MONTHLY ISSUE ABOUT AGRO MARKET 2011 January No. 1 (8)
AGROMEDIA
This issue Grain and rapes market Milk economy market Fertilizers market Agricultural land market
World Bank: Russia grain ban ineffective Russia's decision to ban grain exports through June 2011 will likely not lower domestic prices and could have significant negative impacts on the industry, the World Bank said in a November report on the Russia's economy. The Russian government on Aug. 5 issued a temporary ban from Aug. 15 to Dec. 31 on grain exports in response to ris-ing grain prices brought on by a drought-induced shortfall. The ban on wheat, barley, rye and maize was extended to June 2011 while a ban on flour was not lengthened beyond the end of 2010. It was hoped the ban would protect Russia from rising grain prices by reducing grain exports to 3 million tonnes from the nearly 15 million tonnes initially projected for 2010-11. According to the Oct. 20 estimate, Russian farmers har-vested 62.3 million tonnes of grain in 2010, a drop of 36,S% from 2009. Given production estimates and a domestic con-sumption estimated at 78 million tonnes, the World Bank said Russia will become a net importer of grain, depending on the use of reserve stocks. Grain stocks are estimated at 26.3 mil-lion tonnes as of July 1; 9.6 million is part of the government's grain intervention fund. Due to these circumstances, the World Bank said the export ban will be ineffective in lowering domestic prices because they will continue to be influenced by world grain prices. Several unintended and undesirable side effects could oc-cur because of the ban, the World Bank said. These include undermining Russia's long-term goal of becoming an impor-tant player in the global grain market: encouraging hoarding in anticipation of the ban removal; and distorting prices and affecting the investment and production responses. Continued on page 3
Russia may become the world's largest supplier of cheap milk within 5yrs, thanks to foreign investments and the ever increasing support for the domestic dairy industry by the state, Andrei Danilenko, chairman of the Russian National Union of Milk Producers said last week. According to him, bright prospects for the Russian dairy market was one of the reasons for the recent deal between PepsiCo and Wimm-Bill-Dann (WBD). Danilenko said that Russia's potential as the world's largest supplier of cheap milk might be explained by its climatic conditions and geographi-cal location, as well as logistical issues and the proximity to the Middle East, Southeast Asia, and Central Asia markets, where the consumption of dairy products was growing fast. Russian analysts believe that the acquisition of WBD by PepsiCo may stimulate further development of the Russian dairy market, especially amid reports about the plans of PepsiCo to hugely invest in WBD's resource base and in the building of new processing facilities.
GRAIN AND RAPES MARKET 2010/11 forecast of world grain harvest reduced by 5 million tons According to the data by the International Grain Committee (hereinafter IGC) of November, 2010, world grain harvest was reduced, consumption – increased. Total grain harvest should make 1,725 million tons, that is 5 million tons less than a month ago and 3.5% less than in 2009/10. The main reason is that smaller maize harvest is expected. Grain consumption in the world should increase by 1.6% in 2010/11 – to 1786 million tons, that is 1 million tons more than it was predicted in October. Predictable smaller consumption of feeding grain will not compensate predicted bigger consumption of grain for food and industry. According to the last forecast, USA grain consumption for ethanol may increase by 3 million tons (to 144 million tons). Although this number should exceed last year indicators almost by 7%, it also shows slowing speed of increase in the sector of ethanol production. According to IGC, 2010/11 (July-June) forecast in grain trade world was increased by 1 million tons because of bigger than expected purchase of feeding grain. Grain trade in the world should reach 241 million tons and exceed the level of last year. 29 million tons decrease of export from the Black Sea region should be compensated by increased grain export from USA, Argentina, Australia, Brazil and the EU. Transitional world grain resources of the end of 2010/11 trade year may decrease to 340 million tons because of smaller grain harvest and bigger consumption. Maize resources may decrease the most (to 31 million tons). Transitional resources in the main grain exporters (Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, USA) were decreased by 55 million tons (to 105 million tons) – the smallest amount since 2003/04. According to the data by IGC analysts of November, 2010, 2010/11 forecast of wheat harvest remained the same, compared with the last month, and should make 644 million tons. That will
be 5% less than in 2009/10, but still would remain in the third place according to the size. While the harvest time has run up in the south hemisphere, bigger wheat harvest is expected in Brazil and Argentina. Continuous rain in East Australia stopped the harvest time, and the predicted harvest should make 23 million tons. However, there are more and more reports that wheat harvest may be smaller and of worse quality in some regions. Smaller wheat harvest is predicted for USA and Ukraine. Wheat consumption in the world in 2010/11 was increased by 2 million tons (to 660 million tons), comparing November forecast with October forecast. The main reason is bigger than predicted purchasable feeding wheat amounts in the states of Asia-Pacific Ocean regions, including South Korea and the Philippines because of attractive price. IGC analysts predict that wheat trade forecast in the world in 2010/11 should increase by 1.6 million tons (to 121.6 million tons), compared with October, because of bigger feeding wheat purchase. That will be 5.8 million tons less than in 2009/10, when the demand of alimentary wheat was higher in Middle East. According to the latest forecast, world grain resources in 2010/11 should decrease by 16 million tons, compared with 2009/10, and make 180 million tons, in the presence of small resources decrease in Russia and the EU.
