Boston, MA -- (ReleaseWire) -- 01/18/2013 -- BMI View: We expect strong grain and soybean crops in 2012/13 to contribute towards a loosening of global markets in the medium term after grain prices reached record highs in recent months on a subdued US crop. For sugar, the pace of the harvest has continued to accelerate in recent months, and Brazilian exports have provided some relief to global prices. The country's strong coffee crop is expected to drive increases in the global market and keep prices subdued. The livestock and dairy sectors are performing strongly, and the country has not been affected by margins restrictions to the same extent as other producers, mainly thanks to sufficient domestic grain stocks.
¦ Sugar production growth to 2016/17: 16.8% to 43.1mn tonnes. Because replanting has been slower than initially expected, we project average growth over our forecast period. There are upside risks to our view. * Coffee consumption growth to 2016/17: 11.5% to 22.3mn bags. Coffee consumers in emerging markets that do not have a strong coffee culture are often very price-sensitive, which will drive demand for the cheaper robusta given its lower production costs. * Pork production growth to 2016/17: 24.6% to 4.1mn tonnes. This will come as input costs continue to fall and as export demand rises. As in the rest of the domestic livestock complex, pork production will considerably outstrip consumption and will thus heavily rely on exports in order to continue growth over the medium term. * 2013 real GDP growth: 3.7% (forecast to average 3.6% over 2012-2017). * 2013 consumer price inflation: 5.5% average. * BMI universe agribusiness market value: 2.4% year-on-year (y-o-y) increase to US$172.5bn in 2013, forecast to increase by an average of 2.3% annually between 2011/12 and 2016/17.
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Despite favourable government policy and competitive production costs, Brazil is expected to only partially compensate for the weak global production outlook among major pork producers in 2012/13. Some observers have projected a spike in pork prices in the coming months amid fears of a global shortage, largely owing to poor production outlooks in the EU, Canada and the US, which combined account for roughly 80% of all pork exports. Although data suggest that pigs are being rushed to market in the wake of high grain prices, we are cautious about predicting a significant shortage in pork production over the medium term.
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