Boston, MA -- (SBWIRE) -- 06/29/2012 -- BMI View: We forecast steady growth in grains output over the short term in Canada, as we do not believe the recent decision to end the Canadian Wheat Board's monopoly on grains trading will affect planting decisions by farmers. On the contrary, still-elevated global prices are likely to encourage them to boost production. Both the livestock and dairy sectors are still being affected by slow growth in herds and high feed prices, which are expected to prevent producers from taking full advantage of new export market openings. Thus, we forecast poor output growth in both sectors despite high prices and government support.
- Wheat production growth to 2015/16: 17.9% to 27.3mn tonnes. Elevated global prices as well as export demand will encourage increased plantings and drive output growth.
- Cheese consumption growth to 2016: 5.2% to 438,200 tonnes. Consumption growth will largely be driven by government initiatives to increase consumption of healthy foods, which include probiotic yoghurts and dairy products containing healthy fatty acids, as these foods have been linked to decreased incidences of certain health problems, such as osteoporosis.
- Poultry production growth to 2015/16: 9.6% 1.2mn tonnes. The perceived healthier nature of poultry as well as increasing export opportunities will help to support consumption growth. High poultry prices are also expected to stimulate production.
- 2012 real GDP growth: 2.0% year-on-year (y-o-y). Down from 2.4% in 2011; predicted to average 2.4% over 2011-2016.
- Consumer price inflation: 2.0% y-o-y in 2012. Down from 2.8% in 2011; predicted to average 2.3% over 2011-2016.
- BMI universe agribusiness market value: 3.9% y-o-y decline to US$23.6bn in 2011/12; forecast to average US$23.8bn between 2010/11 and 2015/16.
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After the Canadian federal government declared an end to the Canadian Wheat Board monopoly in October 2011, there has been a slew of mergers and acquisitions activity within Canada's grain sector. Several global grain handlers including Glencore, Cargill, ADM, and Bunge have been rumoured to be interested in acquiring Canadian-based grain distributors in order to establish a presence in a top grainexporting market. The most recent (and persistent) rumours involve the acquisition of Viterra, the largest Canadian handler in Western Canada, with roughly 45% of total market share in the country's three wheat-producing Western provinces. The winning bid could give the parent company access to up to 50% of the grain market in the coming years as Viterra's market share is expected to rise in the wake of the recent deregulation of the sector.
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