Boston, MA -- (SBWIRE) -- 03/08/2013 -- BMI View: Canada's position in the global grain market is being reinforced in 2012/13 thanks to betterthan- expected wheat and corn production and in a context of tight supply from other major producers. The country could temporarily gain export markets from the US, as the wheat Canada produces is the closest to the US hard winter wheat. 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.

- Wheat production growth to 2016/17: 9.2% to 27.6mn tonnes. Liberalisation of the Canadian Wheat Board will increase competition between exporters and encourage farmers to boost production.
- Beef consumption growth to 2017: 0.6% to 1.0mn tonnes. We see potential for consumers to shift to cheaper and healthier types of meat such as pork and poultry.
- 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.
- We highlight that integrated dairy and livestock companies such as Saputo and Maple Leaf Foods have weathered well the recent spike in global grain prices and maintained strong margins.
- 2013 real GDP growth: 1.9% year-on-year (y-o-y). Down from 2.0% in 2012 and predicted to average 2.2% over 2012-2017.
- Consumer price inflation: 2.1% y-o-y in 2013. Up from 1.9% in 2012 and predicted to average 2.1% over 2012-2017.
- BMI universe agribusiness market value: 0.9% y-o-y increase to US$23.8bn in 2012/13. Forecast to increase by an average of 0.5% annually between 2011/12 and 2016/17.

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Industry Outlook

US-based Dean Foods will sell its Morningstar dairy business to Canadian dairy products maker Saputo for US$1.45bn. The deal will enable Saputo to broaden its product range and expand its business footprint in the US. The Morningstar sale marks a major step in the break-up plans of Dean, which is spinning off an additional business into WhiteWave Foods. Saputo will fund the acquisition through a newly committed bank loan. The deal was scheduled to be completed by end-2012.

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