MONTHLY ISSUE ABOUT AGRO MARKET 2010 November No. 6
AGROMEDIA
This issue Grain and rapes market Milk economy market Fertilizers market Agricultural land market
EU countries will have to return 578.5 million euro of agricultural finances The European Commission has requested that member states return 578.5 million euro, EU finances for farming, paid unsoundly to EU farmers. Lithuania will also have to return around tens of thousands euro. This money was paid non-complying with EU rules, applied for agricultural expense, or not assuring the necessary control, that is why they have to be returned to EU budget. Lithuania will have to return 43 thousand euro because of inappropriate confirmation of some invoices. Member states are responsible for paying general agricultural policy finances and checking expenses, and the Commission has to evaluate, whether member states use finances appropriately. When presenting this decision, Dacian Ciolos, the Commissioner of EU Agriculture and Rural Development, said: “We are trying to assure that the control of agricultural expenses is as best as possible, in order to check appropriately, whether the money of taxpayers are not wasted.” Under the newest decision, finances from Lithuania are planned to be returned for inappropriate confirmation of invoices (0,043 million euro), from Poland – for incorrect registration of sugar and grain motion in 2006 and 2007 (1,021 million euro) and localities less favourable for farming, and agrarian environment protection means (2006 financial years) – for lack of cross controls and controls at a place, inappropriate application of sanctions (15.282 million euro). The biggest accomplished corrections are predicted for Greece. This state, after the request of the European Commission, will have to return 347.47 million euro for inappropriate dispensation of money across fruits and vegetables, tobacco sectors, allowances for livestock, support for area, complex support, POSEI programme and some breaches, indicated by financial audit.
“Farmers are more actively insuring the crop this autumn – more farmers have already insured by the beginning of November than during the whole insurance period last year,“ - announces “Mano ukis” (“My farm”). Last insurance season in our country was a perfect example, proving the benefit of insurance – the total of 17.12 million LTL was paid to compensate the damage for crop of 2010 harvest. 5.7 million LTL of the total sum was paid to compensate the winter damage, almost 12 million LTL – damage, done by summer shower of hail and excess rainfalls. According to insurance specialists, people should get used to committing 2-3% for crop insurance every year, making economy balance. As it is known, 50% of contributions are compensated by the state. Many farmers chose Secufarm LT 3 insurance package this autumn, which insures from excess rainfall, shower of hail, storm and winterkilling. 2.9 million LTL were paid to Kaunas district farmers, 2 million – Kedainiai, 1.2 million LTL – Jurbarkas, 1.14 million LTL – Sakiai, 940 thousand LTL– Joniskis, and 628 thousand LTL – Panevezys district farmers. The payment of money finished two weeks ago.
GRAIN AND RAPES MARKET Wheat procurement price in Lithuania has decreased in the second part of October, 2010. Wheat was bought by 611.1 LTL/t on average in Lithuanian grain procurement companies during 42nd week (10 18-24) – 0.9% smaller price than in the second part of September (38th week (09 20-26)). Though buckwheat procurement price during the mentioned period has increased by 27.4% (up to 1938.2 LTL/t), rye procurement price has increased by 14% (up to 561.7 LTL/t), and feeding barley (II class) – 1.4% (up to 526.8 LTL/t). Average rape procurement price in the second part of October reached 1227.9 LTL/t and was 5% higher than in the second part of September. Lithuania has imported twice as bigger amount of grain in September, 2010 as in September, 2009. Lithuanian grain procurement companies have imported 58.304 thousand tons of grains in this September – two times more, comparing with analogous last year period. The biggest (up to 40.863 thousand tons) increase was in II class barley import. They were imported from Latvia and Denmark at average 641.2 LTL/t price. Though, wheat import has decreased in 54.6% (up to 13.193 thousand tons) in September, 2010, comparing with September, 2009. Wheat
was imported from Latvia, Denmark and Germany (average price – 669.5 LTL/t). Rape import during the mentioned period has increased by 13.9% (up to 22.338 thousand tons). They were imported from Latvia, Russia, Ukraine and Belarus at the average price of 1195.3 LTL/t. Grain export made 259.541 thousand tons in September, 2010 and was 13.8% bigger than in September, 2009. Barley export increased 2.4 times. They were exported to Latvia, Estonia, the Netherlands, Belgium, Germany and Saudi Arabia at the average price of 615.6 LTL/t. but wheat export during the analyzed period has decreased by 11.8% (down to 142.245 thousand tons). They were exported to Latvia, Poland, Denmark, Germany, the Netherlands, France, Finland, Switzerland, Turkey, the Faroe Islands, Saudi Arabia (average price – 756.9 LTL/t). 1.5 times more rape was exported during this September than during the same period in 2009. They were exported to Estonia, Latvia, Germany, Great Britain, Belgium, the Netherlands, Finland, France and Switzerland (average price – 1156.5 LTL/t).
