food commodity prices: history & prospects · food commodity prices: history & prospects...
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Food commodity prices: History & prospects
Ron Trostle Economic Research Service
U.S. Department of Agriculture
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USDA Outlook Forum February 20, 2014
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0
50
100
150
200
250
1980
M1
1982
M1
1984
M1
1986
M1
1988
M1
1990
M1
1992
M1
1994
M1
1996
M1
1998
M1
2000
M1
2002
M1
2004
M1
2006
M1
2008
M1
2010
M1
2012
M1
2014
M1
Index: January 2002 = 100
Source: International Monetary Fund: International Financial Statistics. January 2014
Food commodity prices since January 1980: Reversal of a 22-year downward trend in 2002
Down 1/3 in 22 years More than doubled
in 10 years
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0
50
100
150
200
250
Jan 2002 Jan 2004 Jan 2006 Jan 2008 Jan 10 Jan 12 Jan 14
Index: January 2002 = 100
3
Food-commodity prices since January 2002: an upward trend and two spikes
Up 130 %
Down 33 %
Up 60 % June 2008
December 2008
April 2011
April 2007
June 2010
Down 15 %
Source: International Monetary Fund: International Financial Statistics. January 2014
Down 7.6 %
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0
50
100
150
200
250
300
350
2002 2004 2006 2008 2010 2012
Food commodity price index
4 Crops
3 Meats
Index: January 2002 = 100
Livestock prices have become a more significant factor in food commodity prices1/
1/ Meat: index of beef, pork & chicken prices; weighted by world consumption. Crops: index of wheat, rice, corn, & soybeans prices, weighted by trade shares.
Source: International Monetary Fund: International Financial Statistics. January 2014
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Factors contributing to fluctuations in food commodity prices
Economy wide Ag sector
>
Exchange rate (LT & ST)
> Oil price
> Economic growth
> Increasing population
> Cost of energy
> Weather production
> Stock-to-use ratio
> Exporters’ policy response
> Importers’ policy response
> Meat & dairy consumption
> Global biofuel production
> Productivity growth
> Natural resource constraints
Short-term disruptions
Long-term trends
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-4-3-2-1012345678
1990 1995 2000 2005 2010 2015 2020
Percent
World United States
Source: USDA Agricultural Projections to 2023, February 2014.
Developed countries
Developing countries
Economic growth (GDP)
7 7
50
60
70
80
90
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
Per capita production
International Meat: Sum of reporting countries1,2
Production and per capita production
Exponential trend growth rates 1975-90 90-13 14-23 Production 3.1 2.3 1.9 Population 1.7 1.2 1.0 Per capita 1.4 1.1 0.9 production
1 Total meat = beef + pork + chickens & turkeys. 2 Data are not reported in USDA’s PS&D database for some small countries; therefore data are not a global total.
Source: Compiled from USDA’s PS&D Database & Baseline Projections, Feb 2014
50.2 lbs/cap
80.0 87.4 lbs/cap
8 8
70
90
110
Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15
Exchange rate index: 2005 = 100 4-crop price index: 2002 = 100
1/ Real U.S. agricultural trade-weighted dollar exchange rate, using U.S. agricultural export weights, based on 192 countries.
Source: http://ers.usda.gov/data-products/agricultural-exchange-rate-data-set.aspx
U.S. agricultural trade-weighted dollar exchange rate 1/
Jan. 2002
Exchange rate
Four-crop price index
9 9
70
90
110
Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-1540
90
140
190
240
290
340Exchange rate index: 2005 = 100 4-crop price index: 2002 = 100
1/ Real U.S. agricultural trade-weighted dollar exchange rate, using U.S. agricultural export weights, based on 192 countries.
Source: http://ers.usda.gov/data-products/agricultural-exchange-rate-data-set.aspx
U.S. agricultural trade-weighted dollar exchange rate and the 4-crop price index 1/
Jan. 2002
Exchange rate
Four-crop price index
10
70
80
90
100
110
120
130
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Index values, 2005=100
1/ Real U.S. agricultural trade-weighted dollar exchange rate, using U.S. agricultural export weights, based on 192 countries. Source: USDA Agricultural Projections to 2023, February 2014.
U.S. agricultural trade-weighted dollar exchange rate 1/
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0
1
2
3
4
5
6
7
1990/91 1995/96 2000/01 2005/06 2010/11 2015/16 2020/21
Crop year
U.S. corn use projections: Corn-based ethanol expansion slows Billion bushels
Feed use
Exports
Ethanol
Source: USDA Agricultural Projections to 2023, February 2014.
