2013-03-21 13:37:24 - Fast Market Research recommends "Romania Agribusiness Report Q2 2013" from Business Monitor International, now available

BMI View: We still consider the grain sector as the main agricultural sector with growth potential in Romania. This is because of its competitiveness and its exposure to the Middle East and Asia, for which it sells its wheat with important wheat exporters such as Russia and Ukraine. Sugar production should grow only strongly because of base effects as limited consumption growth from both the food and energy sectors will cap production incentives. The livestock sector will remain just below self-sufficiency.

Key Forecasts

* Corn production growth to 2016/17: 9.4% to 11.2mn tonnes. Increased investment and professionalism in the grain-growing industry, growing export markets, consolidation of small farms into more efficient production units, a growing livestock sector, and a slowly improving

economy that provides a larger consumer base for a wider range of finished food products will help to push up corn production in the medium term.
* Poultry consumption growth to 2016/17: 10.8% to 473,900 tonnes. Poultry will continue to be the favourite meat and the one with the most growth potential as the economy recovers and the consumer story improves.
* Sugar production growth to 2016/17: 62.2% to 1.0mn tonnes. This will come as farmers reap the benefits of increasing area devoted to sugar and as production quotas in the EU are being phased out in the medium term.
* 2013 GDP growth: 1.7% (up from 0.5% in 2012).
* 2013 average consumer price inflation: 4.6% (up from 3.0% in 2012).


Full Report Details at
- www.fastmr.com/prod/552388_romania_agribusiness_report_q2_2013.a ..


Industry Outlook

With the planting season essentially complete in the EU, we look towards the 2013/14 harvest, for which data will begin to trickle in over the next few months. We expect EU-27 wheat production to improve in 2013/14 to 133mn tonnes, up from 130mn tonnes in 2012/13. This forecast growth is largely based on our expectations for prices to remain elevated by historical standards and in anticipation of better weather.

There were high hopes for the 2012/13 crop, but dry weather in H112 led to downgrades in several key producers, including the UK, Spain, France and Poland. This contributed to a global wheat production deficit of 38mn tonnes, one of the largest global deficits on record and greater than the deficits recorded during the 2007-2008 grain price spike. Projected EU production growth contributes to our view for a global market surplus of 5mn tonnes in 2013/14. This underpins our view that wheat prices will average lower year-on-year in 2014 (at USc750/bushel) after averaging slightly higher in 2013 (at USc780/bushel) owing to the residual market tightness stemming from the weak 2012/13 global wheat crops.

In the short term, we do not believe this target will have much impact on Romania's biofuels industry. We even believe that, because biofuels produced from sugar is currently much more competitive than produced from grains (because of low sugar prices compared to elevated grain prices), the Romanian sugar sector could be boosted momentarily by sugar demand coming from the biofuels sector. In the long term, however, we do not believe the sector will provide any support for sugar demand and the phasing out of current production quotas in the EU, combined with reforms to the current CAP system of payments to farmers will put downside risks to production over the coming years.

Bovine semen imports reached a value of US$753,000 (about 300,000 doses) in 2010 in the country after increasing significantly between 2007 and 2010. Switzerland is the main semen supplier with Canada and Belgium also responsible for large quantities this year, according to the USDA. The US is also a major supplier of semen, ranking fifth after the above mentioned countries. The samples are subject to strict controls from the local veterinary authorities upon arrivals and are part of the country's objective to improve the quality of its dairy herd and increase its self sufficiency in milk production as well as in quality standards.

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