Wheat and rye procurement prices have increased in Lithuania in the beginning of December, 2010. Lithuanian grain procurement companies bought wheat at the average price of 691.4 LTL/t during 48th week (11 2912 05) of this year – at 7.7% higher price than a month before (44th week (11 01-07)). Rye average procurement price during the mentioned period increased by 12.4% (to 615.1 LTL/t). However, average procurement price of feeding barley (II class) decreased by 1.3% (to 553.1 LTL/t) during 48th week, compared with 44th week. Average rape procurement price has decreased by 3.3% (to 1259.1 LTL/t) during this period.
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World Bank: Russian grain ban ineffective The World Bank suggested alternative solutions for the short and long term. In the short term, it suggested using global markets to fill any temporary grain shortfalls and protecting the poor through reducing taxes and tariffs on key food products. The World Bank also suggested making full use of the grain intervention fund to reduce pressures on the domestic market. For the medium to long term, the World Bank suggested targeting cash transfers to vulnerable groups. It noted that cash transfers are used by many countries including Brazil China, Mexico and South Africa, and are effective in ensuring income transfers to vulnerable population segments. In comparison, export restrictions do not reduce farm-gate prices and result in a negative supply response. Another suggested strategy is to improve transport and logistics. These costs are often a key component of food prices and are generally higher than Organization for Economic Cooperation and Development (OECD) benchmarks, the World Bank said. Countries can World to lower the overall cost of do-mestic distribution. It said that severe difficulties in exporting Russia's 2008 bumper crop highlight the importance of sufficient and efficient transport and distribution infrastructure. Russia recently announced that it is making an investment of S 1.64 billion to build new sea grain terminals and junction silos, and to create an independent Transport Grain Company to help competition development in the railway transshipment market. The projects are expected to be completed by 2015, according to Sergey Levin, managing director of the United Grain Company, established last year as Russia's nee state grain trader. The World Bank suggested Russia encourage a more robust agricultural insurance framework. Farmers are concerned about high premium costs and inadequate claims settlements, and overall are seriously underinsured, it said. A more robust framework would boost investment in infrastructure such
as on-farm storage, which would make natural disasters more manageable. The final suggestions included increasing public investment programs to support agricultural productivity improvements, national irrigation develop-ment and a rehabilitation program, nationwide price market price information services, and strengthening the capacity for food policy formation. The drought — the worst in decades — has had a major impact on the nation's economy, the World Bank said. Close to 40% of the crops in the impacted regions — Central Russia and in the west along the Volga River — have been destroyed. Wheat prices saw the biggest jump since 1973, which has impacted a range of food prices. Prices for grains and related products have soared since July, the World Bank said. Buckwheat prices more than doubled from June through October, and potato prices increased by 30%. Similarly, prices of meat, eggs and cereals increased more than was typical during summer. At the onset of the drought, 27 out of 88 regions in Russia declared an emergency. Price increases were seen throughout the country, but regions in Central and Western Russia were particularly affected, the World Bank said. Net effect of the price increases on household consumption was estimated as a loss in real household income due to an increase in expenditures as a result of higher food prices. People on a fixed income will be the most impacted, with that group seeing a 2.6 percentage point increase in poverty. The World Bank said the impact on pov-erty was sizeable but temporary. As the world‘s third largest grain exporter, the drought also impacted global food developments, but less than was expected, the World Bank said.
