FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and...
-
Upload
lucinda-nicholson -
Category
Documents
-
view
215 -
download
2
Transcript of FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and...
![Page 1: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/1.jpg)
FSA-EPAS1
Food Aid Costs and Prospects IFADC
Kansas City June 29, 2011
Pete RileyEconomic and Policy Analysis Staff
USDA/Farm Service Agency
Washington, DC 20250
202-720-7787
![Page 2: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/2.jpg)
FSA-EPAS
Wheat Supplies Ample, Although There are Quality Concerns
2
percent
![Page 3: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/3.jpg)
FSA-EPAS
Rice Ending Stocks in 2011/12 Forecast 21 million MT Higher Than Recent Low in 2004
3
percent
0
20
40
60
80
100
120
140
160
0
5
10
15
20
25
30
35
40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Mil MT
Global Rice Stocks and Stock-to-Use Ratio
stocks s/u ratio
![Page 4: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/4.jpg)
FSA-EPAS
Current Supply Concerns Mainly Focus on Corn
4
percent
0
50
100
150
200
250
300
0
5
10
15
20
25
30
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Mil MT
Global Coarse Grains Stocks and Stocks-to-Use Ratio
stocks s/u ratio
![Page 5: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/5.jpg)
FSA-EPAS5
Commodity Markets are Volatile: An Example from Dairy
Average U.S. Farm Price for Milk, 1980-2011F
10
12
14
16
18
20
22
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
$ per cwt.
![Page 6: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/6.jpg)
FSA-EPAS6
Despite the Highest Stocks in 23 Years, U.S. Wheat Prices Doubled Last Season
$3
$4
$5
$6
$7
$8
$9
$10
SRW
HRW
$ per bu.
Daily Cash Prices from June 2010
![Page 7: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/7.jpg)
FSA-EPAS
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2004 2005 2006 2007 2008 2009 2010
Commodity Freight
Food Aid Cost Data Summary, 2004-2010(for bulk and processed commodities combined)
Costs Quantities
7
Mil $
Source: FSA/KC Commodity Office
1000 MT
![Page 8: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/8.jpg)
FSA-EPAS
Bulk vs. Processed Commodity Volume by Year
Bulk
0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010
Processed
0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010
8
1000 MT 1000 MT
![Page 9: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/9.jpg)
FSA-EPAS
Bulk vs. Processed Commodity Costs by Year
Bulk Processed
9
Mil $ Mil $
![Page 10: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/10.jpg)
FSA-EPAS
Freight Rates Have Dropped from 2008 Highs
Bulk freight accounted for 35-40
percent of total costs
$0
$50
$100
$150
$200
$250
2004 2005 2006 2007 2008 2009 2010
Bulk, average $/MT
Processed freight accounted for 25-30
percent of total costs
$0
$50
$100
$150
$200
$250
2004 2005 2006 2007 2008 2009 2010
Processed, average $/MT
10
![Page 11: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/11.jpg)
FSA-EPAS
Cost Analysis and ProjectionsMethodology and Caveats
• Constructed simple models for key commodities to analyze relationship between food aid commodity costs and market prices.
• Value of results vary by commodity.
• Projections based on USDA baseline market prices for 5 years out.
• Results need to be interpreted with caution, but should provide some rough indications of future trends.
Note: These are not official USDA projections!
11
![Page 12: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/12.jpg)
FSA-EPAS
Food Aid CostsWheat History and 5-Year Projection *
$0
$50
$100
$150
$200
$250
$300
$350
$400
2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016
* Not official USDA projections
12
$/MT
![Page 13: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/13.jpg)
FSA-EPAS
Food Aid CostsCorn History and 5-Year Projection
13
$/MT
![Page 14: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/14.jpg)
FSA-EPAS
Food Aid CostsVegetable Oil History and 5-Year Projection
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016
14
$/MT
![Page 15: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/15.jpg)
FSA-EPAS
Food Aid CostsCorn Soy Blend History and 5-Year Projection
$0
$100
$200
$300
$400
$500
$600
2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016
15
$/MT
![Page 16: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/16.jpg)
FSA-EPAS
$0
$100
$200
$300
$400
$500
$600
2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016
Freight rate assumptions: flat for first out year, then increasing 2 percent per year.
A Look at Commodity Plus Freight Costs: An Example for Wheat
16
$/MT
![Page 17: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/17.jpg)
FSA-EPAS17
Very Wet and Flooding in North, Drought Across the South and Southern Plains
![Page 18: FSA-EPAS 1 Food Aid Costs and Prospects IFADC Kansas City June 29, 2011 Pete Riley Economic and Policy Analysis Staff USDA/Farm Service Agency Washington,](https://reader030.fdocuments.in/reader030/viewer/2022032723/56649d015503460f949d4c24/html5/thumbnails/18.jpg)
FSA-EPAS
Near Term Risk Factors
Higher Prices
• More flood and/or drought damage
• Poor summer growing weather
• Limited early corn from the South and late Midwest crop
• Late summer bidding war for old crop corn
• Bigger corn imports by China
Lower Prices
• Softer oil prices
• Reduced economic growth
• Less investor interest in commodities
• Strong global acreage response to high prices
• Favorable summer weather
• Higher-than-expected yields
18