Agricultural Commodities Outlook: Prospects and Issues
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Agricultural Commodities Outlook: Prospects and Issues William H. Meyers Professor of Agricultural Economics and Co-Director, FAPRI University of Missouri Project LINK Meeting Bangkok, Thailand 26-28 October2009
Transcript of Agricultural Commodities Outlook: Prospects and Issues
Agricultural Commodities Outlook: Prospects and Issues
William H. MeyersProfessor of Agricultural Economics
and Co-Director, FAPRIUniversity of Missouri
Project LINK MeetingBangkok, Thailand 26-28 October2009
Outline
Recent grain market developmentsPricesProduction and stocksStock-to-use ratio
Changes from Jan 09 outlookIssues old and new
Energy and agricultural price linkagesClimate change measures and agricultureRising protectionism and DDA stagnationPolicy priorities
Wheat production(WASDE Oct 9, 2009)
Coarse grain production (WASDE Oct 9, 2009)
Rice production (WASDE Oct 9, 2009)
Grain production (WASDE Oct 9, 2009)
Wheat stocks, (WASDE Oct 9, 2009)
Coarse grain stocks, (WASDE Oct 9, 2009)
Rice stocks, (WASDE Oct 9, 2009)
Grain stocks, million metric tons (WASDE Oct 9, 2009)
Grain stocks-to-use ratios (WASDE Oct 9, 2009)
World wheat stocks-to-use ratio vs. price, Jan 09 outlook vs Oct 09
0
50
100
150
200
250
300
350
400
2000/01 2003/04 2006/07 2009/10 2012/13 2015/16 2018/19
Dollars per mt
0
5
10
15
20
25
30
35
40
Percent
U.S. FOB Gulf Price Stocks-to-Use Ratio WASDE Oct 09
World corn stocks-to-use ratio vs. price Jan 09 outlook vs Oct 09
0
50
100
150
200
250
300
2000/01 2003/04 2006/07 2009/10 2012/13 2015/16 2018/19
Dollars per mt
0
5
10
15
20
25
30
Percent
U.S. FOB Gulf Price Stocks-to-Use Ratio WASDE Oct 09
Real US Farm Prices, Jan 09 outlook vs Oct 09 (WASDE Oct 9, 2009)
Corn and petroleum prices
Corn and petroleum prices
Effect of 2009 RFS??
Oil and corn prices and exchange rates
0
50
100
150
200
250
Jul 07
Oct 07
Jan 08
Apr 08
Jul 08
Oct 08
Jan 09
Apr 09
Jul 09
Oct 09
Index, July 2007=100
Petroleum
Corn
Dollars/euroCorn price is nearby futures price. Petroleum price is for West Texas Intermediate. Sources: USDA, EIA
d IMF
US corn use
Source: FAPRI baseline projections, Aug. 2009
Movers, shakers and uncertaintiesGood weather and yields in 08/09, but costs and poor weather dampen 09/10 growthPrice surge has abated, but NOT in some developing countriesTrade “safeguard” interventions mostly gone Biofuel growth slowed, but policies remainStrong influence of energy markets continueMajor uncertainties (stochastic analysis)
Oil priceUS dollar The global financial crisis and impacts on demand growth, trade financingWeather
Petroleum price forecasts from IHS Global Insight *NYMEX June futures, 10/22/09
Oil price distribution
Maize US farm price uncertainty
Wheat US farm price uncertainty
Still an uncertain future
1. Road to economic recovery?2. Timing and size of oil price volatility?3. Will biofuel policies change?4. What will happen to climate change policies?5. Will DDA be completed in near term future? 6. Wide range of possible outcomes7. Larger impacts on low income consumers
Challenge and Opportunity
1. Challenge - how to provide safety net measures for the most vulnerable populations
2. Opportunity - higher prices can increase incomes from food production in rural areas where agriculture is the main source of income and employment