Putin says Russia may be forced to import grain Domestic grain price hikes may force Rus-sia to start importing grain, Russian Prime Minister Vladmiir Putin said on Nov. 29. "If necessary. when we see that prices are growing, we‘ll implement those agreernents (on imports) and channel additional grain supplies to the domestic market," Putin said. Russia earlier this year imposed a temporary ban on grain exports while the country's Agriculture Ministry said it was negotiating grain purchases from Ukraine and Kazakhstan. Putin said he had agreed with some of this counterparts from the countries which had not suffered from the drought or suffered less than Russia that they would set aside necessary grain volumes. Putin said the government had "enough instrurnents to restrain grain prices."
Brought to you by “World grain”, December 2010
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Rusgrain Holding announces appointments
Marubeni aims to take on big five crop traders Japan's biggest grain trader, aims to take on the world's largest agricultural comrnodiny traders by shipping more crops on the back of strong demand for food in emerging Asia. according to a Nov. 28 article in the Financial Times. Marubeni. presently the sixth-largest grain trader by volume in the world. expects to ship 25 million tonnes to customers by 2012 or 2013, up from an expected 20 million tonnes this year, chief executive Teruo Asada told the Financial Times. The company has nearly doubled its grain shipments in the past five years. Japanese trading companies have traditionally focused on importing oil and other commodities to their resource-poor home market. But with Japan's population shrinking and its economy long past its high-growth phase, Marubeni and competitors Itochu, Mitsubishi, Mitsui and Sumitomo are now turning abroad. After focusing on oil, metals and miner-
als for decades, the Japanese trading houses have identified agricultural commodities as a source of growth as concerns about food security spread in Asia on the back of the food shortages in 2007-08. To break into the top five traders would require Marubeni to take market share from Archer Daniels Midland Co., Bunge and Cargill of the U.S. France's Louis Dreyfus, and Swiss-based Glencore. Asada told the Financial Times that Marubeni was better positioned than its U.S. and European rivals to take advantage of new opportunities in Asia, especially China. "The grain majors are simply supplying corn, soy and other grains to China. But we are using our grain to get into related businesses like rnilling and animal feed processing," he said. ""That's the sort of thing that only a general trading company can do."
Procurement prices of agricultural products increased by 19.8% within a year According to the data by the Statistics Agency, procurement prices of agricultural products increased by 19.8% in November, 2010, compared with the same period in 2009. During this year, procurement prices of crop products have increased by 37.7%, animals and stock-raising – 8.9%. Prices of fruits (4 times), buckwheat (3.1 times), corns (2.4 times), rye (2.3 times), triticale (2 times), pulses grain (78.2%), wheat (65.2%), potato (64.3%), barley (58.0%), rape seeds (49.7%), maize (49.4%) and vegetables (49.2%) have increased the most. Among animals and animal products, procurement prices on sheep and goats (40.7%), natural milk (24.0%) and livestock (13.5%) have increased. Prices on eggs have decreased by 24.5%, pigs – 8.0%, birds – 1.8%. During one month (November, 2010, compared with October, 2010), procurement prices of agricultural products increased by 6 percent, because procurement prices of animals and stock-raising increased by 0.9%. Such
change was influenced by procurement prices of animals and live-stock products, which increased by 1.8%, and crop products, which decreased by 0.1%. In terms of crop products, prices of fruit (3.7 times), maize (13.1%), pulses grain (7.3%), corns (7.2%), rape seeds (7.0%), wheat (4.2%), rye and barley (at 2.2%), potato (2.0%) and vegetables (1.3%) increased the most. Prices of triticale (7.4%), corn mixes (2.9%), buckwheat (0.5%) and corns for processing (0.3%) decreased. In terms of animals and stock-raising, prices of livestock (9.2%), birds (6.6%) and natural milk (0.9%) have increased. Prices of pigs (1.8%), sheep and goats, and eggs (at 1.2%) have decreased.