First EU-27 prognosis of corny crops areas for 2011 harvest First evaluation of EU-27 corny crops areas were announced in the middle of October, 2010, by French market analysts’ agency “Strategy Grains”. This prognosis may change strongly in the nearest two weeks depending on weather conditions and changes in grain market. Deferred land areas, which have increased in the latter years, should decrease by 0.7 million hectares in 2011. Most of lands are predicted to be returned for production in those regions, where production power is small or there are many small farms (e.g. Spain, Portugal and Scandinavian countries). According to “Strategy Grains” data, area of EU-27 corny crops should increase by 1.2 million hectares (up to 57.2 million hectares) for 2011 harvest. Areas of both soft wheat and barley crops should increase by about 3% for 2011 harvest (soft wheat – by 0.7 million hectares (up to 23.7 million hectares), barley – by 0.4 million hectares (up to 12.6 million hectares). Almost all growth of barley crops areas is related to the growth of summer barley crops areas. Considering current prices and making a premise that sowing conditions will be favourable in spring, it is predicted that maize crops area will be about 4% (that is 0.3 million hectares) bigger and should make 8.4 million hectares. Areas of triticale and rye should remain stable for 2011 harvest and make 2.7 million hectares and 2.6 million hectares respectively. And corn crops area should increase in about 0.2 million hectares (up to 2.9 million hectares).
Russia will revoke flour export ban since January According to decision, made by the Government, Russia is planning to revoke temporary flour export ban starting the first day of the next January. This ban was enacted as a part of grain export ban, which was officially prolonged to 30 June under the order of the Government. State Grain Union appealed to the Government earlier, asking to revoke flour and some grain export ban at least for companies from Siberia region, for them not to lose difficult to reach part of foreign market. Besides, as internet newspaper RIAN Novosti indicates, the Union argues that Russia has enough flour to meet its own requirements. EU can become the biggest rape importer during 2010/11 market years. Smaller rape harvest is foreseen in EU states in 2010 – according to “Agra Europe“ data, it should make 19.9 million tons and that would be 7.8% smaller comparing with the last year. It is predicted that production of rape oil will decrease by 1.1 million tons in 2010/11. EU can become the world’s biggest rape importer of this season due to foreseen smaller rape harvest. It is predicted that import of 2010/11 can make 2.19 million tons (2009/10 – 2.13 million tons). EU plans to import 1.34 million tons of rape from CIS (Commonwealth of Independent States), and 0.85 million tons of rape from Australia. In former years, the leader of rape import was China. In 2010/11, China plans to import 1.8 million tons of rape. World rape harvest should make 56 million tons in 2010/11, or 3.8 million tons less than in 2009/10. Predicted smaller rape harvest in Europe, Canada and China has the strongest influence for that.
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Grain deficit is predicted in world market during the season According to International Grain Committee (hereinafter IGC) data, world grain resource will decrease by 1.2% because of strongly decreased harvests of Europe and CIS. It is predicted that grain demand will increase by 0.6% in 2010-2011 and reach 1780 million tons (predicted harvest – 1741 million tons). According to agency’s data, grain demand will exceed the supply by 30 million tons. It will be the first time during the last three years, when general world grain consumption will exceed the production, and transitional resources will de-
crease by 10% (39 million tons) down to 353 million tons during the season of 2010-2011. Increase of maize demand is foreseen in feed sector in the presence of permanent wheat consumption. FEFAC predicts that feed prices in Europe, where wheat is mostly used for feed production, will increase more than in, for example, USA, where maize is traditionally mostly used for feed. According to agency IGC data, since the end of June to the end of August, world wheat prices have increased approximately by 57%, and maize prices – about 30%.
If EU does not develop a dynamic proteins sector in a short run, feed production will become more and more dependent on import and foreign markets During the meeting of the European Committee in the beginning of October, the problem that feed sector is becoming more and more dependent on increasing proteins markets in South America and Asia, with which EU is not able to compete, was raised. More and more feed is produced in farms because of increasing prices of grains and protein meal, which is why indexes of combined feed sale are decreasing. During the meeting it was offered to promote thoroughly the increase of protein crops in farms of EU states. Also, it was emphasized that feed production companies have to optimize their activity, because it is the only way to remain competitive. That means not only the settlement of production processes, but innovatory attitude towards ecological and specialized products as well, paying more attention to specific feed species and such issues, as stability of environment and reduction of CO2 emission. valid in EU, as well.
