Year 11 | 15 July 2019 | email@example.com
German farmers faced some tough weeks last quarter after an extended drought damaged crops. Rains came in June, but too late to prevent yield damage. We have reduced our forecasts for grains production accordingly. At the same time, the E. coli outbreak has once again dented consumer confidence at a time when the agriculture industry is already reeling from the dioxin scandal. A Russian ban on German meat and dairy imports has only increased the pressure.
- In light of the drought that hit parts of Germany in spring, we have reduced our wheat production forecast for 2010/11 and now expect production to fall 5.7% to 22.4mn tonnes.
- The drought in spring will also have taken its toll on the barley crop. We are forecasting production in 2010/11 of 10.2mn tonnes, down 1.8% y-o-y.
- In 2010/11, we are forecasting a rise in sugar production of 4.1% to 4.45mn tonnes, as producers take advantage of high prices and scarcity to ramp up production again.
- In 2011, we expect the recovery in cocoa demand to continue, with consumption rising 3.1% yo- y to reach 337,000 tonnes.
- In 2011, reduced domestic demand for pork due to the fallout from the dioxin scandal will slow growth, though not by much, and we forecast another pork production gain of 2.5% to 5.58mn tonnes.
- We expect poultry production to rise 4.2% y-o-y to 1.44mn tonnes. Over the forecast period, growth will continue to impress, with production increasing 16.2% to reach 1.60mn tonnes by 2015.
- Prices paid to dairies are rising. Milk production in 2011 is likely to rise marginally to reach 27.9mn tonnes.
Russia is ending its grains export ban and Ukraine is removing export quotas. However, both countries plan to bring in export duties that will hit the competitiveness of their exports. This comes at a time when poor growing conditions in the US and the EU are likely to severely reduce global supply. In the EU, drought has hit France, Germany, the UK and Poland, which produce 65% of the continent's wheat. In the US, only 37% of crops are reportedly in 'good' condition due to damage from heavy rain. BMI is therefore sceptical that the coming months will see significant reductions in already high wheat and corn prices.
Following the dioxin scandal, the German food industry has been hit by a second food-safety crisis, this time involving E. coli bacteria. The outbreak, believed to be the worst E. coli outbreak ever, began in late May. The majority of cases were found in Germany, though several EU countries were affected. The outbreak has infected more than 3,000 people and killed at least 39. Russia has responded by banning imports of German meat and dairy products, which is likely to hit some German producers hard while it lasts.
Following a fifth round of negotiations on a free-trade agreement in Asuncion from May 2-6, the EU and Mercosur released a statement saying they 'reaffirmed their commitment to move negotiations forward to reach a comprehensive, balanced and ambitious Association Agreement'. 'Substantial progress was achieved in the negotiation of texts', it added. The statement said negotiations would continue in Brussels from July 4-8 and in Uruguay from November 7-11. We believe that while German poultry and beef production could be adversely affected by the deal, pork exports may actully benefit.
by S. C.
28 july 2011, World News > Europe