Rusgrain Holding OJSC announced on November 8 several appointments for member companies. Timur Butov was appointed CEO of Russian Grain LLC, the managing company of the agricultural holding, as well as general director of Russian Grain Trading House LLC. This is the first time that the CEO position has been introduced at Russian Grain due to significant business growth. Dayto-day management of the agricultural holding, as well as further development of the company's presence in the agricultural market, will fall within the CEO's role. Butov has 12 years of management experience in some of Russia's leading agricultural holding companies. Earlier, Butov headed Razgulyay Grain Company CJSC, member of the Razgulyay Group, for two years. Maxim Chemikov was appointed to lead Russian Grain's foreign economic activity department, a position he had previously held in the Razgulyay Group. "We are glad that our management team will be reinforced by such professionals as Mr. Timur Butov and Mr. Maxim Chemikov. Mr. Butov has an extensive management extensive at grain companies, and we believe that employing such a professional manager will contribute to further development of the trading and production divisions of the Group, as well as to a more efficient daily management of the Group‘s activities from the single headquarters," said Alexey Verkhoturov, general director of Russian Grain.
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Export of some milk products to the third countries increased in Holland in JanuaryAugust, 2010
MILK ECONOMY MARKET Average natural milk procurement price LTL/t of Lithuanian biggest milk shoppers Average natural milk procurement price, LTL/t Name of a company
Milk, for which Milk, for which deductions due any deduction to quality were due to quality not applied was applied
Average milk procurement price
AB "Pieno zvaigzdes" companies group UAB "Marijampoles pieno konservai" AB "Rokiskio suris" companies group AB "Zemaitijos pienas" UAB "Vilkyskiu pienine" AS (Agricultural society) "Salteksnis" UAB „Vikeda“, Kedainiai Bariunai AS (Agricultural society), Joniskis district Dairying cooperative "Zalmarge"
1042,5 940,2 982,4 1028,7 941,1 896,2 1271,6
716,4 748,5 777,2 863,8 708,9 1124,4
1036,1 937,2 977,0 1022,7 927,1 953,2 1271,6
758,2 809,6
535,2 578,7
756,8 803,3
Average milk procurement price, Lt/t
1005,4
799,4
999,1
The European Commission offers new means of increasing milk sector stability On 9 December, the European Commission (EC) agreed for concerted relations in milk sector, in order to improve the position of milk producers in milk supply chain and assure bigger sector‘s orientation towards the market and stable future. Possibility to make agreements in writing, bargain together for conditions of the agreements through producers organizations, in order to assure balance of power of milk producers and main processing companies, was projected in the offer for milk producers and processing companies, as
well as special EU rules, applied for interbranch organizations, and means for increasing clearness of market were indicated. It is offered to adopt the means until 2020, preparing two transitional reviews till that time. Appropriate quantitative restrictions and other special protection means, indicated for collective bargains, should help increase negotiating power of milk producers, keeping competition and protecting interests of small and medium companies. Besides, EC accepted milk market report, where smooth and gradual cancellation of milk quotas system is discussed.
Holland exported 383.09 thousand tons of cheese in January-August, 2010 – 6% more than during the same period last year. Export of this product to other countries grew by 4% (to 320.42 thousand tons), and to the third countries – even by 24% and made 62.67 thousand tons. Cheese export to Russia increased by 44% (to 4.23 thousand tons), to Germany – 9% (to 135.35 thousand tons), but decreased to France and Belgium and respectively made 4% (to 41.23 thousand tons) and 10% (to 36.21 thousand tons). During the analysed period, 75.52 thousand tons of butter and melted butter were exported to other EU countries – 20% more than in the same period in 2009, but export of this product to the third countries has decreased by 5% and made 27.73 thousand tons. The biggest amount of this product was exported to Germany (24.36 thousand tons), Belgium (21.80 thousand tons) and Iran (4.97 thousand tons). Export of skim milk powder (SMP) in Holland increased both to the third countries and other EC countries in January-August, 2010. 39.55 thousand tons of SMP were exported to the third countries – 36% more than in January-August, 2009, and amounts of this product, exported to other EU countries, have increased by 10% and made 21.98 thousand tons. The biggest amount of SMP was exported to Belgium (9.107 thousand tons) and Nigeria (7.26 thousand tons). Holland exported 94.77 thousand tons of whole milk powder (WMP) to the third countries in this JanuaryAugust – 9% less than in the same period in 2009. However, the export of this product to other EU countries has increased by 5% and made 9.71 thousand tons. The biggest amount of WMP during the analysed period was exported to Germany (4.17 thousand tons) and Nigeria (20.09 thousand tons).
