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“Implication of 2012 drought for US , Ukraine and global markets: the FAPRI outlook. By William H. Meyers and Kateryna Goychuk Howard Cowden Professor and PhD Candidate Agricultural and Applied Economics FAPRI at MU Grain Congress 16 October Kyiv, Ukraine. - PowerPoint PPT Presentation
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“Implication of 2012 drought for US , Ukraine and global markets: the
FAPRI outlookBy
William H. Meyers and Kateryna GoychukHoward Cowden Professor and PhD Candidate
Agricultural and Applied EconomicsFAPRI at MU
Grain Congress 16 OctoberKyiv, Ukraine
AgendaWhat is the FAPRI market outlook?
Implications for Grain markets
What is a baseline and how is it used?
It is not a forecastIt is a projection based on a set of reasonable assumptions aboutMacroeconomic outlookTechnology outlook Policy outlook
Ethanol growth slows, Jan 2012
Source: USDA FAPRI-MU baseline, January 2012
So what happened this year?US and Kaz-Rus-Ukr drought greatly changed market outlook
FAPRI updated the baseline in August
Briefly review that change A taste of August 2012 outlook
Not just maize, but wheat too (USDA WASDE Oct 11, 2012)
Production (mil mt)
2011/12 2012/13 change
Coarse Grains 1148.9 1110.1 -38.8 USA 323.7 284.2 -39.5 Rus + Ukr 66.1 56.9 -9.2Wheat 695.0 653.0 -42 Kaz+Rus + Ukr 101.1 64.0 -37.1 USA 54.4 61.8 7.4
U.S. maize farm price projections, Jan 2012
Sources: FAPRI-MU baseline, Jan. 2012; USDA, May 2012; CME Dec. contracts, June 8, 2012
U.S. maize farm price projections, August 2012
0
50
100
150
200
250
300
350
05/06 07/08 09/10 11/12 13/14 15/16 17/18 19/20 21/22
Dol
lars
per
met
ric
ton
FAPRI Jan USDA Oct Dec fut. Sept 8 FAPRI Aug
Sources: FAPRI-MU baseline, Jan. and Aug 2012; USDA, Oct 2012; CME Dec. contracts, Oct 11 2012
Ethanol also adjusts to high price
Source: USDA FAPRI-MU baseline, January 2012 and August 2012 update
World Grain Prices, Aug update
World Oilseed Prices, Aug update
Source: FAPRI-MU August 2012 stochastic baseline, Refiners’ acquisition price
Price volatility to continue
Source: FAPRI-MU August 2012 stochastic baseline. Maize FOB Gulf prices
Maize price uncertainty
Source: FAPRI-MU August 2012 stochastic baseline, US FOB GULF PRICE
Source: FAPRI-MU August 2012 stochastic baseline, HRW WHEAT US FOB GULF
Source: FAPRI-MU August 2012 stochastic baseline
AgendaWhat is the FAPRI market outlook?
Implications for Grain markets
What to expectContinued prices higher than before
the 2007/08 price surgeContinued price volatility from year
to year and from week to weekBeware of many uncertainties that
can impact markets at any time.
Unknowns and uncertaintiesHigh volatility likely to continueMajor uncertainties in the marketsPolicy proposals and policy reactions
Oil/Energy pricesExchange ratesWorld price surgesFinancial crisesWeather events/climate change
Diakuju!!