Worldwide grain export prices Lt/t* Grain Wheat
State JAV HRW 2 kat. JAV SRW 2 kat. Argentina ES, France, FCW 1
Corn Barley
ES, Germany, B class ES, United Kingdom, forage Canada, CWRS 13,5% protein JAV 3 YC Argentina ES, France, forage Australia, forage Australia, malting
2009 september 463,5
july 602,9
2010 Price change % august september mounth ** year *** 774,8 731,5 -5,6 57,8
387,9
626,8
734,1
721,3
-1,7
86,0
496,7 424,7
616,2 618,1
769,4 773,4
777,4 770,0
1,0 -0,4
56,5 81,3
439,9
637,5
810,2
787,6
-2,8
79,0
383,1
555,1
652,5
639,8
-2,0
67,0
617,3
794,1
916,2
917,6
0,2
48,7
392,6 392,6 352,4 340,5 354,7
425,0 451,5 488,7 515,3 608,2
543,7 554,6 655,2 679,7 744,9
586,3 576,0 685,7 655,1 785,1
7,8 3,9 4,6 -3,6 5,4
49,3 46,7 94,6 92,4 121,3
HRW – Hard Red Winter, SRW – Soft Red Winter, FCW – French Channel Wheat, CWRS – Canada Western Red Spring, YC – Yellow Corn * prices (Lt) provided based on the currency exchange of the Bank of Lithuania on the respective date ** comparing Septembert with August, 2010 *** comparing September, 2010 with September, 2010 Data sourse: Agro rinka, No. 20 (147)
Kazakhstan could export grain to Persian Gulf countries Kazakhstan is considering building grain terminals in the United Arab Emirates and Jordan to export its grain to the Persian Gulf countries. Kazakh Prime Minister Karim Masimov said at his Sept. 27 cabinet meeting. "We are going to finish the construction of the railway (to Iran's Persian Gulf coast). After that our grain will become a competitive commodity in this region. The Arabic countries are interested in our grain, so we should consider building grain terminals in the United Arab Emirates and Jordan." Masimov said. "Our strategy is to enter new markets. We have to work out logistical issues to be able to export our grain in 2012." he said. He said the international railway New Ozen-Gyzylgai-Bereket-Etrek-Gurgen (Kazakhstan-Turkmenistan-Iran), which will later be joined to the European and Asian railways through Russia, will be the shortest and most convenient route to the Persian Gulf. The construction is to be completed by the end of 2011. Initially, the railway is expected to transport 3 to 5 million tonnes of cargoes a year, which will grow to 10 to 12 million tonnes in the future. The total length of the railway, which will run from the Kazakh steppes through the Karakum deserts to the Gulistan province in northern Iran, will be 900 kilometers. US. 2010 all-wheat down 2% from August Wheat stored in all positions on Sept. 1 totaled 2.45S.S49.000 bushels, up 11% from 2.209,338.000 bushels on Sept. 1, 2009, the U.S. Department of Agriculture said in its latest Grain Stocks report Sept. 1 old crop corn stocks were up 2% at 1,707,566.000 bushels, and old crop soybean stocks were up 9% at 151,121.000 bushels. The USDA stocks numbers for wheat and com were above the average of prereport trade expectations while the soybean number was as expected.