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Markets more positive
Powder prices edge up World prices for powder are rising, but butter and cheese prices remain unchanged. US SMP/NDM prices are also rising with reports of higher export demand, reflecting more uncertainty over supplies in 2011, with an 11% cut in Fonterra's SMP supplies at the GDT auction. NZX WMP futures have also trended higher with trades of $3,750/t for next March. NZ milk supplies are falling seasonally with the decline accelerating due to drought on the North Island—10wks earlier than last year. Australian farmers have been facing floods and pro-
duction from July to October was only just above a year ago. More irrigation water could boost milk supplies later in the season, and ABARE forecasts a 1.4% rise for the 2010-11 season. US butter and cheese prices have plummeted during the past 2mths, and are now well below world price levels. Up to October, the US exported 140,000t of cheese and 48,000t of butter in 2010, 60% and 160% up on 2009 respectively.
Markets firm, SMP tight Despite the disruption of Christmas demand and difficult weather, EU markets are firm, with some future uncertainty. SMP prices have surged almost 10% in 5wks with the gap between food- and feed-grade powder continuing to close, now €100/t compared with €200/t in November. Prices are more than 25% above intervention at €2,100/t-€2,200/t. At their first sale since early October, the EU Commission last week sold, 4,500t of intervention powder at €2,071/t to €2,121/t, which will ease the tight supply. Little is available for spot sale, with speculation that Algeria bought 35,000t. Although 195,000t of SMP is in intervention, only 26,700t is for sale —product that entered stores before May 2009 and not reserved for future charity schemes. The EU is likely to export nearly 400,000t of SMP in 2010—more than 35% of output, and the highest since 1992. The €/$ has fluctuated but has had no overall trend in December, stabilizing export returns. EU butter prices are stable, tipping 60% above intervention, having fallen by 5% since early October—and still above world market prices, in the range €3,500/t-€3,600/t, as the market quietens. Butter output has been below a year ago for much of 2010, resulting in manufacturers struggling to fill domestic EU demand, and keeping prices high, although the growth in milk supplies over the past 3mths has
enabled more butter manufacture than expected. PSA stocks total 33,000t, with around 4,000t a week coming onto the market, and may now be sufficient to meet demand over the next 2mths, being only 5,000t down on a year ago. Butter exports are expected to be around 140,000t in 2010, less than 10% of production, and similar to the amount exported in the past 2yrs. WMP prices are up by 5% since midNovember at €2,800/t-€2,900/t, benefiting from more export demand. Ever -volatile whey powder prices have risen by €100/t in a month, approaching €800/t at the end of last week. Cheese production has been rising, up by 2% year-on-year from April to September, and along with fresh prod -ucts, has been absorbing the higher milk supplies, with demand firm and stocks low for this time of year. Cheese prices are 15%-20% up on a year ago and are expected to remain stable in January. In France and Germany, the year-on-year gain in milk supplies over last year has shrunk to 2%-2.5%, which could be weather related or reflecting increased feed costs. If it is the latter, this will help markets remain firm into 2011.
UK commodity markets are increasingly positive, with more optimism that prices in the New Year will not plum-met. The butter market has stabilized at £2,800/t-£3,000/t with discounted parcels now rare and manufacturers looking to hold prices. Cream prices have been 145p/kg-160p/kg for some weeks, with January prices only 15p/kg down, helped by a fall in the £/€ rate in the past fort night. SMP prices have been rising, reflecting higher EU prices. The milk equivalent butter/powder price is around 27ppl. Butter output was up 13% year-onyear in October, but is now at its seasonal low and the market is tight, with very little SMP or butter available outside regular contracts. UK cheese manufacture rose by 2% year -on-year in October, but Cheddar output in England and Wales was marginally down, with no reports of excessively large stocks. Mild Cheddar prices have been fluctuating and are £2,560-£2,900, with perhaps a few more discounted parcels around, but are currently stable. For the first 2wks of December, UK milk deliveries were only 1.8% up on last year, and affected by spells of cold weather, which will continue to bring some disruption. Tesco, Sainsbury and Marrison’s have raised liquid prices to £1.55/4 pints, with Asda still selling at £1.25.
