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OECD-FAO Agricultural Outlook 2009

image of OECD-FAO Agricultural Outlook 2009
This 15th edition of the Agricultural Outlook edition presents the outlook for commodity markets during the 2009 to 2018 period, and analyses world market trends for the main agricultural products, as well as biofuels. It provides an assessment of agricultural market prospects for production, consumption, trade, stocks and prices of the included commodities. 

This edition of the Outlook was prepared in a period of unprecedented financial market turmoil and rapidly deteriorating global economic prospects. Because macroeconomic conditions are changing so quickly, this report complements the standard baseline projections with an analysis of revised short–term GDP prospects and alternative GDP recovery paths. Lower GDP scenarios result in lower commodity prices, with reductions in crop and biofuel prices about one-half those for livestock products. A sensitivity analysis to highly uncertain crude oil prices shows the important links between energy and agricultural prices. The Outlook also reports on a survey of various actors in the agri-food chain in terms of the current impacts of the global economic crisis and credit market constraints.

The issue of food security and the capacity of the agricultural sector to meet the rising demand for food remains very high on the international political agenda.  This report provides a brief overview of critical factors such as land availability, productivity gains, water usage and climate change, and suggests that agricultural production could be significantly increased, provided there is sufficient investment in research, infrastructure and technological change, particularly in developing countries.

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Sugar

In the lead up to this year’s Outlook, the world sugar market was basically out of sync with developments in other commodity markets which experienced rapidly rising prices stoked by fears of pending food shortages with permanently rising demand and tight supplies. This market psychosis also spilled over to sugar to some extent, although with adverse fundamentals of two consecutive large world crops and a large global surplus, sugar prices were outperformed by most other commodities in 2006 and 2007. The changes in sugar prices that occurred were linked by the market to mainly non-sugar factors. Since the second half of 2008, however, many of these other commodity prices have imploded by 40-50% from their mid-year peaks. In contrast, the world indicator price for raw sugar (Intercontinental Commodities Exchange No. 11, spot, f.o.b. Caribbean ports) and white sugar (Refined sugar price, London Euronext, Liffe No. 5, f.o.b., price, Europe), showed a comparatively moderate development throughout 2008, although with considerable within year volatility. In early 2009, world sugar prices have rallied with their re-connection to fundamental factors based on an emerging, medium-size, global deficit as the constructive force behind near term price changes.

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