Situation and Outlook of Global

Agricultural Commodity Markets

UEBAYASHI Atsuyuki（上林 篤幸）

April 21, 2017 at China Agricultural Outlook seminar

Beijing China

Senior Economist, PRIMAFF-Japan

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Outline of this Presentation

• 1.Situation; We will evaluate the Trends of and

Situations of World Agro-Food Markets.

• 2.Outlook; We will see the the Medium-

Term(about 10 years ahead) Outlook for them.

• 3.Concluding Remarks

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Part 1: SITUATION (Situation of World Food and Agriculture)

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Wheat Production(Unit: Million MT)

China

130

E-28

160

Russia

61

India

87

USA

56

Canada

28

Australia

25

Argentina

11

Japanese Import

6

The Level of World Production in 2015/16; 734 million MT

Data: USDA

Place of Origin; Iraq

Egyptian Import

12

Data: USDA “PS & D Database” , accessed on 7 July 2016

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Rice Prodution（Unit: Million MT on Milled Rice Basis)

China

146India

104

USA

6

Indonesia

35

Japan

8

Bangladesh

35Viet Nam

28

Thai

16

The Level of World Production in 2015/16; 471 Million MTData: USDA

EU

2

Origin; Hubei Provence of China

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Maize(Corn) Production(Unit: Million MT)

China

225

E28

58

India

21

USA

345

Brazil

78

Japanese Import

15

Argentina

27

Mexico

25

The Level of World Production in 2015/16; 966 Million MTData: USDA

Place of Origin: Mexico, or Bolivia

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Soybean Production(Unit: Million MT)

China

12

EU Import

13

India

7

USA

107

Brazil

97

Japanese Import

3

Argentina

57

The Level of Production in 2015/16; 313 Million MTData: USDA

China

Import

83

Place of Origin: North East China(Liaoning（遼寧）, Jiling（吉林）, and

Heilongiang（黒竜江） towards Russia

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World Cereals: Production, Consumption

and Stocks

Data: USDA “Grain:World Markets and Trade” ”WASDE” “PS&D Database”

Note: Cereals = Wheat + Maize + Rice(milled)

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Factor of Increase in Cereals Production- Driver is Yield -

Data: USDA”Grain:World Markets and Trade” “PS&D Database” “WASDE”

Note: Cereals = Wheat + Maize + Rice(milled)

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Background of Yield Growth

• Increased fertilizer and pesticide input

• Introduction of farm machinery

• Land improvement and irrigation

• Cultivation technology and management

• Plant breeding (Green revolution in 1970’s)

• Dissemination of GMO(Genetically

Modified Organism)

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Global Population; Trends and Outlook

Annual Percentage Change

資料：UN “World Population Prospects 2015 Revision”

1990 2000 2010 2020 2030 2040 2050China 1.7 1.0 0.5 0.5 0.1 ▲ 0.1 ▲ 0.3India 2.3 1.9 1.6 1.2 1.0 0.7 0.4Other Developping 2.4 2.0 1.8 1.7 1.5 1.3 1.1Developed 0.6 0.4 0.4 0.3 0.1 0.0 ▲ 0.0World Total 1.8 1.4 1.2 1.1 0.9 0.7 0.6

ProspectsTrends

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Effect of Income Increase on

Dietary Pattern

• (Traditional)

Large quantities of Carbohydrate(Cereals) , small quantities of animal protein(Livestock products and Fish), as well as oils and sugar

・(Income Increase)

Decrease in intake of Carbohydrate, on the other hand, Increase in consumption of animal protein, oils and sugar

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Increase in Feedstock for Animal

and Fish, i.e., Maize and Soybean

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Livestock products versus feed

- Feed grains needed to produce 1 kg of livestock products -

（Maize equivalent）

【Beef 9-12Kg】 【Pork - 4Kg】 【Chiken - 2Kg】 【Egg - 2Kg】

Source: OECD (AGLINK-COSIMO model)

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Meat Per Capita Cousumption in Muslim

Countries

Data: FAO “FAOSTAT database”

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Taboo in Diet- Religion and Tradition -

Religion Taboo Ratio on World

Population in

2010(%)

Christian NONE 31

Muslim（回） Pork and alcohol 22

Hindu Beef, and in some cases

vegetarian

15

Buddhist（仏） NONE 7

Judaism Pork, Octopus, Squid, Fishes

without scale

0.2

Data; CIA “The 2012 World Factbook”

https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html

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Risk; Why did Prices Soar in 2006-07 ?

