Lithuanian position due to communiqué to

be imposed on CAP after 2013 On 18 November, the European Commission announced communiqué related to Common Agricultural Policy (CAP) after 2013 “Common Agricultural Policy on the eve of 2020”. CAP reform, launched in 2003, is continued with this com-muniqué. The reform has sought to direct agriculture more to market needs, modernize it and adapt to quickly changing market conditions and new chal-lenges. While reforming CAP, it has been sought to make European agriculture sector more dynamic and competitive, that it could further the implementation of strategy “Europe 2020” – to prompt stable, progressive and integral growth - more actively. Having evaluated the communiqué, the Ministry of Agriculture has defined cer-tain intended Common Agriculture Policy changes that could be useful to Lithuania, though there are some particular provisions that are raising doubts. Under Lithuanian request, in the part of communiqué which describes market regulation, it is predicted that unit of market regulation means should operate as a reliable safety net. It is predicted that interventional purchases of products and private protection could remain. Lithuanian objectives to refuse historical referential indexes when counting the direct support are also predicted by the communiqué. There are some refer-ences about more proper distribution of direct support among member states, though the offered methods and transition periods force to think that “two dif-ferent speed Europes” may be tolerated for some time, i.e. old and new EU members are separated. Lithuanian stands that in order to assure honest competition between member states, the level of direct benefits in European Union should be defined follow-ing the objective criteria that would assure the clearness of support level, prompt agricultural production in all the EU. Lithuania expects more attention from the European Commission towards simplification of direct support rules.

This issue

Grain and rapes market

Milk economy market

Fertilizers market

Agro technique market

Lithuania agrees with many com-muniqué aims, such as:

• CAP should remain strong common policy, comprised of two supports (direct support and mar-ket regulation means and rural development) in future;

• Assurance of food provision;

• More proper distribution of direct support to assure farmers’ income and more orientation to-wards public goods, such as envi-ronmental protection, animal wel-fare, fostering of landscape, protec-tion of cultural heritage etc.;

• Direct support should focus on the increase of competition, inno-vations, stable management of natural resources, climate change, environment, balanced develop-ment of territorial rural places;

• CAP should be oriented to-wards market needs, keeping par-ticular market regulation instru-ments, such as stability guarantee in case of crisis. Also it is planned to seek for simplification of market regulation means;

• Balanced territorial develop-ment;

• Perfection of food chain;

• Simplification of rural develop-ment means.

2010 December No. 7

AGROMEDIA

M O N T H LY I S S UE ABO UT A GRO M A RKET

GRAIN AND RAPES MARKET

Procurement prices on wheat, feeding barley and rape continue to increase in Lithuania. Lithuanian grain procure-ment companies have bought wheat at the average price of 634.1 LTL/t in the second part of November, 2010 (46th week (15-21 11)). Compared to the sec-ond part of October (42nd week (18-24 10), wheat procurement price has in-creased by 3.8%. Feeding barley (II class) average procurement price has increased by 8.6% (to 571.9 LTL/t) dur-ing the analysed period. Rape procure-ment price that has boomed since the beginning of harvest, started to de-crease during the recent weeks – it has decreased by 16.4% (to 469.7 LTL/t), compared to the prices of 46th and 42nd weeks. Average buckwheat procure-ment price, which has increased to its absolute height – 1938.2 LTL/t, was smaller by 10.9% during the last week and amounted to 1727.8 LTL/t. Rape procurement price, the same as wheat, continues to increase. Com-pared to the procurement price of 46th and 42nd weeks, it has increased by 8.2% (to 1328.9 LTL/t). In Lithuania, grain import was 4.5 times bigger, and export – 28% smaller in October, 2010, than in October, 2009. Lithuanian grain procurement compa-nies have imported 1850 thousand tons of grain in this October. Wheat made the biggest part (8.997 thousand

