Fast Market Research recommends "Egypt Agribusiness Report Q3 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 07/06/2013 -- Egypt remains the world's largest wheat importer, and high global prices are feeding into domestic prices, even if minimally. Even though imports needs have been slightly lower this year, we do not see this as a pattern and believe the country's import needs will only get larger in the coming years. We continue to see the lifting of the three-year-old ban on rice exports as providing a boost to the local industry. The sugar industry is benefitting from a tight local market and higher domestic prices than global while the cotton industry should be helped by the recent recovery in prices. The livestock and dairy industries are likely to recover soon from the recent foot-and-mouth disease outbreak, which had a milder impact than expected. We like the growth opportunities for a company such as Juhayna Foods, which is exposed to the strong consumer story in the country.
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- Wheat production growth to 2016/17: 13.4% to 9.5mn tonnes. This will come largely on the back of government efforts to increase area planted and yields in the coming years.
- Cotton consumption growth to 2016/17: 12.3% to 633,000 tonnes. The cotton industry is set to recover slightly in the medium term, as domestic output increases and cotton prices remain below previous peak in the coming years.
- Poultry production growth to 2016/17: 18.3% to 986,600 tonnes. This will come from improvements in productivity as well better integration of livestock producers and therefore gains in margins. Our forecast for a moderation in grain prices in the medium term should also help.
- Real GDP growth: 1.9% year-on-year (y-o-y) in 2013 (up from 2.2% y-o-y in 2012).
- Consumer inflation: average 12.0% y-o-y in 2013 (up from 7.2% y-o-y in 2012).
- BMI universe agribusiness market value: 2.2% y-o-y increase to US$11.1bn in 2012/13; forecast to grow on average 2.1% annually between 2011/12 and 2016/17.
In the wake of the Egyptian government's decision to reduce imports to save money, the country's 2013/14 wheat crop (due to be harvested in July) takes on increasing importance. So far, prospects for the crop look favourable, and we continue to forecast mild production growth in 2013/14. This, combined with our view that wheat prices will moderate in H213, is likely to help keep the country's food price inflation only slightly above five-year lows at around 8%. If production problems occur, the country will be forced to increase imports, which could be comparatively cheap if the Eastern European grain crop meets production expectations.
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