United Nations Conference on Trade and Development

10th MULTI-YEAR EXPERT MEETING ON COMMODITIES AND DEVELOPMENT

25-26 April 2018, Geneva

The outlook for global food and agricultural markets

By

Holger Matthey

Team leader – Medium-term Outlook and Market Analysis

Trade and Markets Division (EST)

FAO

The views expressed are those of the author and do not necessarily reflect

the views of UNCTAD.

The outlook for global food and agricultural markets

UNCTAD 2018 Multi-Year Expert Meeting on Commodities and Development

Holger MattheyTeam leader – Medium-term Outlook and Market Analysis

Trade and Markets Division (EST)FAO

OECD-FAO Agricultural Outlook

• 10 year horizon

• Global coverage

• Major temperate climate commodities

• Model based projection validated through global expert consensus

• Scenario analyses

Key macroeconomic assumptions

Global population growth slow down to 1% p.a., but strong regional differences remain

Economic recovery in most industrialized countries, but growth prospects in large emerging countries diverge

Crude oil reference price rising to $80 (nominal)

Real currency appreciation expected in major exporters

Consumption trends

Global consumption continues to expand but patterns change as previous drivers lose strength:

➢ biofuel expansion in US and EU

➢ growth in China

Markets expected to be driven by different factors as India and Sub-Saharan Africa, MENA drive the expansion

Diets evolve toward higher value commodities:

➢ Sugar/oil

➢ Meat/fish/dairy

Convergence in diets remains limited

Consumption trends of major food groups

0%

5%

10%

15%

20%

25%

30%

Cereals Veg.Oils

Sugar Dairy Meat Fish

Gro

wth

20

15

/17

to

20

26

Food Consumption Population

6

• Cereals food consumption driven mostly by population growth.

• Fats and sugar use expands rapidly in developing countries.

• Dairy consumption still at low levels in many regions, but fast expanding.

• Diverging trends in meat consumption.

Total agricultural production by region

Growth sectors

• SSA: coarse grains, livestock

• S-E Asia: grains, dairy

• MENA: wheat, livestock

• Americas: soybeans, poultry

• EECA: wheat , maize oilseeds

• Oceania: wheat, dairy

• W-Europe: poultry, maize

0%

5%

10%

15%

20%

25%

30%

35%

0

200

400

600

800

1000

1200

1400

1600

1800

Sub-Saharan AfricaSouth and East AsiaMiddle East and North AfricaAmericasEastern Europe and Central AsiaOceaniaWestern Europe

Hu

nd

red

s

Bill

ion

co

nst

ant

do

llars

2015-17

Crop production

• Yield growth will be the main driver of food crop and feed production

➢ 70% yield and 30% area harvested

• Wheat, rice:

➢minimal net area expansions

➢ regional shifts of areas

• Soybean, maize:

➢ net area harvested growth in

0%

5%

10%

15%

20%

Wheat Maize Rice Soybean

Gro

wth

20

15

-17

to

20

26

Area Yield

Relative growth shares of area harvested and yield

Agricultural net exports by regions

• Basic trade patterns expected to continue, trade shares stay fixed.

• Growing import dependency in Asia and Africa.

• Traditional exporters expand surpluses, resulting in ongoing high market concentration.

-200

-100

0

100

2004 2007 2010 2013 2016 2019 2022 2025

Bill

ion

co

nst

ant

do

llars

N. America Lat. Am. and CaribbeanW. Europe E. EuropeNorth Africa and Middle East Sub-saharian AfricaAsia Oceania

Projections of commodity prices

• Supply and demand fundamentals keep real international reference price trends slightly declining.

• The additional resources can be mobilized below current price levels.

• Most commodity group prices follow similar trends due to substitutability and complementarities.

50

70

90

110

130

150

170

190

210

230

250

1999 2004 2009 2014 2019 2024

20

02

-04

= 1

00

Projected FAO Food Price Index

Nominal Real

Key messages and policy challenges

Consumption Production

• Slow convergence in diets• Consumption growth in milk, sugar and oils• Persistent undernourishment and malnutrition

Policies to combat malnutrition

• Output gains mostly from yield increases• Important sustainability challenges • Big yield gaps in poorest countries

Invest in sustainable productivity growth

Trade Prices

• Trade growth to slow• Increasing import dependencies• Export trade to remain concentrated

Need for open and reliable markets

• Real prices for most commodities expected to fall

• Upside price risks higher than downside

Market information and risk management

12

Thank You

After release in July, download the publication from: http://www.fao.org/publications/oecd-fao-agricultural-outlook/2018-2027/en/

Access the full database at: http://www.agri-outlook.org/data/

Contact us for further information at:

est-projections@fao.org