tons) of imported grain. They were im-ported from Latvia and Denmark at the average price of 616.3 LTL/t. Barley (751 tons) was also imported from Lat-via and Denmark (average price – 614.4 LTL/t). Maize (2.055 thousand tons) was imported from Hungary and Ukraine at the average price of 558 LTL/t. Rape import has twice increased in Oc-tober, 2010, comparing with October, 2009 – to 21.484 thousand tons. They were imported from Latvia, Russia and Ukraine at the average price of 1299.5 LTL/t. 171.486 thousand tons of grains were exported this October. 81% of them (139.675 thousand tons) were wheat. They were exported to Latvia, Den-mark, Holland, Germany, France, Portu-gal, Finland, Switzerland, Norway, Saudi Arabia and Libya (average price – 747.1 LTL/t). Barley (12.289 thousand tons) was exported to Latvia, Estonia, Finland and Denmark at the average price of 452.3 LTL/t. Triticale (18.255 thousand tons) was exported to Spain, Finland, Sweden and Libya (average price – 416.0 LTL/t). Rape export has increased by 15% - to 44.031 thousand tons in October, 2010, compared to last October. They were exported to the following EU states: Latvia, Estonia, Germany, Belgium, Denmark and Finland (average price – 1128.1 LTL/t).

According to the data by the Depart-ment of Statistics, procurement prices of agricultural products have increased by 23.2% in October, 2010, compared with the same period in 2009. During this year, procurement prices of crop products have increased by 39.3%, ani-mals and stock-raising – by 12.3%. Talk-ing about crop production products, prices of buckwheat (3.1 times), rye (2.5 times), triticale (2.3 times), corn (2.2 times), barley (71.8%), pulse grain (69.3%), wheat (60.7%), potatoes (59.3%), rape seeds (42.3%) and vege-tables (40.5%) have increased the most. Among animals and animal products, procurement prices on sheep and goats (45,1 %), natural milk (44,2 %), livestock (15,9%) have increased. Prices on birds have decreased by 24.6%, eggs – 20.7%, pigs – 13.4%. During one month (October, 2010, compared with September, 2010), pro-curement prices of agricultural prod-ucts have increased by 6 percent, be-cause procurement prices of animals and stock-raising have increased by 5.4%, procurement prices of crop pro-duction – by 4.7%. Talking about crop production products, prices of corn mixes (36.2%), barley (22.4%), buck-wheat (17.1%), corn (16.1%), triticale (16%), pulse grain (14.7%), potatoes (9.4%), rape seeds (3.4%) and wheat (3%) have increased the most. Prices of maize have decreased (13.5%). Talking about animals and stock-raising, prices of natural milk (12.2%), livestock (10.6%) and birds (0.9%) have in-creased. Prices of pigs (8.7%), eggs (1.4%), sheep and goats (0.7%) have decreased. Procurement of pulse grain (47%), po-tatoes (19%), pigs (16%), birds (14%) and fruits (11%) has increased during January-October, 2010, compared with the same period in 2009. Less purchas-able were corn (23%), livestock, sheep and goats and eggs (at 3%), natural milk and vegetables (at 1%).

2

In November forecast by USDA, Austra-lian wheat harvest forecast, compared with the one of October was raised by 1 million tons (to 24 million tons). Com-pared with last year, wheat harvest would be 7% bigger and it would be the biggest harvest during the recent four years. The productivity of land is predicted to reach 1.8 t/ha – 10% big-ger than during 2009-2010. This season there were perfect mete-orological conditions for corny plants in the main Australian wheat growing regions (New South Wales, Queen-sland, Victoria and South Australia). Wheat crop condition in the Eastern

region of Australia has been the best during many years. Though, West Aus-tralia announces that it has been one of the worst seasons for wheat and other winter crop during the last 40 years because of drought and temperature, higher than usual.

