lunes, 25 de febrero de 2008

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México

25 - 29 de Febrero de 2008

The World

Canadian dairy companies buying more of the US market: That is what we saw happening at the beginning of the month. With the Canadian market dominated by three players, who together have over a 75 percent share, foreign markets offer the best alternative for growth. And, the neighboring U.S. cheese market, which is still relatively fragmented, is especially attractive. Saputo said that they were planning on acquiring the activities of Alto, a Wisconsin based dairy cp – op. This comes off their acquisition last year Land O'Lakes’ west coast business. The Alto acquisition helps strengthen their presence in the cheese business since Alto produces Italian and American style cheeses". Additionally, this is attractive for Saputo since Alto also "concentrates on whey products, which are marketed nationwide under a variety of brand names and private labels." With the acquisition Saputo will have 17 manufacturing facilities in the U.S. Not to be out done, Agropur, the Canadian dairy cooperative, acquired Trega Foods. Interesting, Trega is also located in the state of Wisconsin and also "manufactures different types of cheese and whey products." Agropur's last acquisition in the U.S. was in 2002.

More soybean and less corn area in the U.S.:
Somewhat in line with what we had expected, the U.S. Department of Agriculture’s outlook for 2008/09 crop year, prepared for their annual Agricultural Outlook Forum, projects an increase in both wheat and soybean acreage: 3.6 million acres and 7.4 million acres, respectively. Their projections also include a 3.6 million acre contraction of corn area. In spite of the growth in area, and, consequently production, average farm level prices for wheat and soybeans are expected to increase – 5.3 percent and 10.6 percent, respectively – due to both the continued expansion of demand and rebuilding of inventories. Average farm level corn prices are projected to increase by 15 percent, reflecting a contraction in production combined with an increase domestic corn use, due primarily to an expected continued strong demand for corn as a feedstock for ethanol. U.S. exports of both corn and soybeans are projected to fall. All in all, this implies that the animal protein industry and food manufactures won’t find any commodity cost relief into the near future.


The economy grew 3.3 percent in 2007:
A strong fourth quarter – up 3.8% – propped up 2007’s GDP, which came in at just under US$ 900 billion, somewhat beyond what analysts had projected. Driving the growth was the service sector, which expanded 4.4% year over year (yoy). In spite of this somewhat better than expected growth there were some signs of concern. The industrial sector grew by only 1.4%, while the trade deficit grew to US$11.18 billion, as the rate of growth of non – petroleum exports slowed down. At the same time remittances were practically flat, and unemployment levels are expected to show a slight upward movement. While the peso yoy was flat against the U.S. dollar, the Euro appreciated 12.1% against the peso, which should enhance Mexico’s competitive position in that market. The projected contraction in the U.S. economy this year will work to limit Mexico’s GDP growth in 2008.

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