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Milk deliveries up 1.8 % in first half of 2010
Cheese down to 9mth low A cold and snowy December has hit milk flow in the eastern half of the US. In addition, processors are already planning for reduced milk output in 2011 as the implications of negative margins (lower milk prices, higher feed costs) play out. In the short term, how-ever, cheese supplies are long and prices fell to their lowest level since March as manu-facturers look to pare holdings before the end of the year. Holiday pipelines are filled and users are keeping orders to a minimum until they see how the season finishes. Also, more milk is usually channelled into manufacturing in the second half of December, so cheese stocks are building. On the other hand, firm international markets are supporting US butter, NDM and whey prices. The butter market was bid
back up to $1.6525. Exports remain good and competition for cream has been strong though now slowing. Production will pick up after the start of the year but tight inventories remain a concern. NDM prices have crept above $1.20—the highest since July—as steady export business continues to clear seasonally increasing production. Whey prices are firm with little spot supply available. Both butter and NDM futures settled at new contract highs last week, reflecting more bullish expectations for the upcoming year. Butter futures for 2011 average $1.73, which would be the highest for a full year since 2004. NDM futures average $1.22. Whey futures are on the rise again as well; 2011 contracts average 38.5¢
Global certain dairy products price LTL/kg Product name
Average price USA CME, FOB 2010
2009
Butter, AA CME Cheese Cheddar tipe, units LMP, Central and Easten region, FOB NPA, Nacional, FOB Whey powder, Central region, FOB
Change %
48 sav. 45 sav. (1146sav. (11 47 sav. (11 48 sav. (11 (11 29-12 08-12) 15-19) 22-26) 23-27) 03) 7,75 10,93 10,91 9,84 9,00
week
year
-8,51
16,07
8,28
7,68
8,00
8,30
8,67
4,36
4,70
6,76 7,42
6,76 9,25
6,92 9,47
6,94 9,50
7,14 9,76
2,80 2,80
5,53 31,56
1,94 1,99 2,01 2,07 Western Europe exports, FOB 2010 44-45 sav. 46-47 sav. (11 01-12) (11 15-26) 12,94 13,04 7,01 7,16 9,05 9,23 14,09 14,41 2,29 2,55 Oceania exports, FOB 2010 44-45 sav. 46-47 sav. (11 01-12) (11 15-26) 11,12 11,45 7,54 7,76 8,65 8,97 10,26 10,69
2,80
11,70
1,85
Butter, 82% fat. WMP SPM Melted butter Whey powder
2009 46-47 sav. (11 09-20) 11,53 7,77 9,09 11,77 2,50
Butter, 82% fat WMP PM Cheese Cheddar tipe
2009 46-47 sav. (11 09-20) 8,53 7,89 8,24 9,12
EU milk deliveries, which were a combined 7% under quota for 2009 -10, were up 1.8% in the first half of the current year, Apr-Sept, according to figures just released by the European Commission. Biggest increases were recorded by Ireland (+7.4%), Latvia (+5.4%), Belgium (+4.5%), UK (+3.7%), France (+ 3.4%), the Netherlands (+ 3.3%) and Austria (+ 3.0%). By contrast some member states, mainly in eastern Europe, showed major declines compared with last year: Hungary (9.1%), Romania (-7.7%), Slovakia (5.1%) and Bulgaria (-4.9%).
Ukrproduct Group, in a trading update for the year to December 2010, said full-year sales were expected to be in line with the previous year, while gross profit in the branded products segment was expected to nearly double in the second half, largely as a result of growth in the profitability of packaged butter and spreads. The group's profit before tax in the second half was also expected to be nearly double what it was in the first half. Pre-tax profit for the full year was expected to show low double digit growth year-on-year. Net profit might be affected by more stringent tax regulations. The purchasing power of the Ukrainian population had deteriorated further in the second half of 2010 with information from food retailers suggesting that the value of an average retail food bill fell by 20% to the beginning of November, the company said.