24 million tons of wheat harvest is expected in Australia in 2010–2011

More than three times smaller grain harvest in Russia, 2010

NOVOROSSIYSK, RUSSIA — The Novo-rossiysk Commercial Sea Port Group reported on Oct. 18 its consolidated operating re-sults for January-September 2010. In the reporting pe-riod, NCSP Group's cargo turnover amounted to 62.6 million tonnes, which is 3.9% (2.574 million tonnes) less than in the same period of 2009. Export of grain from the Russian Fed-eration was officially banned from Aug. 15, which conditioned the total decrease of grain volumes in the re-porting period by 962,900 tonnes versus same period last year. Commenting on the operating results for January-September of 2010, Chief Executive Officer Igor Vilinov said, “Over the last nine months NCSP's overall volumes dynamics were shaped by two major factors. On the one hand, the grain export ban alone resulted in losing almost 1 million tonnes of cargo traffic. On the other hand, volatile crude oil volumes also affected the total turnover in a nega-tive way”. “When viewing NCSP operating per-formance isolated from these two factors, we can speak of stable cargo volumes and posi-tive changes in the cargo mix, such as growing share of priority cargoes, including containers, which nearly doubled in volume”.

Explanation of Tables:

HRW – Hard Red Winter, SRW – Soft Red Winter,

FCW – French Channel Wheat, CWRS – Canada

Western Red Spring, YC – Yellow Corn

* prices (Lt) provided based on the currency

exchange of the Bank of Lithuania on the res-

pective date

** comparing Septembert with August, 2010

*** comparing September, 2010 with Septem-

ber, 2010

Worldwide grain export prices Lt/t

3

Data sourse: Agro rinka, No. 22 (149)

According to the Ministry of Agricul-ture of Russia, total grain harvest in the state should reach 64.2 million tons in pocket weight, and 60.3 million tons – in valid weight. Compared with 2009, it would be 35.5% smaller than the previ-ous year. At the end of this October, the Ministry of Agriculture informed that transi-tional grain resources in the state amounted to 26.3 million tons on 1st July, 2010, so total grain amount to-gether with this harvest should reach 86.6 million tons. 77 million tons of grain are consumed in Russia per year, so according to tentative data, grain resources should make 13 million tons at the end of harvest year. It is predicted that wheat harvest in Russia will amount to 42 million tons in 2010 – 31.9% smaller than in 2009. Grain import could reach 3.9 million tons (2.2 million tons of wheat and 1.7 million tons of other grain), and 3.5 mil-lion tons of wheat are believed to be exported later. According to the data by the United States Department of Agriculture (hereinafter – USDA), in Russia, 2010, total harvest of maize, rye and corn has dropped down to 17.3 million tons, because of smaller crop areas and their smaller productivity. Compared with harvest of 2009, this is 46% less. Crop area of these corn for 2010 harvest was

smaller by 12% (from 15.9 million hec-tares to 14 million hectares), compared with 2009, and productivity decreased form 2t/ha to 1.24 t/ha. In Russia, this year barley harvest has amounted to 8.5 million tons (17.9 mil-lion tons in 2009), maize – 3 million tons (4 million tons), rye – 2.1 million tons (4.3 million tons), and corn – 3.5 million tons (5.4 million tons). Most of these grains (from 70 to 90% of barley, maize and corn, and only 15-30% of rye) are used for feeding. Since 1987-1988, crop areas of these sorts of corn has decreased by about 60% because of declining amount of animals during the decrease of grain demand. Though the number (especially poultry and pigs) of some animals started to grow during the lat-ter years, usage of feeding grain re-mained stable. That was influenced by unfavourable barley prices in 2010 dur-ing spring sowing. Because of this, bar-ley crop areas were smaller by 20% for 2010 harvest. However, the main reason that influ-enced the decrease of barley, maize, rye and corn harvest in Russia, 2010, was drought and high temperature in Volga valley neighbouring regions dur-ing almost the whole growing season. Despite unusually hot summer and drought, Russia is going to be fully pro-vided with grains.

