Tuesday, April 19, 2016

Trending in Global Agriculture: Argentina's Profits Up, Milk Surplus, Saudi Ends Wheat Production, FAO's Strong Grain Forecast, China's Corn

Five Global Agriculture-related subjects that are trending on this Tuesday...

Ag policy changes with Argentina's new leadership may result in a doubling of farm profits.
Because Argentina has ended crop shipment quotas, reduced export taxes on grains, and depreciated its peso currency, its trade competitiveness has improved. Farmland profitability is now expected to double. Furthermore, increased sugar prices will also help. In Argentina, farmers use silo bags to store excess grain, and that use is expected to continue.

Too much milk in the world.
The globe is awash in milk and dairy farmers aren't happy with today's low prices. The United States has increased its milk production by 12 percent from 2007 to 2015. In that same time period, New Zealand increased its output 36 percent, and the EU 10 percent. It is expected that output from the four large dairy exporting nations will rise 3.5 million tonnes this year, with 1.6 percent increase in the U.S., an amount far exceeding global import growth.

U.S. farms with milking herds of at least 1,000 cows accounted for nearly half of all cows in 2012, up from 10 percent of all cows in 1992.

Saudi ends wheat production.
According to plan, because of depleted aquifers, Saudi is ending its wheat production this year after producing wheat for domestic use for over 30 years. A few farmers there may continue to produce wheat for local artisanal mills, however. The country will import 3 million tonnes of wheat in 2015-16, which is 14 percent less than the previous year due to large carryover stocks.

Continued strong global grain production foreseen in the coming year.
The FAO Food Price Index is a trade-weighted index tracking international market prices for five key commodity groups: major cereals, vegetable oils, dairy, meat and sugar. Its decline over the past year reflects ample food supplies, a slowing global economy and a stronger US dollar. The FAO Cereal Price Index fell slightly in March - marking the fifth straight month of decline - amid a favorable supply outlook. The Cereal Price index is down 13.1 percent below its March 2015 level. The FAO predicts continued ample global production of grains this coming market year, although wheat production is expected to be down slightly due to dry weather in the Russian Federation and Ukraine.

China is ending corn stockpiling.
Corn exporting nations are nervous about decreased demand from China following its announcement that it will end its stockpiling to try to bring its domestic corn price down. This comes at a time when the world is already oversupplied with corn. It is estimated that China has 250 million tonnes of corn stockpiled, equal to more than one year of supply.

To view last week's trendspotting post, go here.--k.m.

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