Change % 2 week
year
0,77 2,07 1,92 2,30 11,33
13,08 -7,85 1,47 22,44 1,76
Change % 2 week
year
2,98 2,98 3,71 4,22
34,22 -1,56 8,89 17,19
1
prices in foreign countries (Lt) made in accordance with the exchange rate on the date of LB compare with latest two weeks comapre 2010 y. and 2009 y. the data for the periods 4 compare 2010 46-47 weeks to 44-45 weeks 2
3
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FERTILIZER MARKET Prices are increasing in world nitric fertilizers market World urea prices increased by 2025% in the end of year (in November), compared with the beginning of 2010 (in January-February), and compared with the beginning of summer (June), urea prices increased by more than 40%. Although this situation is not satisfying to the buyers of fertilizers, increase of world demand provides conditions for growth of price. India bought 500 thousand tons urea consignment, which consisted of fertilizers, produced in China, Iran and Ukraine, during the last biggest bargains. Price of Chinese fertilizers made 953 LTL/t. Urea, bought in port Yuzhny, cost 927 LTL/t, and urea of Iran – 966 LTL/t. While urea price in port Yuzhny made 678 LTL/t (FOB conditions) in July, the price for trade in December reached 966-979 LTL/t. Urea, produced in Turkey, was sold a little cheaper (953 LTL/ t), and the product from the Baltic States was sold at 861 LTL/t. Urea in Egypt port, sold for trade in Europe, cost 1,056-1,236 LTL/t. However, Brazilian customers have suspended bargains, where urea price reached 1,005 LTL/t (CFR conditions), and USA customers were glad because of slightly decreased urea prices, which made 953-966 LTL/t (FOB conditions). In Thailand, granular urea was sold at 1,056 LTL/t (CFR conditions), in China – at 1,082 LTL/t and in Bangladesh –
at 922 LTL/t (FOB conditions). Increasing prices of ammonium sulphate induce the increase of urea price. That shows that urea prices will continue to grow in the short run. India has bought 50-60 thousand tons of urea in the region of the Black Sea, Ukrainian port Yuzhny, and reserved a cargo of another 20 thousand tons at 979 LTL/t for the beginning of December. Brazil bought 30 thousand tons in November and ordered 25-30 thousand tons of urea for December. The factory “Dniepr” in Horlivka renewed production of urea and ammonium in order to prepare about 50 thousand tons of urea for their customers on time. Russia sold 10 thousand tons of urea at 927 LTL/t in December. Novosibirsk “Eurochim” sold urea at 966 LTL/t. Romania sold urea of their production for European markets at 1,005 LTL/t in November, and the new bargains were already at 1,030 LTL/t (FOB conditions). Urea price of Baltic States’ producers in St. Petersburg port ranged from 927 LTL/t, and in more southern ports – to 953 LTL/t and more. In Canada, urea was sold at 1,005 LTL/t (FOB conditions), USA bargains were made at 966 LTL/t, and in South and Central America prices were a bit smaller. In Guatemala, urea was sold at 927 LTL/t, and in Peru, the price of this fertilizer made 927-938 LTL/t.
Market of ammonium is still conditionally stable. CIS (Commonwealth of Independent States) states supplied ammonium to port Yuzhny at 1,0051,017 LTL/t (FOB conditions). It was attempted to sell ammonium at 1,030 LTL/t, but the customers refused and no new bargains were made. The current price is quite affordable, because there is no need to transport the product from far states. Besides, after Gorlovka renewed the lines of ammonium and urea, additional 5 thousand tons of these products should be carried to the port till the end of November for December selling. Morocco
has reserved 23 thousand tons of ammonium at 1,120 LTL/t (CFR conditions) in port Yuzhny even earlier. The price of ammonium for December was reduced by 25.76 LTL/t in port Tampa in the Gulf of Mexico. Such conditional stability should remain till the end of December. Though, after good autumn season in USA, needs for phosphates and nitrates may increase in the first quarter of 2011.
