2012-10-24 16:10:53 - Recently published research from Business Monitor International, "Kazakhstan Agribusiness Report Q4 2012", is now available at Fast Market Research
BMI View: We have revised our production forecast for wheat and barley down again as dry weather conditions have reduced area harvested and yields by more than anticipated previously. We still expect the country to have a strong export capacity because of high stocks and reduced competition with its neighbours, even though we stay cautious on the infrastructure outlook. Recently soaring milk prices could provide some support to dairy production in the country, even if this will not last into the medium term.
* Wheat production growth to 2015/16: 69.0% to 2.2mn tonnes. This will be driven by increasing export demand especially from Middle Eastern countries and by government support to the sector.
* Cheese consumption growth to 2016:
52.4% to 77,000 tonnes. This will come from increased demand for dairy value-added products on the back of accelerating urbanisation and improvements in infrastructure.
* Poultry production growth to 2015/16: 101.0% to 215,000 tonnes. The government's subsidy programme, combined with the import tariff system and financial support for new enterprises should underpin this growth. We also highlight renewed private sector interest for the sector, which should enhance efficiency and quality of the industry over the medium term.
* 2012 real GDP growth: 5.8%, down from 7.5% in 2011. Predicted to average 6.4% from 2011 to 2016.
* 2012 consumer price inflation: 5.6% year-on-year (y-o-y) annual forecast inflation, down from 8.3% y-o-y in 2011. Predicted to average 6.5% from 2011 to 2016.
* BMI universe agribusiness market value: 42.4% y-o-y increase to US$10.5bn in 2011/12, forecast to grow on average 10.1% annually between 2010/11 and 2015/16.
Full Report Details at
- www.fastmr.com/prod/464520_kazakhstan_agribusiness_report_q4_201 ..
We have revised down our 2012/13 forecasts for wheat production in Ukraine and Kazakhstan because of unfavourable weather conditions in both countries. We now forecast production in Ukraine to fall 41.0% y-o-y to 13.0mn tonnes in 2012/13 because of the lack of rainfall in the country during plantings. The country was affected by dry cold spells during the early months of plantings and later by warm weather accompanied by insufficient rainfall. This has resulted in significant losses in both area harvested (despite plantings at the same level as in 2011/12) and yields.
For poultry, we believe the recent US$108mn investment by Israeli technology provider MAD Corporation to build five large poultry farms in the north of the country will unleash growth potential in the sector on the back of strong government support for the industry. Even though the sector has benefited from large feed-subsidy programmes, poultry production is still hampered by a lack of breeding material as well as the vulnerability of the animals to diseases, and the lack of high-quality vaccines to treat them. Thus, we expect the project to improve poultry farming technology and quality. We also believe these types of projects could attract other private companies to the country, and boost private investment in the sector in the medium term.
After having lost 30.7% between September 2011 and May 2012, milk prices regained 18.4% to reach US$17.7/lb in August. This is because of the recent spike in grains prices linked to the worst drought in 56 years in the US. We believe this could support dairy production in Kazakhstan, at least in the short term. In the medium term, we expect a moderation in grain prices to take dairy prices slightly lower again (we forecast milk prices to average US$17.00/lb in 2012 and USc16.50/lb in 2013). Therefore, we do not see a major impact from the recent hike on our long-term production forecast for the country. Also, since most producers sell their milk domestically (Kazakhstan is not a major dairy exporter), sharp moves in global prices would only have a delayed effect on the domestic industry.
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