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Flour export record set for third straight year
For the third straight crop year, world trade in wheat flour established a new record in 2009-10, according to revised data just issued by the International Grains Council (IGC) in its latest Grain Market Report. As World-Grain reports, at the same time the Council placed world flour trade in the year just ended at a new peak, it forecast a nearly 8% decrease in the 2010-11 season just under way. According to the IGC, global flour exports in 2009-10 aggregated 13,150,000 tonnes in wheat equivalent (210 million cwts in terms of wheat flour), a new peak for the third year in a row. The revised estimate for 2009-10 was up 819.000 tonnes, or 7%, from the prior export peak of 12,331.000 in 2009 -09 and was 11% more than the first recent peak of 11,849,000 in 2007-08. It was only in 1995-96 that world flour exports first ex-ceeded 10 million tonnes of wheat equivalent, reaching 10.136,000. The record-setting pace of flour exporting in the past decade was underscored by the way flour exports decreased from the peak in the mid1990s to reach a recent low of 8,824,000 tonnes at the start of the new century in 2000-01. From that nadir, exports in 2009-10 showed an increase of 49%. In its first forecast of global flour trade prospects for 2010-11, the IGC pointed to a total of 12,160,000 tonnes in wheat equivalent. That would be down nearly 1 million tonnes from the record of 13,150,000 estimated for 2009-10, and would also be exceeded by 12,331,000 in 2008-09. Except for those two years, the prospective volume in 2010-11 was the largest. The IGC attributed the prospect for a decrease in global flour trade in 2010-
11 to expanded milling capacity in several importing countries. Indeed, it pointed to reduced tak-ings by all of the leading flour importing countries in 2010-11 as compared with the preceding season. The sharpest import demand decrease was forecast for Afghanistan, the country that has been the leading flour destina-tion for several years running. It projected Afghanistan im-ports in 2010 -11 at 1.4 million tonnes of wheat equivalent, against record takings of 1,750,000 tonnes in the previous season and 1,425,000 in 2008-09. Uzbekistan was forecast to import 1.2 million tonnes in 2010-11, down 300.000 from its record takings in 2009-10. Iraq, which accounted for imports of 1,250,000 tonnes in 2009-10, was forecast to take 1.1 mil-lion in the new season. Indonesia, a country that had recently built sufficient milling capacity to supply its needs, emerged as a ranking importer in 2009-10, taking 1 million tonnes in wheat equivalent of flour imports. That country's imports were projected to dip to 800,000 in 2010-11. The latter would be in line with its imports in the preceding several years. Partially offsetting these expected flow import decreases by North African imports were forecast at 620,000 tonnes, up 100,000 from the previous season, largely due to an expected rise in Libya imports. Tajikistan was forecast at 650,000 also up 100,000. Top world flour exporters by IGC (in 1.000 tonnes, wheat equivalent) 2009-10 2008-09 2007-08 Kazakhstan 3.500 2.733 2.054 Turkey 2.602 2.161 1.520 E.U. 1.300 1.482 1.227 Argentina 1.300 1.368 1.535 UAE Pakistan U.S. Russia China Japan Canada Ukraine Australia Others World total
650
650
500
600 580 400 388 269 180 165 150 1.065
500 388 665 214 245 223 309 185 1.207
500 479 548 842 315 284 310 273 1.463
13.150
12.331
11.849
Kazakhstan leads exporters When it came to flour exporting, Kazakhstan once again held the dominant position. Its exports in 2009-10 soared to a new record of 3.5 million tonnes of wheat equivalent (equal to 56 million cwts of flour), compared with 2.733.000 in 2008-09 and 2.054,000 in 2007-08. Kazakhstan accounted for 27% of global flour exports in the year just ended. Not so incidentally, that share of global flour trade was less than half of the 56% share the European Union held in 1996-97 when its exports peaked at 6,249,000 tonnes. From that high, E.U. exports fell to a low of 1,227,000 tonnes in 2007-08. A small rebound to 1.4 million was forecast for 2010-11. The IGC forecast that Kazakhstan will continue as the leading global flour exporter in 2010-11, shipping 3.2 mil-lion tonnes in wheat equivalent. This country's exports pri-marily went to Uzbekistan and Afghanistan. Once again in second place was Turkey, which exported 2,602,000 tonnes of wheat equivalent in 200910, up 20% from 2,161,000 in 200309. It was forecast to ship 2.3 mil-lion tonnes in 2010-11. According to the IGC, competitive pricing by Turkey on flour exports meant that it opened new markets in Asia. The Council attributed the decrease in E.U, exports in 2009-10 to reduced sales to Cuba, Indonesia and Libya. On the other hand, U.S. exports in 2009-10 reached 580,000 tonnes in wheat equivalent (more than 9 million cwts), up 49% from 388.000 in 200309 and the largest U.S. exports since 667,000 in 2002-03. U.S. exports last exceeded 1 million tonnes in 19992000 with an outgo of 1,399,000. The Council attributed the rise in U.S. exports to "strong sales to Mexico and South Africa." The most dramatic change among flour exporters was the Council forecast that shipments from Russia will fall to a minimal 10,000 tonnes in 2010-11 as a result of the government-imposed export ban in the wake of the drought-curtailed wheat crop. Russia shipped 400,000 tonnes of flour in wheat equivalent in 2009-10, which was down from 665.000 in 2008 -09.
