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Recent world grain market trends Opportunities for Mexico

Recent world grain market trends Opportunities for Mexico. Michel FERRET FranceAgriMer, Paris 10/11 April 2013. Part I : Recent trends. Main changes. Reminder : « Financialisation » of commodities markets + Price explosion 2007/08 (not addressed here)

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Recent world grain market trends Opportunities for Mexico

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  1. Recent world grain market trendsOpportunities for Mexico Michel FERRET FranceAgriMer, Paris 10/11 April 2013

  2. Part I : Recent trends

  3. Main changes Reminder : « Financialisation » of commodities markets + Price explosion 2007/08 (not addressed here) Global wheat production vs corn production : and the winner is … corn Impact of the US Farm Bill 1996 No visible impact of GMO’s on corn yield Major shifts in grain acreage in the USA and Latin America Competitors of the USA increase their market share in grain exports A new way of supporting farmers’s incomes : biofuel policies World prices architecture, as reflected by Chicago (CME) quotations : Corn is the market driver ….but beware of …. China’s overwhelming part in oilseeds imports : a serious threat to the stability of the grain price architecture Inversion of the Corn / SRW price relationship : a new situation Emergence of Black sea producers : a welcome contribution to the world supply situation (wheat, barley, corn) but a major instability factor

  4. Global corn and wheat production. Difference 2012 : 195 million tons (Mt) • IGC projections for 2017: Corn 981 Mt, wheat 731 Mt.Difference : 250 Mt

  5. USA: Area devoted to corn, soybeans and wheat. Impact of the 1996 Farm Bill Monde Area (Mha) Yield (t/ha) Source: USDA /NASS/Prospective Planting Report 28/03/2013

  6. Corn yields in selected countries

  7. Corn yield trends (t/ha):no visible impact of GMO’s on corn yields • USA : > 90 % of the corn area planted to GMO varieties ; France 0 %

  8. USA: Corn production, use for ethanol, exports (Mt) • Ethanol: ~ 40 % of corn use / EU: 3,6 % of wheat production, 5,5 % of corn production • US ethanol production: 64 % of world ethanol production Source: USDA /NASS

  9. Global ethanol production (2011): 844 Mhl / 66 Mt • For reference: Global biodiesel production: 19,4 Mt • EU: 9,6 Mt; USA: 3,2 Mt

  10. USA: Corn supply and demand

  11. World corn prices: « ethanol impact »

  12. Brazil: corn and soybeans area Corn Soybeans Source : IGC

  13. Argentina: area devoted to cereals and oilseeds Cereals Oilseeds • And the loser is: … wheat Source : USDA

  14. Ukraine: a newcomer, now among the 4 top corn exporters! (Mt) Source : IGC

  15. Top world exporters, corn and soybeans Corn (Mt) Soybeans (Mt) Source: USDA

  16. Structure of world soybean imports: a dangerous situation • Soybean imports by China: in 2012/13 63 % of the world imports ! • Priority given in China to the growing of corn • Growing Chinese interest in Canadian canola

  17. USA: Corn, wheat and soybeans prices in Chicago ($/t) Source: IGC

  18. Part II : Opportunities for Mexico 2 examples

  19. Opportunities for Mexican beer exports Why? Beer production in Mexico expanding Excellent image in Europe How? Mexico-EU trade agreement negociations?

  20. Global beer production(Mt) • China, Brazil and Mexico : the new driving force in beer production Source : FAO

  21. Opportunities for Mexican durum exports Durum consumption increasing in the Maghreb countries Mexico among the top 4 durum exporters A new « grain landscape » in North America after the removal of the CWB’s marketing monopoly USA : the « shale oil / gas rush » : a new paradigm, in many respects : World energy balance Geopolitics Durum wheat production!

  22. Durum wheat consumption in Maghreb countries Source : IGC /FranceAgriMer

  23. Mexico: Durum wheat production and exports (Mt) • World market in durum wheat : ~7,5 Mt • Mexico’s market share : ~15 % • USA : ~10 % ; Canada : 45-55 % Source : IGC

  24. USA: Durum wheat production: North Dakota, the main producing state 3 000 2 500 US total 2 000 North Dakota 1 500 Montana 1 000 t 1 000 California 500 Arizona 0 2012 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 • North Dakota : 40-50 % of US durum wheat production Source : USDA - NASS, January 2013

  25. The « Bakken formation »(shale gas and oil) • North Dakota’s Durum wheat area : located in the north-western corner of the State

  26. Trend : increasing . North Dakota is already the 2nd producer state in the USA, behind Texas • (2 millions barrels/day), ahead of Alaska

  27. Gas flaring in North Dakota • Currently : 8 000 wells, potentially 40 000 ? • Will there still be room for durum production ?

  28. Conclusion:« Potencia alimentaria o impotencia dependiente ? » Concerning grain markets : Dependency, yes, but… Diversification of potential suppliers More competition, better procurement prices ? Some interesting export opportunities

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