Fast Market Research recommends "Canada Agribusiness Report Q3 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 08/13/2013 -- Canada's position in the global grain market was reinforced in 2012/13 thanks to better than expected wheat and corn production and in a context of tight supply from other major producers. Even though the country's grain crop will prove strong again in 2013/14, the return of the Black Sea Region and other producers to export markets will limit the country's market share that year. Canada's dairy industry has seen improvements in margins and we believe it will continue to do so in the medium term. The country's livestock industry has been suffering from tight margins and disease outbreaks, which could confirm the country's decreasing importance in the global meat market. We like Agrium in the short term as we believe the company's share price has lost significant ground in recent months on the back of the recent dispute between management and activist shareholder Jana over the potential split of the company. As a result, Agrium is trading at a lower Price/Earnings and Price/Book ratio compared to the industry.
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- Wheat production growth to 2016/17: 9.0% to 27.6mn tonnes. Liberalisation of the Canadian Wheat Board will increase competition between exporters and encourage farmers to boost production.
- Sugar consumption growth to 2017: -0.8% to 1.0mn tonnes. We are moderately bearish on sugar consumption in the medium term on the back of already high consumption per capita and changing eating habits towards healthier options.
- Milk production growth to 2016/17: 8.9% to 9.2mn tonnes. This will come on the back of continued yield increases and investment in the sector. We believe recent signs of reconsideration of the supply management system also will be beneficial to the industry in the medium term.
- 2013 real GDP growth: 1.5% year-on-year (y-o-y). Down from 1.8% in 2012 and predicted to average 2.1% over 2012-2017.
- Consumer price inflation: 2.0% y-o-y in 2013. Up from 1.5% in 2012 and predicted to average 2.2% over 2012-2017.
- BMI universe agribusiness market value: 2.9% y-o-y increase to US$27.2bn in 2012/13. Forecast to increase by an average of 0.7% annually between 2011/12 and 2016/17.
Revisions To Forecasts:
- Wheat: 2013/14 production revised up from 26.7mn to 29.0mn tonnes on the back of higher plantings and better weather conditions than expected initially.
- Corn: 2013/14 production revised up from 12.5mn to 13.5mn tonnes previously for similar reasons as wheat.
- Beef: 2012/13 production revised down from 1.2mn tonnes to 1.0mn tonnes as herd declines after the recent outbreak of E.Coli virus in the country, which resulted in the shutdown of a major beef processing plant.
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