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MILK ECONOMY MARKET Average natural milk procurement price LTL/t Lithuanian biggest milk shoppers
Name of a company
Average natural milk procurement price, LTL/ t Milk, for witch Milk, for witch deductions due any deduction Average milk proto quality were due to quality curement not applied was applied price when paying when paying
AB "Pieno zvaigzdes" companies group
936,3
720,2
925,9
UAB "Marijampoles pieno konservai" AB "Rokiskio suris" companies group
849,2 885,4
647,8 677,7
845,4 877,3
AB "Zemaitijos pienas"
897,8
835,3
894,4
UAB "Vilkyskiu pienine" AS (Agricultural society) "Salteksnis"
837,6 827,4
612,0 968,0
823,5 859,8
UAB „Vikeda“, Kedainiai Bariunai AS (Agricultural society) Joniskis district Dairying cooperative "Zalmarge"
1148,1
-
1148,1
725,3 736,0
658,0 502,9
724,3 727,5
Average milk procurement price, LTL/t
888,6
739,7
881,8
During the first three quarters of this year, 1.50% less milk of natural fatness was bought from Lithuanian milk producers in Lithuania, and average price of milk of natural fatness increased by 43.78%. 974.93 thousand tons of raw milk of natural fatness were bought from Lithuanian milk producers in Lithuania – 1.50% less than in 2009 and 7.87% less than in 2008 during the respective periods. Average procurement price of milk of natural fatness during the analysed period made 820.36 LTL/t and was 43.78% higher than in 2009, but 7.23% smaller than in the respective period in 2008. During the first three quarters of 2010, Lithuanian milk processing companies have bought 69.34% of milk of natural fatness from Lithuanian milk producers during the whole analysed period. The average milk procurement price, paid by Lithuanian milk processing companies, made 830.21 LTL/t and was 39.55% higher than during the respective period in 2009. While Lithuanian milk producers companies bought it at 798.08 LTL/t – 69.04% higher price than in JanuarySeptember, 2009. Six months of 2010-2011 quota years, quota of milk for processing was implemented at 43.41% - similar indexes (43.44%) as in the same period of last quota year were obtained.
Amounts of additional national direct benefits for livestock were confirmed Amount of additional national direct benefits for livestock for 2010 were confirmed by Minister of Agriculture, order No. 3D-943 of 25 October, 2010. The transfer of the benefits to accounts of livestock growers has started 8 November of this year. 543 LTL special benefit for bull, 50 LTL extensification benefit and 213 LTL livestock killing benefit were estimated. Special benefits for bull, committed for 9 month old cow, realized during current years (this is the only benefit for livestock, related to production) and extensification benefits (calculated according to arithmetic average of extensification benefits of 2004-2006), dissociated from current years’ production, remained the same, comparing with the last year. Killing benefit, dissociated from
current years’ production, calculated according to arithmetic average of killing benefits of 2004-2006, was reduced by 7 LTL due to limited state finances. It is planned to transfer about 55 million LTL up to the end of this year, and about 75 million LTL of special, killing and extensification benefits should be paid to farmers in total. First money will reach those livestock growers, who have realized bulls in I, II and III quarters of 2010, afterwards, killing benefits will be transferred. Special benefits for bulls, realized in IV quarter of 2010 and dissociated from production extensification benefit, will be paid in I quarter of 2011.
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2010 indexes are better than 2009 in USA 6803.89 thousand tons of raw milk were produced in USA in August, 2010 – 2.8% more than in August, 2009, and 2% more comparing with July, 2010. Cheese (including fresh cheese) production has increased by 5.9% in August, 2010 comparing with the same period in 2009, and made 399.61 thousand tons, and comparing with July 2010, 0.1% less cheese was produced. 472.1 thousand tons of cheese resourced was stored at the end of this August – 4% more than at the end of last August and 2% less than at the end of July, 2010.
46.27 thousand tons of butter was produced in August, 2010 – 0.6% more than in the same period in 2009 and 8.4% less than in July, 2010. At the end of July, 2010, comparing with the same period in 2009, butter resources have decreased by 42% down to 68.86 thousand tons, and in August, 2010, comparing with the same period in 2009, in USA, production of skim milk powder has increased by 41.2% (up to 103.4 thousand tons), lactose – 27.7% (up to 35.6 thousand tons), though whey powder decreased by 0.8% (down to 37.15 thousand tons).
