Agricultural Commodity Markets Outlook - By the European Commission - This report analyses the evolution of world agricultural commodity markets over the course of the last 25 years and anticipates the potential changes that will likely take placeover the coming decade. It is primarily based on the medium term outlook of the Organisation for Economic Co-operation and Development (OECD) and the economic forecasts of the Food and Agricultural Policy Research Institute (FAPRI).

The poultry sector has been the most dynamic meat sector in the past twenty years. Having experienced strong growth and overtaken the beef sector in the mid 1990s, it is now the second most widely consumed meat. The spread of the Avian Influenza has the potential to cause the first major disruption for the world poultry sector, with significant negative impacts on the feed cereals and oilseeds/oilmeal markets. Brazil’s production grew faster than its consumption over the period under consideration and in 2002-2004, its production levels were close to those of the EU-15 at almost 9 mio t. Thailand has also established itself as an exporter with a net-trade comparable to, or even higher than that of the EU-15. Major importers are Russia and Japan, followed by Saudi Arabia and Mexico. Poultry consumption and production is projected to increase at slightly more than 2 % annually from 2005-2014, less than half the rate observed over the past two decades. Trade in poultry meat is likely to increase faster than production and consumption.

Cereals production and consumption has grown at very modest rates since 1980 and is forecast to continue at this pace for the next decade with the coarse grains market remaining slightly more dynamic than wheat. The EU is forecast to maintain its current level of exports and thus is expected to slowly lose part of its market share, especially in the coarse grains sub-sector. Australia and Argentina will most likely benefit from this in the wheat market, and the US and Argentina in coarse grains. No significant change in cereal prices is expected.

World oilseed production and consumption has grown at robust rates in the last quarter of a century and, although this growth rate could drop somewhat in the next 10 years, it is nevertheless expected to remain double that of cereals. In order to bring demand and production into balance nominal oilseed prices could rise modestly. Brazil will overtake the USA as the most important oilseed exporter. China could double its imports and, therefore, absorb almost half of the oilseeds traded in 2014/2015. The EU will remain the second major importer.

Production and consumption of oilmeals will basically follow the growth pattern of oilseeds although the share of oilmeals traded is unlikely to increase further as crushing capacity improves where the meals are consumed. Argentina and Brazil together are expected to account for at least three quarters of world oilmeal exports in 2014. The EU, already by far the most important importer is likely to increase its imports further. Global consumption and production of vegetable oils has increased at the fastest pace of all sectors in the oilseeds/meals/vegetable oils complex and is expected to continue doing so.

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Source: European Commission - February 2006