Grain State

2009 2010 Price change %

october august september october mounth ** year ***

Wheat JAV HRW 2 kat. 496,9 774,8 731,5 738,1 0,9 48,5

JAV SRW 2 kat. 440,9 734,1 721,3 710,6 -1,5 61,2

Argentina 501,6 769,4 777,4 725,6 -6,7 44,7

ES, France, FCW 1 445,4 773,4 770,0 740,6 -3,8 66,3

ES, Germany, B class 457,3 810,2 787,6 753,1 -4,4 64,7

ES, United Kingdom,

forage

403,6 652,5 639,8 660,5 3,2 63,7

Canada, CWRS 13,5%

protein

653,2 916,2 917,6 930,8 1,4 42,5

Corn JAV 3 YC 410,6 543,7 586,3 635,5 8,4 54,8

Argentina 394,3 554,6 576,0 635,5 10,3 61,2

Barley ES, France, forage 366,3 655,2 685,7 648,0 -5,5 76,9

Australia, forage 352,3 679,7 655,1 635,5 -3,0 80,4

Australia, malting 417,6 744,9 785,1 743,1 -5,3 77,9

U.S. corn crop down 4% from September

U.S. 2010 corn production was fore-cast at 12.664 billion bushels, down 4% from 13.16 billion bushels forecast in Septem-ber and down 3% from a record 13.110 billion bushels in 2009, the U.S. Depart-ment of Agriculture (USDA) said in its Oct. 8 Crop Production report. Soybean production was fore-cast at a record 3.408 billion bushels, down 2% from 3.483 billion bushels forecast in Septem-ber but up 1 % from 3.359 billion bushels last year.

The USDA com production number was below the average pre-report trade estimate of 12.95 billion bushels. The USDA soybean number also was below the trade average of 3.491 billion bush-els.

Based on Oct. 1 conditions, com yield was forecast at 155.8 bushels an acre, down 6.7 bushels from the September forecast and 8.9 bushels below the 2009 record of 164.7 bushels an acre, the USDA

said. Corn area harvested for grain in 2010

was forecast at 81.3 mil-lion acres, up slightly from September and up 2% from 2009, the USDA said.

Soybean yield based on Oct. 1 condi-tions was forecast at a record 44.4 bush-els an acre, down 0.3 bushel from Sep-tember but up 0.4 bushel from the previ-ous record high of 44 bushels in 2009. Harvest-ed area was forecast at 76.8 mil-lion acres, down 1% from September but up 1% from 2009.

The 2010 rice crop was forecast at 242,260,000 cwts, down 5% from 255,319,000 cwts forecast in September but up 10% from 219,850,000 cwts in 2009.

Sorghum production in 2010 was fore-cast at 337,229,000 bushels, down 10% from 376,469,000 bushels in September and down 12% from 382,983,000 bush-els in 2009, the USDA said.

Salim, Seaboard enter into partner-ship Two of the world's largest grain proc-essing companies have become part-ners in Australian-based pool manager and grain accumulator Plum Grove, the companies an-ounced on Oct. 12.

Indonesian-based Salim Group, U.S.-based Seaboard Corp, and Plum Grove have jointly reached agreement to en-ter into an Australian-based partner-ship that aims to bring Australian grow-ers and international customers closer together.

The Salim Group is historically a large buyer of Australian wheat, mostly from Western Australia. Seaboard Corp., through its Commodity Trading and Milling Division, owns flour milling and other grain processing operations throughout Africa, South America and the Caribbean.

Plum Grove Executive Chairman An-drew Young said the new partnership would create a two-fold benefit for Aus-tralian growers. First, it would open more direct channels between Austra-lian grow-ers and one of the most sig-nificant end users of their product, and secondly, it would open the door for Australian wheat to enter previously uncharted markets throughout Africa. "Both Seaboard and the Salim Group see the investment in Plum Grove as an opportunity to participate in an alterna-tive model that promotes transparent contact between customers and grow-ers." he said. "Unlike recent major trans-actions involving multinational entities in the Australian grain industry, this partnership involves consumers who have significant processing exposure seeking to form a direct relationship with growers."

4

Russia extends grain export embargo to July 2011

Russian Prime Minister Vladimir Putin announced on Oct. 22 that Russia has decided to extend its grain export em-bargo until July 2011. On Aug. 5, in response to Russia's drought and wild fires, Putin announced that he had signed a temporary ban on the export of wheat, meslin, barley, rye, maize, wheat and wheat-and-rye flour from the Russian Federation.

