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New Report Available: France Agribusiness Report Q1 2014

New Food market report from Business Monitor International: "France Agribusiness Report Q1 2014"

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Boston, MA -- (SBWIRE) -- 12/06/2013 -- We believe the grain sector in France will continue to outperform other agribusiness sectors in terms of production growth. This will be reinforced by the ongoing reforms of Common Agricultural Policy subsidies, which are likely to have more of an effect on dairy and livestock farmers than grain farmers. The agriculture minister's proposal to shift some EU subsidies from crop farmers to dairy or livestock farmers could support production growth in the latter, even though we do not see this as sufficient to turn around the current production trajectories of each sector.

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Key Forecasts

- Wheat production growth to 2016/17: 12.7% to 40.6mn tonnes. We expect wheat to remain the most profitable crop in the country and the one most in demand for domestic use and exports.
- Poultry consumption growth to 2017: 4.9% to 1.7mn tonnes. We see stronger long-term poultry demand than that for pork and beef because of poultry's generally higher affordability and reputation for better health benefits than red meat.
- Cheese production growth to 2016/17: 8.8% to 2.1mn tonnes. Over the longer term, we expect consolidation in the dairy industry to allow producers to take advantage of rising quotas and export demand. We also believe the European Commission's decision to adopt new legislation allowing producers to collectively negotiate contracts with processors will improve the profitability of milk production, in turn supporting output.
- 2013 real GDP growth: 0.0% (down from 0.1% in 2012).
- Consumer price inflation: 1.4% average in 2013 (slightly down from 2.0% in 2012).
- BMI universe agribusiness market value: 4.4% year-on-year (y-o-y) decrease to US$35.6bn in 2012/13.

Industry Developments

We believe EU wheat prices have found a bottom around the EUR175/tonne level, in line with our view for CBOT wheat prices to bottom around the USc640/bushel level and for the global market to tighten from September onwards. On the technical side, the weekly relative strength index for EU wheat prices is now in oversold territory, indicating little room for prices to come down in the near term. Net speculative long positions for wheat are also at a record lows, and any concern over global supply will help prices higher in the near term.

French dairy company Danone plans to sell its industrial properties, including its Castelo Branco plant in Portugal, to US-based dairy company Schreiber Foods. The deal will also include the sale of Danone's facilities in Bulgaria and the Czech Republic. The Castelo Branco plant will continue its operations, according to the company, and 110 employees will be retained.

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