SMP price fall accelerates EU SMP prices have dropped 4%-7% in the past fortnight, with feed-grade prices falling faster than food-grade— now at early August levels, but still 25%-30% above intervention. Buyers are hesitating as the market drops and trading is described as quiet, particularly for exports, where the strength of the € has resulted in increasing EU $ offer prices despite the cut in internal EU prices. The latest Algerian tender has not yet been settled and Russian powder demand has diminished. Supplies have been temporarily boosted by the charity scheme with 24,000t coming out of intervention in September. SMP production has been running below a year ago with output down 8% between April and July despite a 1% gain in milk supplies, with the extra milk absorbed by rising cheese and fresh product manufacture. Recent indications suggest, however, that year-on-year, milk deliveries have risen, with supplies in France up by 8% in early October and 2% in Germany. Milk supplies, and SMP and butter manufacture, reach the seasonal low point in the EU as a whole in November. So far, SMP prices have been supported by export demand, with 251,000t exported in the first 7mths of 2010—up 90% on a year ago. Skim concentrate prices are stable despite the cut in SMP prices. WMP prices have dropped by 5% in
the past 2wks, but are still expensive compared with NZ quotes. Whey prices have plunged, but have fluctuated from €600/t to €800/t for a year, making it difficult to decipher any long-term trend. Butter prices have also eased but the market remains firm at 70% above intervention, with prices showing little change since May, and trading low with contracts taking most production. Butter production between April and July was 3% down on a year ago. There are reports of odd parcels being sold at around €3,550/t. Cream prices have slipped in the past 3wks— unusual at this time of year, but still marginally above the butter equivalent indicating that the market remains tight. Around 5,000t of butter is coming out of PSA storage weekly, and the current level of stocks is now only 10,000t below the level of a year ago at 64,000t. Commodity Gouda prices are unchanged but demand is strong, both from within the EU and for export, with Russia reported to be active, and some upward pressure on prices, with stocks running low despite production in Germany and the Netherlands up 5% on a year ago in August. Demand for cheese will be important to the overall EU market balance as milk supplies rise from the seasonal trough, given that higher cheese production is limiting supplies of butter and SMP.
“Mano ukis” (“My farm”) writes that according to “Guardian”, new product showed up in Germany and was patented as “night milk”. Milk producers claim that in the new product – milk of special technology, there are plenty of sleep hormone, melatonin that helps people, who suffer from insomnia, to fall asleep quicker. It is stated that the new milk has 25 times more melatonin than the usual milk. Cows are milked only at night in one farm in Munich district. According to farmers, milk has the biggest amount of hormone between two and four o’clock in the morning. Such milk is processed to powder and supplied to the customer. It has been emphasized that “night milk” powder is sold only in pharmacies as food complement so far. According to pharmacists, “night milk” power helps one out of three persons, who suffer from insomnia. According to Heiko Dustmann, technologist of agricultural products, cows are reacting very calmly to the change of milking time. It was noticed that some cows became even milkier. They are believed to sleep calmer at pale light at night, thus the amount of milked milk increases. Enquiry opened as milk prices leap Estonian milk prices have jumped 66% in the past year while the prices of some vegetables have more than doubled. Price increases across the Baltic region have persuaded regulators to step up price-fixing investigations and politicians to call for tighter regulation of corporate profits as government officials seek to head off inflation. In Estonia, regulators are concerned that the country's plan to adopt the euro in January is giving companies an added excuse to raise prices. Estonian prosecutors and competition authorities have opened an enquiry into dairy prices aftermost leading retailers raised milk prices by 25% late last month.
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Strong growth potential for world dairy The European Commission have published a compari-son of forecasts by FAPRI and OECD-FAO covering the outlook for world agricultural commodity markets to 2019. Both forecasts show "strong growth potential forworld dairy prices over the next decade driven by increasing population and vigorous demand expansion” and are more optimistic than the previous year's projections. World prices are expected to grow by 2%-4% a year, with FAPRI more bullish and they remain firmly above the 1999-2006 period. The highest gains, compared with 1996-2006 are expected for butter, followed by cheese, SMP and WMP. World milk production is forecast to grow by 2.2% a year with the biggest gains being in developing countries. WMP and butter production is projected to grow faster than SMP and cheese. Global trade is expected to grow but FAPRI are considerably more optimistic; particularly for butter where OECD expect increasing Russian production to lead to a decrease
in imports. FAPRI expect a faster rate of growth in SMP con-sumption and production (2% a year compared with less than 1%) and trade, with the OECD/FAO expecting a higher share of SMP trade from India, Ukraine and Brazil with the EU, US and Oceania share falling to 60% of trade. Both forecasts for WMP are similar, with production rising by just under 3% a year, lower than in the past decade, and with Argentina and Brazil rising exporters. China's WMP imports are expect to fall and FAPRI expect China to be a net exporter. World butter production is expected to grow by just under 3% a year but exports from the US and EU are expected to fall. Cheese consumption and production is forecast to grow by around 2% a year. Trade is expected to grow, with China emerging as a major consumer but EU exports are expected to fall with growth in internal demand.
