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Italy Agribusiness Report Q2 2014 - New Market Report

Fast Market Research recommends "Italy Agribusiness Report Q2 2014" from Business Monitor International, now available


Boston, MA -- (SBWIRE) -- 04/15/2014 -- Our outlook for the Italian agribusiness sector has turned more bearish, as dry conditions in Europe, high operating costs and bleak economic prospects have taken a toll on the grains, dairy and livestock sectors. Our long-held view has favoured the grains segment over rice, and we expect conditions to be particularly favourable for wheat and corn over the forecast period to 2018. We expect poultry and cheese to outperform, mainly bolstered by the expected economic recovery, changes in consumption habits and opportunities for expansion into export markets.

Key Forecasts

- Wheat production growth to 2016/17: -2.8% to 7.5mn tonnes. Production is expected to decline only slightly over our forecast period - a result of base effects as well as lower prices and weather concerns in 2013/14. Production will recover in the last years of our forecast period as prices stay elevated by historical standards, driven by growing demand for food and biofuels.
- Cheese consumption growth to 2017: 20.6% to 1.8mn tonnes. Per capita cheese consumption, at 28.1kg, is on a par with France and Germany and higher than in northern European countries such as Sweden and the UK. Still, we see room for additional growth over the coming years.
- Poultry production growth to 2016/17: 10.4% to 1.4mn tonnes. Poultry is a relatively cheap meat; as such, we expect continued strong demand amid the tough economic climate.
- 2014 real GDP growth: 0.4% year-on-year (y-o-y), compared with an estimated -1.8% in 2013.
- 2014 consumer price index: 0.9% average, slightly lower than 1.1% in 2013.
- BMI universe agribusiness market value: 4.7% y-o-y decline to US$54.7bn in 2013/14, forecast to grow on average 0.2% annually between 2012/13 and 2017/18.

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We are maintaining our estimate for EU wheat production to come in around 137mn tonnes in 2013/14, as production improves on the back of improved yields, which mitigated a lower planted area. This comes after a poor 2012/13 season when output reached 133mn tonnes (the lowest since 2008), and when EU ending stocks fell to their lowest level since 1978 and contributed to a 41mn tonne global market deficit. The reduced output in the EU resulted in EU prices rising in H113, while benchmark CBOT prices fell. The increase in output in 2013/14 was accompanied by improved quality, as industry sources say a greater proportion of EU wheat is being designated as milling wheat.

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