In an interview with the Ogoityok maga-zine, Arkady Zlochevsky, head of the Russian Grain Union, said he was sure Russia would remain in last year's third position in the rating of the world's top grain exporters, and perhaps ascend even higher. The embargo, however, has severely damaged Russia's image of a reliable food exporter, he noted.

Noble Group opens grain terminal at Port of Santos

The Brazilian State Port Author-ity Codesp announced in mid-October that Hong Kong-based Noble Group has opened a 100-million-real ($60.7 million) grain terminal in the Brazilian Sao Paulo state's Port of Santos. The 10,000-sriuare-uieter terminal has a storage capacity of 90,000 tonnes of sugar, soybeans, corn and soybean meal, and it is expected to handle a total of 2.3 million tonnes per year. Codesp said that since test operations began in July, over 600,000 tonnes of commodities, especially sugar, have been handled at the terminal. With the new terminal, the company

expects to increase its rev-enue in Brazil to over 1 billion reais this year, at least a 57% increase from the 637 million reais posted in 2009. Noble Group also expects to further expand its operations at the port, according to company founder Richard Elman. Codesp said Noble has invested 1 billion reais in infrastructure projects in Brazil. The group is currently building a soybean crushing plant in Mato Grosso state. "We are expecting to surpass 20 percent annual growth (in Brazil) in the coming years. Brazil looks very promising," El-man said.

MILK ECONOMY MARKET

Procurement price on raw milk by Lithuanian milk producers has in-creased in this III quarter in Lithua-nia. Lithuanian milk buyers have bought 412.75 thousand tons of natural fatness raw milk from Lithua-nian milk producers in III quarter of 2010 – 2.55% more than in the same period in 2009, but 4.62% less, com-pared with the same period in 2008. Average procurement price on this milk from Lithuanian milk producers made 816.16 LTL/t this III quarter and was 49.78% higher than in the same period in 2009 and 2.27% higher than III quarter in 2008. 853.06 thousand tons of milk of av-erage fatness of 3,99% were sold for confirmed milk procurement com-panies during seven months of 2010-2011 quota years (from 1 April to 1 November, 2010). Having trans-ferred the value into national de-fined 3.99% milk fatness, the amount comprised 861.43 thousand tons. 50.75% of sales for processing quota (hereinafter – SPQ) were im-plemented during seven months of quota years. Compared with the same period during 2009-2010 quota years, implementation of SPQ has decreased by 6.84%, i.e. more than 13.1 thousand tons. During seven months of quota years, imple-mentation of total national milk ex-traction quota, defined for Lithuania, is 50.75%.

Prices on many milk products has increased in Latvia and Estonia during III quarter of 2010

Name of a company

Average natural milk procurement price,

LTL/t

Milk, for witch

deductions due

to quality were

not applied

when paying

Milk, for witch

any deduction

due to quality

was applied

when paying

Average

milk pro-

curement

price

AB "Pieno zvaigzdes" companies group 1042,4 762,1 1035,3

UAB "Marijampoles pieno konservai" 944,1 724,3 940,1

AB "Rokiskio suris" companies group 1005,5 841,2 999,3

AB "Zemaitijos pienas" 1009,4 836,8 1003,2

UAB "Vilkyskiu pienine" 939,9 703,3 928,2

AS (Agricultural society) "Salteksnis" 933,3 1133,3 978,5

UAB „Vikeda“, Kedainiai 1274,8 - 1274,8 Bariunai AS (Agricultural society) Joniskis

