DG AGRI autumn 2021 edition of the short-term outlook report

DG AGRI published its short-term outlook report Autumn 2021 highlighting the current commodity prices surge

According to the report, a conjunction of factors, among them the recovery of the EU, US and Chinese economies contributed to the current commodity prices surge. Energy prices, and in particular natural gas ones in Europe, are hitting new highs, and have a strong impact on fertilisers’ prices that almost doubled in a year.

The total 2021/22 EU cereal production is projected at 292.2 million t, a 5.1% increase year-on-year (+4.9%/5-year average), due in particular to the recovery of the wheat production estimated at 132 million t (+7.9%/5-year average). While there are some concerns regarding quality, this good harvest could provide enough supply of wheat for feed use. However, high cereals prices together with favourable conditions for pasture in the EU are expected to keep the use of cereals for feed stable at 162.2 million t. The EU oilseed production is estimated at 30.4 million t in 2021/22. This 10% annual increase, after the drop in 2020/21, should ease the EU market by providing larger availabilities although rapeseed supply would remain tight due to low beginning stocks.

The situation of the animal products’ markets is mixed: while beef, poultry and dairy prices are relatively good, margins risk being squeezed by rising feed (cereals, oilseeds and oilcakes) costs and input prices. Extensive dairy and beef farms should benefit from the ample availability of grass this year. The pigmeat sector is in a more challenging situation, confronted with falling prices (resulting from increased production, limited domestic demand and reduced export opportunities in China) and higher costs.

The COVID-19 vaccination campaign in the EU has reached a plateau, with 73.4% of adults being fully vaccinated. Containment measures are easing and savings allow for a rebound in demand. As illustrated by the first half of 2021, recovery prospects are good with the real GDP of the euro area expected to reach in 2023 a level 4.8% above its 2019 level. However, inflationary pressures become stronger: energy, raw materials, fertilisers and, most strikingly, freight has seen sharp price increases during the first half of 2021.

With this Autumn 2021 edition, the Short Term Outlook (STO) marks the 10th anniversary of its public release. On that occasion, the current publication contains testimonies/feedback of several stakeholders to STO, including Mr Doring, Secretary-General of FEFAC: “Short-term Outlook reports are a unique source of information for FEFAC as it helps to complete “in house” market analysis that is regularly shared with its members, ie. the whole European Compound feed industry. We really appreciate the hard work and resources invested in STO reports drafted by DG AGRI who combine the best of research by not only looking at the analytical data but also regularly holding expert meetings with stakeholders to seek and analyse the “from the field” market information. Lastly, thanks to a high level of transparency of data, FEFAC is able to regularly update its Feed & Food statistical yearbooks (link) which provide an overview on the European feed sector’s economic development.”

See the full publication, data and highlights here.