Data: Reuter ES

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Australian Wheat;

Historical Yield and Export

Drought of 2006

and 2007

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Recent Climate Incidents

• 2006-07 Drought in Australia

(decrease in wheat export)

・2010 Drought in Black Sea Countries (Russia,

Ukraine and Kazak(h)stan

(decrease in wheat export)

・2011 Flood in Thailand

・2012 Drought in USA

（decrease in maize and soybean export）

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2012 Summer US Drought

Content of Moisture in Land: 2012 US Late June

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Biofuels; Bio Ethanol and Its Feedstocks

Material Yield per

Hectare（t/ha）

Ethanol per

Hectare（KL/ha)

Cane 62 5.2

Maize 8.6 3.4

Rice 5 2.4

Wheat 5 2.0

Beat59 5.9

Source: MAFF

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Capital Speculation and Overflow

Capital

(money)

Stock

Currency

Commodity

Bond（defensive-risk avoidance)

(risk taking)

Futures for crude

oil, metal, and

agricultural

commodities,etc.

FX currency exchange

CASH

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Synchronization of Markets

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Summary of Part 1

• 1. Dietary pattern change brings increase in demand for

livestock products, that leads to boost the demand for feed

cereals and oil meal.

• 2. The soar of prices was brought out by extreme weather

events, increase in demands of developing countries,

biofuels, and speculation.

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Part 2: OUTLOOK

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Outlook is NOT intended

to be a forecast

• of what the future will be,

• but instead are a description of what would

be expected to happen,

• under very specific assumptions and

circumstances on climatic conditions, macro

economic indicators and agricultural

policies.

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Outlook provides a neutral

reference scenario,

• in another word “Baseline” that can serve as

a start point of departure.

• And it is for the discussion of alternative

agro-food sector outcomes, that could result

under different domestic or international

conditions.

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OECD-FAO Agricultural

Outlook

• Released in every year since 1995.

• Medium-Term(10 years ahead) Outlook on balances and prices of major agricultural commodity products.

• Before 2005, OECD only. After 2005, become joint work between OECD and FAO. More detailed output in developing countries.

• The latest issue is “The OECD-FAO Agricultural Outlook 2016-2025”(22nd publication)(Hereafter “Outlook”).

• The tool for these outlook is AGLINK-COSIMO model , that comprises about 86,000 variables.

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Outlook of International Prices

for Cereals and Soybeans

Data: OECD-FAO Agricultural Outlook 2016-2025

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Outlook for Cereals- per Capita Cereals Consumption -

Data:|”OECD-FAO Agricultural Outlook 2016-2025”

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Outlook for Meat - per Capita Meat Consumption -

Data: ”OECD-FAO Agricultural Outlook 2016-2025”

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Outlook of Cereal Yields

Table1　Weat Yields for Major Countries

Trends Outlook1960-70 70-80 80-90 90-2000 00-10 15-25

Argentina 1.9 1.5 2.1 2.7 3.6 0.8Australia ▲ 1.2 ▲ 2.4 5.4 1.1 1.1 1.1Canada 2.3 ▲ 0.3 2.7 0.7 1.4 0.9China 4.0 5.1 5.4 1.6 2.4 0.5EU 2.9 4.4 2.6 ▲ 0.4 0.5 0.0India 4.6 1.8 3.9 2.7 0.2 1.7Russia - - - ▲ 2.6 1.7 ▲ 0.1USA 1.7 0.8 ▲ 0.2 2.5 1.0 1.2

Table2　Maize Yields for Major Countries

Trends Outlook1960-70 70-80 80-90 90-2000 00-10 15-25

Argentina 3.3 4.5 0.6 3.0 2.1 0.3Brazil 0.2 2.8 0.2 5.9 2.7 2.5China 7.4 4.0 3.9 0.2 1.7 1.2EU 5.0 2.0 1.8 ▲ 1.4 2.2 0.5Russia - - - - 3.5 0.5USA 2.8 2.3 2.7 1.4 1.1 0.7South Africe 4.3 5.4 ▲ 3.7 1.0 4.4 3.0

Data: USDA”PS&D　Database and "OECD Agricultural Outlook 2016-2025"

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Summary of Part 2

(Main Message of the “Outlook”)

• Good harvests in these three consecutive years has brought the ample supply, that depress the prices.

• However, in medium terms, on account of; (1)population increase, (2)economic growth and dietary pattern change, will increase in demand of agricultural commodities, hence their prices.

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Part 3: Concluding Remarks(Risks and Uncertainties)

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Risks and Uncertanities

• Droughts and frosts brought by extreme

weather?

• Will world economy show favorable growth?

• Policy Change; how and when?

• Animal and human disease (BSE, SARS)?

• Capital speculation, likewise Lehman crash

(September 15, 2008)?

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Thank you for your attention.

Note:

This presentation is based on my personal views,

and does not necessarily reflect the official

views of the Government of Japan.

謝謝！再見！

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