Global certain dairy products price LTL/kg Product name
Average price USA CME, FOB 2010
2009
Butter, AA Cheese ChedCME dar tipe, units LMP, Central and Easten region, FOB NPA, Nacional, FOB Whey powder, Central region, FOB
Change %
33 week 34 week 35 week 36 week 36 week (08 16-20) (08 23-27) (08 30-09 (09 06-10) (08 31-09 04) 6,23 12,78 12,90 13,25 13,17
week
year
-0,59
111,50
6,98
9,90
10,00
10,24
10,22
-0,14
46,52
5,43 6,36
7,80 9,64
7,19 9,73
7,33 9,81
7,31 9,83
-0,22 0,18
34,73 54,57
2,07 2,07 2,06 2,04 Western Europe exports, FOB 2010 34-35 week 32-33 week (08 23-09 03) (08 09-20) 13,15 13,41 7,56 7,67 9,56 9,30 14,48 14,77 2,66 2,65 Oceania exports, FOB 2010 32-33 week 34-35 week (08 09-20) (08 23-09 03) 10,79 11,13 7,99 8,42 8,39 9,00 10,39 10,66
-1,03
30,13
1,57
Butter, 82% fat. WMP SPM Melted butter Whey powder
2009 34-35 week (08 17-28) 6,96 5,32 6,17 7,54 1,36
Butter, 82% fat WMP PM Cheese Cheddar tipe
2009 34-35 week (08 17-28) 5,17 5,17 5,41 6,68
Stability returns World market prices have barely changed in the past 2wks, with some stability returning to foreign exchange markets. Butter and cheese prices were up but SMP prices dropped. At last week's Fonterra auction, 8.500t of SMP was made available. US SMP/NDM market is unchanged although trading is below expectations despite the fall in the $/€ rate in the past 6wks which should give an advantage to US exporters. US milk supplies show no sign of flagging, with California up by 7% year-on-year in September. EU SMP and WMP prices are falling but have risen in $ terms as the € has strengthened. Milk supplies in Australasia have been affected by poor weather but are still l%-2% up on a year earlier in the first 2mths of the new season. Deliveries are reaching their seasonal peak and product supplies should grow. With output still rising in the US and EU, buyers are becoming nervous, particularly for powder. Longer term, cuts in water entitlements in the Murray Darling basin could have a significant impact on Australia's milk supplies.
Change % 2 week
year
1,95 1,50 -2,67 1,95 -0,60
92,68 44,26 50,78 95,94 94,49
Change % 2 week
year
3,21 5,35 7,21 2,60
115,53 62,96 66,31 59,44
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FERTILIZER MARKET European fertilizer prices Belgium - €/t bulk CAN 27% del retail KCI (G) fot ex-store DAP fob/fot bulk $ France- €/t bulk AN 33,5% gran del AN 33,5% prill fot bgd Urea prill fot Urea gran fot DAP fot KCI gran fot Germany - €/t bulk CAN cfr imp inland Urea prill cfr 15-15-15 cif inland DAP fot seaport Ireland - €/t bagged Urea gran del CAN 27,5% del 27-6-6 del Italy - €/t bagged Urea gran fot Urea prill fot CAN (27%) fot DAP fot Netherlands - €/t bulk Can cif del inland KCI (G) fot ex-store Spain - €/t bulk CAN 27% fot Urea prill fot DAP fot 15-15-15 fot United Kingdom - £/t bagged AN 34,5% del farm AN cif import Urea prill cif bulk Urea gran cif bulk DAP cif bulk Baltics - US $/t
29 October 245-252 322 600-610
15 October 243-249 322 605-610
270-310 280-290 n.m. 295-300 430-435 320-323
250-300 270-275 n.m. 295-300 438-400 320-323
225-239 265-270 320 432-435
225-239 265-270 320 432-439
n.m. n.m. n.m.
n.m. n.m. n.m.
330-340 315-320 240 440-450
330-340 320-330 240 445-450
225-235 322-323
225-235 322-323
245 305-310 421-427 320-350
225-245 305-310 421-427 320-323
285-290 270-275 240-245 280-290 375-378 28 October
275-280 265-275 240-245 275-280 355-368 14 October
Urea prilled bulk
335-339
322-328
Ammonium Nitrate prilled UAN 32%N DAP MAP
250-257 255-265 525-558 540-567
250-255 265 525-558 532-555
KCI standard grade
340-365
340-360
Producers continue to increase AN prices in France and the UK but they are now finding some resistance. A lot of the market has now been covered and in both countries they are also keeping a watchful eye on urea prices. Granular urea prices so far have held on at the $380 level in Egypt but there is much to be done for November and most European markets are showing little interest today. A lot has been done in Northwest Europe, Spain has covered quite a few cargoes in recent weeks at prices reflecting closer to $365 and the Italians are still not ready to jump into the market. UAN prices are slightly softer in France and the international market is starting to edge backwards after months of seeing steady increases. The French market is getting fairly full now as we go into the dead period and the US buyers are looking for bargains to finish off buying their requirements. Phosphate markets are quiet in Europe whilst the international market is still making some gains. There are some cargoes lined up from Phosagro for the ARA ports and Lithuanian prices today are proving more attractive than those from North Africa. Similarly Lebanese TSP today is proving more competitive in Northwest Europe than North African material.
