Canada Agribusiness Report Q3 2012

The Canada Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on canada's agribusiness service.

BMI View:
Canada's involvement in the Trans-Pacific Partnership negotiations has the potential to begin a process that could ultimately see the country's dairy and poultry supply management system dismantled. After the abolition of the Canadian Wheat Board's monopoly on grain trading, dairy and poultry could be the next industries to be shaken up. For now, we expect milk, poultry and pork production growth to be mild in 2011/12. We forecast corn output to decline in 2011/12 but to remain strong in the coming years as higher renewable fuel content requirements encourage the construction of new ethanol plants.

Key Trends
- Corn production growth to 2015/16: 10.7% to 13.0mn tonnes. Large domestic demand growth coming from the livestock sector and higher renewable fuel content requirements will drive output growth.
- Milk production growth to 2015/16: 6.8% to 9.0 tonnes. Output will increase on the back of continued yield increases and investment in the sector. The recent signs of reconsideration of the supply management system could be beneficial to the industry in the medium term.

- Poultry consumption growth to 2015/16: 13.7% 1.1mn tonnes. The perceived healthier nature of poultry as well as increasing export opportunities will help to support consumption growth.

- 2012 real GDP growth: 2.0% year-on-year (y-o-y). Down from 2.5% in 2011; predicted to average 2.4% over 2011-2016.

- Consumer price inflation: 1.8% y-o-y in 2012. Down from 2.9% in 2011; predicted to average 2.2% over 2011-2016.

- BMI universe agribusiness market value: 3.9% y-o-y decline to US$23.6bn in 2011/12; forecast to average US$23.8bn between 2010/11 and 2015/16.

Industry Outlook
Owing to favourable weather and higher global prices in 2011, we expect improved output for Canadian wheat in 2012/13. There was much speculation regarding the end of the Canadian Wheat Board as sole marketing authority for western wheat (starting on August 1 2012) and its effect on future production. We believe the end of the monopoly is likely to have broader and positive effects for farmers in the coming years, as they could receive higher prices in a more competitive market with several purchasing entities. The industry is also likely to benefit from Canada's recent free trade agreement with Morocco, which is set to offer Canadian wheat unrestricted access to one of the world's largest wheat importers. In 2011/12, we are forecasting poultry production to increase slightly driven by demand from the retail sector and as more consumers switch away from beef. The Canadian government announced an investment of more than CAD600,000 into the Atlantic Poultry Institute in order to improve feed and health research. The investment is aimed at increasing the region's poultry producers' competitiveness, enabling them to increase quality of their products in order to meet demand from the more healthconscious consumer. This is expected to support production in the longer term, as will increasing export opportunities and high poultry prices. In 2011/12, we forecast mild milk production growth. The number of milk cows in Canada has fallen by 17% over the last decade, but this has been countered by a subsequent increase in yields and greater consolidation at the farm level. BMI believes that Canada's involvement in the Trans-Pacific Partnership has the potential to begin a process that could ultimately see the country's dairy and poultry supply management system dismantled. In our view, this could be the catalyst that leads the system to the same fate as the abolished Canada Wheat Board. Over the short term, this development could reduce Canada's dairy production, but it presents upside risks to our long-term production outlook. SHOW LESS READ MORE >

Executive Summary 5

SWOT Analysis 7

Canada Agriculture Swot 7

Supply Demand Analysis 8

Canada Sugar Outlook 8
Table: Canada Sugar Production & Consumption, 2011-2016 8
Table: Canada Sugar Production & Consumption, 2008-2012 10

Canada Livestock Outlook 10
Table: Canada Poultry Production & Consumption, 2011-2016 11
Table: Canada Pork Production & Consumption, 2011-2016 11
Table: Canada Beef & Veal Production & Consumption, 2011-2016 12
Table: Canada Poultry Production & Consumption, 2008-2012 15
Table: Canada Pork Production & Consumption, 2008-2012 16
Table: Canada Beef & Veal Production & Consumption, 2008-2012 16

Canada Dairy Outlook 17
Table: Canada Milk Production & Consumption, 201-2016 18
Table: Canada Butter Production & Consumption, 201-2016 18
Table: Canada Cheese Production & Consumption, 201-2016 18
Table: Canada Milk Production & Consumption, 2008-2012 22
Table: Canada Butter Production & Consumption, 2008-2012 22
Table: Canada Cheese Production & Consumption, 2008-2012 22

Canada Grains Outlook 23
Table: Canada Wheat Production & Consumption, 2011-2016 24
Table: Canada Corn Production & Consumption, 2011-2016 24
Table: Canada Barley Production & Consumption, 2011-2016 24
Table: Canada Wheat Production & Consumption, 2008-2012 31
Table: Canada Corn Production & Consumption, 2008-2012 31
Table: Canada Barley Production & Consumption, 2008-2012 31

Commodity Price Analysis 33

Monthly Softs Update 33

Cocoa: 2012 Outperformance To Continue 33

Coffee: Next Support At USc130 /lb 35

Palm Oil: False Break? 37

Sugar: More Fears Over Brazilian Crop 38

Cotton: Technical Bounce Over? 39
Table: Select Commodities: Performance & BMI Forecasts 40

Monthly Grains Update 41

Wheat - Deteriorating Supply Prospects 42

Corn - Anticipating US Supply Downgrades 43

Soybean - Range Trading Ahead 44

Rice - Ample Supply To Keep Prices In Check 46
Table: Select Commodities: Performance & BMI Forecasts 47

Upstream Analysis 48

GM Plantings Growth To Slow, Americas To Remain The Largest Exporter 48

Americas Fertiliser Quarterly 52

Canada Agribusiness Report Q3 2012

© Business Monitor International Ltd

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Downstream Analysis 54

Consumer Outlook 54

Food 55

Food Consumption 55
Table: Food Consumption Indicators - Historical Data & Forecasts 56

Confectionery 56
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2009-2016 57

Prepared Food 57
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2009-2016 58
Table: Fish, 2009-2016 58
Table: Frozen Fruit & Vegetables, 2009-2016 59
Table: Oils & Fats,2009-2016 60

Drink 62

Alcoholic Drinks 62
Table: Alcoholic Drinks Value Sales - Historical Data & Forecasts, 2009-2016 63
Table: Alcoholic Drinks, 2009-2016 63

Hot Drinks 65
Table: Hot Drinks Value Sales - Historical Data & Forecasts, 2009-2016 65

Soft Drinks 65
Table: Soft Drink Value Sales - Historical Data & Forecasts, 2009-2016 66

Mass Grocery Retail 66
Table: Mass Grocery Retail Value Sales by Format - Historical Data & Forecasts, 2009-2016 67
Table: Mass Grocery Retail Sales By Retail Format Type (%) 67

Trade 68
Table: Trade Indicators - Historical Data & Forecasts, 2009-2016 68

Canada Demographic Outlook 69
Table: Canada's Population By Age Group, 1990-2020 ('000) 70
Table: Canada's Population By Age Group, 1990-2020 (% of total) 71
Table: Canada's Key Population Ratios, 1990-2020 72
Table: Canada's Rural And Urban Population, 1990-2020 72

Our Forecast Modelling

73

How We Generate Our Industry Forecasts 73