Boston, MA -- (SBWIRE) -- 08/30/2012 -- BMI View: We have revised down our production forecast for wheat and barley as dry weather conditions have reduced yields for the 2012/13 season. However, we expect the country to have a strong export capacity, thanks to high stocks and another good production balance. We reiterate our view for strong growth potential for the livestock sector in Kazakhstan thanks to ongoing government support as well as renewed private sector interest, as the recent US$108mn investment by Israeli technology provider, MAD Corporation, to build five large poultry farms in the north of the country shows.

Key Forecasts

- Wheat production growth to 2015/16: 128.0% to 22.1mn tonnes. This will be driven by increasing export demand especially from Middle Eastern countries and by government support to the sector.
- Beef consumption growth to 2016: 21.4% to 517,200 tonnes. Livestock consumption will benefit from strong domestic production increases, which should help improve product affordability and from Kazakhstan's healthy forecast economic growth outlook, which will increase demand for processed livestock products.
- Cheese production growth to 2015/16: 51.2% to 28,900 tonnes. This will come thanks to better availability of milk in the country on the back of the government's recent plan for the development of large-scale modern dairy farms and its significant investment in machinery for these farms.
- 2012 real GDP growth: 6.1%, down from 7.5% in 2011. Predicted to average 6.7% from 2011 to 2016.
- 2012 consumer price inflation: 6.2% y-o-y annual forecast inflation, down from 7.6% yearon- year (y-o-y) in 2011. Predicted to average 7.0% 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 9.4% annually between 2010/11 and 2015/16.

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Industry Outlook

We maintain our forecast for Kazakhstan's wheat production to fall 9.2% y-o-y to 20.6mn tonnes in 2012/13 on subdued plantings growth and dry weather conditions. The country experienced a bumper wheat crop in 2011/12 thanks to favourable soil moisture and high plantings on elevated global prices. In 2012/13, we believe farmers will be discouraged from planting more wheat because of shortages of elevators, storage and transportation equipment, according to the UN's Food and Agriculture Organization. Moreover, recent dry weather lowered soil moisture during plantings as the country's lands are not irrigated and therefore fully dependent on its continental climate.

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