The OECD-FAO Agricultural Outlook Global Trends in Commodity Markets by Pavel Vavra Power Point Presentation for the International Agricultural Trade Research Consortium Analytic Symposium Confronting Food Price Inflation: Implications for Agricultural Trade and Policies June 22-23, 2009 Seattle, Washington
Organisation for Economic Cooperation & Development The OECD-FAO Agricultural Outlook Global Trends in Commodity Markets Pavel Vavra Trade and Agriculture Directorate Confronting Food Price Inflation: Implications for Agricultural Trade and Policies IATRC, June 22-23, 2009, Seattle, Washington Trade & Agriculture Directorate 1
OECD-FAO Outlook 2009- Highlights of medium-term agricultural outlook i. Price projections ii. Commodity markets developments Sensititivity to assumptions Issues and uncertainties Trade & Agriculture Directorate 2
OECD-FAO Outlook 2009- Agricultural Outlook - a set of conditional projections published in an OECD-FAO annual report The datasets are available at www.agri-outlook.org Trade & Agriculture Directorate 3
Main commodity projections Agriculture more resilient to global crisis than other sectors Commodity prices in real terms to remain at or above 1997-2006 levels Crop prices have strongest gains; 10-20% on average Production increases in the range of 10 to 40% Developing countries driving the global demand and trade gains Expansion of biofuels largely driven by mandates Trade & Agriculture Directorate 4
Outlook for world prices Crops Trade & Agriculture Directorate 5
Outlook for world prices Crops Trade & Agriculture Directorate 6
Outlook for world prices Meat and Dairy Trade & Agriculture Directorate 7
Outlook for world prices Meat and Dairy Trade & Agriculture Directorate 8
Prices in real terms: Is there a trend decline? Trade & Agriculture Directorate 9
Most commodity prices at higher average levels 160 140 Changes to average price levels (in real terms) % changes relative to 1997-2006 average 120 100 80 60 40 20 0-20 Wheat Coarse grains Rice Oilseed Veget. Oil Raw sugar Beef Pigmeat (pacific) (pacific) Butter SMP Crude oil Average 2007-08 Average 2009-18 Trade & Agriculture Directorate 10
Wheat Coarse grains Rice Oilseeds Oilmeals Veget. Oils Sugar Beef Pigmeat poultry Butter Cheese WMP SMP Steady growth of global production 50 Production Growth from average to 40 % 30 20 10 0 Trade & Agriculture Directorate 11
Wheat Coarse grains Rice Oilseeds Oilmeals Veget. Oils Sugar Beef Pigmeat poultry Butter Cheese WMP SMP Steady growth of global production 50 Production Growth from average to 40 Growth realised until 2008 Growth from 2008 to % 30 20 10 0 Trade & Agriculture Directorate 12
Higher trade gains in developing countries 60 Export growth from average to 50 40 % 30 20 10 0-10 Wheat Coarse grains Oilseeds Sugar Pigmeat Poultry SMP OECD Non-OECD World Trade & Agriculture Directorate 13
Higher Ethanol Prices in Longer Run Trade & Agriculture Directorate 14
Biodiesel Prices to rise, more slowly after 2012 Trade & Agriculture Directorate 15
World OECD Non- OECD Food remains the main use for wheat + 34 Mt Food use Feed use Biofuels Other 0 100 200 300 400 500 Million tonnes 0 100 200 300 400 500 600 700 800 Trade & Agriculture Directorate 16
World OECD Non- OECD Food remains the main use for wheat + 34 Mt Food use Feed use Biofuels Other Wheat Use Shares World () 2% 0 100 200 300 400 500 Million tonnes 9% 18% 71% 0 100 200 300 400 500 600 700 800 Trade & Agriculture Directorate 17
World OECD Non- OECD while feed and fuel push coarse grain demand up + 50 Mt Food use Feed use Biofuels Other 0 100 200 300 400 500 600 700 Million tonnes + 90 Mt 0 200 400 600 800 1000 1200 1400 Trade & Agriculture Directorate 18
World OECD Non- OECD while feed and fuel push coarse grain demand up Demand Shares () - OECD 11% 8% 24% + 50 Mt 56% Food use Feed use Biofuels Other 0 100 200 300 Demand 400 Shares 500 () 600 World 700 Million tonnes 12% 13% 19% 56% 0 200 400 600 800 1000 1200 1400 Trade & Agriculture Directorate 19
Biodiesel increasingly important demand driver for vegetable oil Indonesia USA EU non-biofuel use biofuel use + 90 Mt 0 5 10 15 20 25 30 35 Million tonnes Trade & Agriculture Directorate 20
Biodiesel increasingly important demand driver for vegetable oil Indonesia USA EU non-biofuel use 20% Demand shares - WORLD () + 90 Mt biofuel use 80% 0 5 10 15 20 25 30 35 Million tonnes Trade & Agriculture Directorate 21
thousand tonnes Driven by economic growth, meat consumption increases especially in developing countries 2006-2008 2006-2008 2006-2008 350000 300000 250000 200000 150000 100000 50000 0 Sheep Poultry Pork Beef OECD non-oecd WORLD Trade & Agriculture Directorate 22
Large differences in milk production gains European Union India USA China Russia Pakistan Brazil New Zealand Ukraine Australia Mexico Argentina 0 40 80 120 160 million tonnes Trade & Agriculture Directorate 23
million tonnes Outlook for dairy products consumption 25 OECD non-oecd 20 15 10 5 0 2006-08 2006-08 2006-08 2006-08 Butter Cheese SMP WMP Trade & Agriculture Directorate 24
Underlying macroeconomic assumptions uncertain Economic projections changing monthly Energy prices important but highly uncertain Credit markets in turmoil Timing/speed of recovery critical Trade & Agriculture Directorate 25
Lower income growth impacts livestock products more 0-2 Wheat Maize Rice Oilseeds Oilmeals Beef Pork Butter Cheese -4-6 % -8-10 -12-14 -16 Feed 2009-10 Trade & Agriculture Directorate 26
USD per barrel World oil prices still relatively high and. 120 100 80 60 40 20 0 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017 Outlook 2008 Outlook 2009 Trade & Agriculture Directorate 27
US$ per barrel increasingly more volatile 150 140 130 120 110 100 90 80 70 60 WTI av. Brent av. 50 40 30 20 10 Trade & Agriculture Directorate 28
Impact of higher oil prices on commodity prices 50 40 2009-10 30 20 10 0 Trade & Agriculture Directorate 29
Key Issues and Uncertainties Traditional uncertainties: Weather and economic stability Developments in trade and domestic policies Increased price volatility? Biofuels policies and biofuel developments The key question is supply response Price transmission to local markets Technological progress Need to address climate change/water availability/sustainability Trade & Agriculture Directorate 30
Thank You www.oecd.org/tad pavel.vavra@oecd.org Trade & Agriculture Directorate 31