Countries listed accordg to ir position global 1,125.6 production (average 2008-2010) 1,109.0-1.5 * Countries listed accordg to ir position global production (average 2008-2010)
Cereal production and utilization Year-to-year change cereal production
wheat supply and demand outlook 2010/11: Tight but manageable... Production and Utilization Closg Stocks
coarse gra supply and demand outlook 2010/11: Gettg tighter... Production and Utilization Closg Stocks
rice supply and demand outlook 2010/11: Record production and high stocks Production and Utilization Million tonnes Million tonnes Closg Stocks 470 150 Production 450 130 430 Utilization 110 410 90 390 70 370 01-02 03-04 05-06 07-08 09-10 10-11 f'cast 50 01-02 03-04 05-06 07-08 09-10 10-11 f cast
Trade Wheat Coarse gras
and Agriculture Organization of United Nations Economic and Social Development Department United States: Maize Stocks and Stock-touse Ratio 000 tonnes 140,000 120,000 100,000 Closg Stocks Stock-to-Use Ratio % 100 90 80 70 80,000 60,000 40,000 20,000 60 50 40 30 20 10 0 1980-1981 1984-1985 1988-1989 1992-1993 1996-1997 2000-2001 2004-2005 2008-2009 0
CIS gra exports by type CIS, EU and USA exports
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 USD per tonne Shockg OECD-FAO model: If wheat production CIS* remas low for two consecutive years n: 2010 2011 350 300 Projected wheat prices Production -19.5mt -25mt /Exports -11mt -17mt Prices +15% +25% 250 200 150 100 origal projected prices projected "shocked" prices slide 18/30
and Agriculture Organization of United Nations Economic and Social Development Department More Uncertaties Maize USA: More surprises (more production cuts November)? Severely tight maize supplies USA: What if demand for ethanol rise faster? Maize Cha: Official production much higher than private sources: How much maize will Cha import 2010/11? Sourn hemisphere: Harvestg of wheat approaches & wear is critical - too wet East Australia! Wheat plantgs Russia well below last year (13.5 million hectares compared to 18.5mh last year). Wheat Plantgs Ukrae also short of target (6.75mh) Wter plantg USA: Conditions not so good - worst 15 years says USDA What to plant more for next year USA? Corn or soybeans? Policy: Will food flation encourage export restrictions? US Dollar: Weaker dollar, higher ternational prices! Prices of or crops: From soybeans to cotton and sugar, prices are high and some creasg. Wheat and rice supplies are adequate but for how long ir prices can resist upward pressure comg from or markets?
and Agriculture Organization of United Nations Economic and Social Development Department CBOT Futures - March Wheat Maize
Are we ready? I. We are not a food crisis and gra prices may even come down a bit II. III. But all dications pot to still high prices and volatile markets with many uncertaties lyg ahead security under growg market stability and price volatility: Are we ready?
Contacts FAO, Trade and Markets Division A. Abbassian (Analyst) Abdolreza.Abbassian@fao.org Tel: (++39) 0657053264 C. Cerquigli (Database Management and Outlook Reports) Claudio.Cerquigli@fao.org Valenta Banti (Admistrative Assistant) Valenta.Banti@fao.org Situation Portal: http://www.fao.org/worldfoodsituation FAO Gras Website: http://www.fao.org/es/esc/en/15/53/dex.html slide 23/30