Data source:Fertecon European Fertilizer Fax,
29 October 2010
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MARKET OF AGRICULTURAL LAND Land market of the III quarter, 2010 After the growth, which lasted three years in a row, land of agricultural purpose activity in land market has decreased again in the III quarter of 2010. Though the decrease was not big (30.4%), comparing with the last quarter, the statistical publication “Agro rinka” (“Agro market”), No. 20 argues that it could be related with seasonal fluctuations in the market. Usually, exactly the third quarters introduced the smallest extents of alienable land. Harvest of corny cultures, which was smaller than it was expected, did not influence farmers’ income and land demand, because prices of world agricultural production have increased respectively (and maybe more). During the III quarter of 2010, 24.97 hectares of private land of agricultural purpose were alienated, that is 30.4% less than in the II quarter, but 7.3% more than in the III quarter, 2009. Despite the fact that market has recovered, it is the second worst quarter result related to alienated area since 2004, but general alienated area within three quarters is already 3.42% higher than during the same period in 2004 and even 16.05% higher comparing with 2009. Evaluating the structure of buyers, land area, bought by legal bodies within quarter, decreased more than the number legal bodies. After notice-
able increase of activity in II quarter (37.6%), legal bodies bought only 2.34 thousand hectares of land of agricultural purpose (9.4% of all trades) in the III quarter of 2010, that is even 51.1% less than in the II quarter, though 11.6% more than a year before. During this year, activity of legal bodies increased comparatively more than of natural persons, who bought only 6.8% more land than a year before. General area, bought by legal bodies within three quarters was also even 39.5% bigger than last year, when natural persons – only 13.5%. In theory, market developed pretty gradually. Activity of natural persons has decreased by 28.0-30.2% during a quarter in West, East and Middle Lithuania, 22.8% - in South Lithuania, and only 9.8% - in the territories around Vilnius, where land is bought more for constructions than for developing agriculture. Land, bought by legal bodies, sharpened the differences a bit more. Such alienations mostly decreased in Middle Lithuania, where they made only 13.5% (even 21.5% in II quarter) of all trades – 58.5%. Activity decreased by 41.4 and 46.0% in West and East Lithuania. Differently than anywhere else, land, bought by legal bodies increased by 20.5% in South Lithuania.
Editorial: AB “Agrowill Group”, Smolensko g. 10, Vilnius Tel./fax +370 5 2335340; +370 5 2335345; e-mail: info@agrowill.lt Subscribe to free updates in the website www.agrowill.lt
Evaluating the regions, the biggest decrease of alienated area during the quarter was in Taurage region (40.7%), Panevezys and Kaunas regions (~37.5%), a bit smaller – in Telsiai region (34.6%) and Siauliai, Vilnius and Alytus regions (28.131.0%). The smallest decrease of activity was in Utena region (16.1%), Marijampole region (20.8%) and Klaipeda region (25.1). comparing with III quarter of 2009, alienated area was smaller only in Taurage and Siauliai regions (17.6-18.7%) and Kaunas region (1.7%). Otherwhere it was bigger, especially in Klaipeda (52.6%), Telsiai (35.3%) and Utena (21.0) regions. 6.58 thousand hectares of agricultural land was bought from state during the III quarter of 2010. These trades also have obeyed general market tendency, and areas, bought during the quarter, decreased by even 48.0%, though they still were 26.4% higher than a year before. Area (11.95 thousand hectares) of mortgaged land of agricultural purpose has slightly decreased during the III quarter of 2010, comparing with a big decrease of alienated private and state land area – only by 8.5%, and was even 23.6% higher than before year. That means that land was intensively mortgaged in the III quarter, and relation of mortgaged land to the alienated private and national land increased up to 37.9% (which made only 26.9% in the II quarter), and almost reached the level of 2007-2008.
Data sourses: Fertecon European Fertilizer Fax, 29 October 2010, Dairy Industry Newsletter October 12, 2010, Vol 22, No. 12, Dairy Industry Newsletter October 26, 2010, Vol 22, , No. 13; World Grain October 2010, Agro rinka, Nr. 20 (147)/2010 m., www.vz.lt , www.fendt.com, www.valstietis.lt; www.ukiozinios.lt; www.lrytas.lt, zum.lt, manoukis.lt, savasukis.lt, Web sites of other companies and other public sources of information
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