12
100
150
200
250
300
1970 1980 1990 2000 2010 2020
Production
Area
Yield
Total world grain & oilseeds1 Production, yield, area harvested .
Source: Compiled from USDA’s PS&D Database & Baseline Projections, Feb 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Index: 1970 = 100
Exponential trend growth rates: 1970-90 90-2013 2014-23 Production 2.43 1.72 1.39 Yields 2.02 1.29 0.91 Area 0.44 0.43 0.48
13
100
150
200
250
300
1970 1980 1990 2000 2010 2020
Production
Area
Yield
Population
Percap production
Total world grain & oilseeds1 Production, yield, area harvested, population & per cap production
Source: Compiled from USDA’s PS&D Database & Baseline Projections, Feb 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Index: 1970 = 100
Exponential trend growth rates: 1970-90 90-2013 2014-23 Production 2.43 1.72 1.39 Yields 2.02 1.29 0.91 Area 0.44 0.43 0.48 Population 1.74 1.25 0.98 Per capita 0.68 0.46 0.41 production
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100
150
200
250
300
1970 1980 1990 2000 2010
Total world grain & oilseeds1 Production
Source: Compiled from USDA’s PS&D Database & Baseline Projections, Feb 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Index: 1970 = 100
2013 increase was 7.8 %
43-year trend is a 1.8 % annual increase
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0%
5%
10%
15%
20%
25%
30%
35%
1970 1975 1980 1985 1990 1995 2000 2005 20100
50
100
150
200
250
Stocks / Use
Total world grain & oilseeds1
Stocks-to-use ratio
Source: USDA WASDE and PS&D Database: January 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Stocks:use ratio
16
0%
5%
10%
15%
20%
25%
30%
35%
1970 1975 1980 1985 1990 1995 2000 2005 20100
50
100
150
200
250
Stocks / Use 4-crop price index
Total world grain & oilseeds1
Stocks-to-use ratio and 4-crop price index
Source: USDA WASDE and PS&D Database: January 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Crop price index
Stocks:use ratio
17
0%
5%
10%
15%
20%
25%
30%
35%
1970 1975 1980 1985 1990 1995 2000 2005 20100
50
100
150
200
250
Stocks / Use 4-crop price index
Total world grain & oilseeds1
Stocks-to-use ratio and 4-crop price index
Source: USDA WASDE and PS&D Database: January 2014
1 Oilseeds = soybeans + rapeseed + sunflowers
Crop price index
Stocks:use ratio
Jan 2014
18 18
0
2
4
6
8
10
12
14
16
1980/81 1985 1990 1995 2000 2005 2010 2015 2020
Corn, wheat, rice, and soybean prices projected to remain historically high
$ per bushel (per cwt for rice)
Corn
Wheat
Soybeans
Source: USDA Agricultural Baseline Projections to 2023, February 2014.
Rice
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20
40
60
80
100
120
140
160
1990 1995 2000 2005 2010 2015 2020
$ per hundredweight, U.S. markets
Beef cattle: Steers, 5-area
Broilers: National composite
Hogs: National base
Livestock Prices
Source: USDA Agricultural Baseline Projections to 2023, February 2014.
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Conclusions
World production rose sharply in 2013 in response to high prices and good weather. Stocks have risen.
Expect prices to decline from recent peaks, but to remain historically high • Global economic recovery and renewed growth in demand for
crops, animal products, and energy • Slower productivity growth • Continued low value of the dollar • Much slower growth in global biofuels output
World ag production prospects • In short-run: production can respond to higher prices – if the
weather cooperates. • Over next 10 years, global production growth is projected to keep
pace with population.
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Why Have Food Commodity Prices Risen Again? http://www.ers.usda.gov/publications/WRS1103/
USDA Agricultural Projections to 2023
http://www.ers.usda.gov/topics/farm-economy/agricultural-baseline-projections.aspx
Contact:
Ron Trostle [email protected]
202-694-5280
Related reports and contacts
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0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
Jan 90 Jan 95 Jan 2000 Jan 05 'Jan 10
Crude oilAll commoditiesFood commodities
Index: January 2002 = 100
Non-food commodity prices have risen even faster
Source: International Monetary Fund: International Financial Statistics. January 2014
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Factors that may influence future ag prices
• Economic growth & world economy • Global consumption & import demand • Weather / world ag production • Stock levels • Exchange rates • Energy & other non ag prices / Ag production
costs • Policy changes by food commodity exporters &
importers