World prices of urea ammonium saltpetre (UAS) remained quite stable. Product of Romanian production was sold at 721 LTL/t. In Egypt, UAS price was a little smaller and made 708 LTL/t (FOB conditions), and in USA – a little higher – 734 LTL/t. World prices of both ammonium nitrate and ammonium sulphate are also rapidly increasing. The price and demand of the latter is closely related to UAS. The price of ammonium nitrate has increased to 747 LTL/t (FOB conditions) in the port of the Black Sea, and ammonium sulphate – to 567 LTL/t. In Brazil, ammonium sulphate was sold at 605 LTL/t (CFR conditions) in the beginning of November, but till the end on the month prices increased to 670-683 LTL/t. Turkey sold ammonium nitrate at 755 LTL/t for CIS states for December, but later bargains were made at 773 LTL/t price. In Mexico, granular ammonium sulphate was sold at 708-721 LTL/t. Prices of ammonium sulphate remained a little smaller in Asia for some time. In Indonesia, these fertilizers were sold at 528-541 LTL/t (CFR conditions), in China – at 464-477 LTL/t and South Korea – 515 LTL/t (FOB conditions).
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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
23 December 248-50 340-342 615-620
10 December 243-252 322 610-615
310-315 295-305 320-325 330-335 470-475 340-342
310-315 275-285 320-325 340-345 455-460 320-323
235-247 310 325 473-488
235-247 285-286 325 463-464
375-380 295-300 380-385
380-385 298-300 385-387
350-360 340-350 270-275 475-480
345-350 335-340 260-265 455-460
235-243 340-342
235-243 322-323
250-258 330-335 460 340
250-258 325-330 460 320-325
295-305 270-275 280-285 290-295 395 23 December
295-305 270-275 270-275 285-290 395-400 10 December
Urea prilled bulk
355-376
350-370
Ammonium Nitrate prilled UAN 32%N DAP MAP
295-305 365-270 567-573 570-585
295-305 265-285 567-573 570-574
KCI standard grade
370-405
355-375
CAN 27 % CAN del retail KCI KCI (G) fot ex-store DAP 14-46% DAP fob/fot bulk $ AN AN 33,5% gran del Urea Urea prill fot UAN UAN 32%N
Data source: Fertecon European Fertilizer Fax, 23 December 2010
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MARKET OF AGRICULTURAL LAND New preparation and implementation rules for land consolidation projects confirmed On 15 December, the Government of the Republic of Lithuania has confirmed new preparation and implementation rules for land consolidation projects, as announced by the Ministry of Agriculture. Land consolidation, implemented in Lithuania, will allow using land plots more effectively, improving farming conditions and developing rural facilities. The Government agreed to change the decision, valid since 2005, specifying procedures of project preparation and implementation rules. The body in charge of preparation of consolidation projects was also confirmed by the new order, delegating this function to the state enterprise “State Land Fund”, instead of heads of districts. List of subjects, which can participate in the process of land consolidation, was complemented in rules of land consolidation projects. Right to participate in the projects has been extended to municipalities and state land trustees. Considering the experience of preparing and implementing the first 14 land consolidation projects in 20052008, provisions of preparing land evaluation plan and components of land consolidation project have been specified in the new rules.
During the implementation of land consolidation, borders of land plots, located in a particular rural territory, were rearranged in a complex way, joining them in order to form rationally managed agricultural domains and create proper rural infrastructure. Consolidation helps improve farming conditions, forming less land plots of better form by joining them. In Lithuanian Rural Development programme of 2007-2013 it is predicted that implementation of land consolidation projects will be fully financed by European Union, so owners of land do not have to invest their money. Land owners, especially farmers, who want to improve the domains of their land, are encouraged to submit applications to “State Land Fund” and actively participate in land consolidation projects. Contacts for further information as indicated by the Ministry: “State Land Fund”: Konstitucijos pr. 23, phone: (+370 5) 2623 000, Information about land consolidation: phone: (+370 5) 2391 320, e-mail: giedre.leimontaite@nzt.lt
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
Data sourses: Fertecon European Fertilizer Fax, 23 December 2010, Dairy Industry Newsletter 21 December , 2010, Vol 22, No. 17, Agro rinka, Nr. 23 (150)/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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