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OECD-FAO Agricultural Outlook 2010

image of OECD-FAO Agricultural Outlook 2010

This is the sixteenth edition of the Agricultural Outlook and the sixth co-edition prepared by the Organisation for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO). This edition covers the outlook for commodity markets during the 2010 to 2019 period, and brings together the commodity, policy and country expertise of both organisations. The report analyses world market trends for the main agricultural products, as well as for biofuels. It provides an assessment of agricultural market prospects for production, consumption, trade, stocks, and prices of the commodities analysed.

The macroeconomic assumptions that condition the commodity projections examined are more positive in this year’s edition as compared to last year. The anticipated return to global economic growth, a rising population, emerging biofuel markets, and a higher cost structure are expected to underpin international commodity markets and prices over the outlook period under study. Developing countries are expected to be the driving force behind the expected growth in agricultural production, consumption and trade.

This year’s report also includes a special section on price volatility and price transmission from world to domestic markets. Governments are concerned about price volatility because it affects farm viability, food security and needed investment. The report analyses the evidence of and changes in price volatility over the longer term and summarises policy advice from both FAO and OECD on this issue.

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Sugar

The world sugar market is experiencing considerable turbulence and stress at the start of the Outlook. The sugar market is currently facing a second year of global deficit with a wide gap remaining between world consumption and production that has reduced stocks to very low level). World sugar prices have rallied strongly in response to tightening supplies, and rising imports, to reach 29 year highs in February 2010 (Figure 7.1). Prices have since fallen back to around the pre-peak levels of mid-2009 on expectations of improved supply prospects, particularly in Brazil. The past several months have also witnessed considerable volatility in the white sugar premium. The premium advanced rapidly in the second half of 2009 on fears of low stocks and tightness of export supplies of white sugar to reach over USD 146/t in January 2010, the highest nominal margin between raw and white sugar prices since July 1995.

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