district 760,8 636,1 760,6

Dairying cooperative "Zalmarge" 854,8 606,6 846,5

Average milk procurement price, LTL/t 997,3 809,4 990,4

5

Latvian milk buyers paid 87.13 LTL/100 kg at average in III quar-ter of 2010 – 57.00% more than in the third quarter of 2009. Pro-curement amounts of natural fatness raw milk have increased by 11.35% and amounted to 144.63 thousand tons in III quarter of 2010, compared with the same period in 2009. Sale-prices (producer price) of milk products, produced in many Latvian companies, have increased because of increased average pro-curement price on natural fatness raw milk in the state. For ex-ample, average sale-price (producer price) on semirigid cheese, which was 10.49 LTL/kg in III quarter of 2009, increased to 14.05 LTL/kg, and price of skim milk powder increased by 52.36% - to 8.59 LTL/kg. In III quarter of 2010, compared with the same pe-riod in 2009, average sale-price (producer price) on butter, pro-duced by state milk processing companies, increased by 24.94% and made 13.48 LTL/kg, and unskimmed milk powder – 24.23% (to 11.89 LTL/kg). In III quarter of 2010, compared with the same period in 2009, in

Estonia, natural fatness raw milk was bought at 45.15% higher price and its average procurement price amounted to 97.23 LTL/100 kg. 157.10 thousand tons of natural fatness raw milk were bought in Estonia during the analysed period – 0.38% less than in III quarter of 2009. Higher procurement price on raw milk influ-enced higher prices of many milk products. Average sale-price (producer price) on skimmed milk powder, produced in Estonian companies, increased by 44.86% (to 8.11 LTL/kg), and butter (82% fatness, 25 kg lump) – 11.23% (to 8.65 LTL/kg) in this III quarter, compared with the same period in 2009. During the analysed period, average sale-price (producer price) on unskimmed milk powder reached 11.39 LTL/kg and was 82.98% higher than in the same period in 2009.

Average natural milk procurement price LTL/t Lithuanian biggest milk

shoppers

Requisitions to participate in milk quotas trade auction are already

accepted

Farmers, who are not using all milk quotas, may sell them to other milk producers during an auction. Agricul-tural Information and Rural Business Centre reported that requisitions for Milk Quota Trade Auction of March, 2011, are already accepted. Agricul-tural Information and Rural Business Centre informs that requisitions are accepted until 31 December. According to the presented informa-tion, requisitions should be submitted to Agricultural Departments of those municipalities, where agricultural do-main centre is registered. Only those farms, which are registered in the ter-ritory of Lithuania, may buy and sell quotas. According to official informational statistical publication “Agro rinka” (“Agro market”), there were

48846 holders of quotas in the state on 1 November, 44736 (91.6%) of which disposed with selling to proc-ess quota and 5260 (11.8%) – selling for direct use quota. 1150 producers, i.e. 3.3% of all quota holders, disposed of the quotas of both types. On average, 28.7 tons of milk quotas are imposed on one quota holder in Lithuania. The sum of disembodied additional national direct benefits for milk in 2010 for 58641 producers this year was 116.781 million LTL. Disem-bodied additional national direct benefits for milk in 2010 are paid for the amount of milk, given for factual market in 2006-2007 quota years. The amount of benefit is 87 LTL for the sold ton of milk.

As the website “Mano ukis” (“My Farm”) announces, American cows growers develop vaccine against E. coli bacteria (group of E. coli bacteria is large and various; part of it may cause diarrhoea, respiratory infec-tions and other diseases), and the results of first experiments are promising. International food company “Cargill” announced the first results after the test of new vaccine, during which 85 thousand livestock were vaccinated. According to Dan Schaefer, vice-president of the company, animals’ immune system reacted to vaccine positively in the Department of Beef Research, and comparatively small amounts of E. coli varieties, danger-ous for people, were found in organ-isms of cows. Though, the scientist emphasizes that the livestock that was not vaccinated had small amount of bacteria. According to D. Schaefer, the amount of the bacteria is influenced by the weather, life conditions, vaccine dosage and other factors. Other USA producers also perform similar tests. Chandler Keys, repre-sentative of the company “JBS USA” claims that the company is about to complete its experiments with 200 thousand of vaccinated animals, and expects to have results next month. According to the data by the Na-tional Centre for Disease Prevention and Control, more than 73 thousand of people caught E. coli bacteria in USA and more than 600 cases were deadly.

SMP demand revives, prices firmer

EU markets continue to steady, with SMP and whey powder prices now rising after falling since late Septem-ber. Food-grade prices are down to 20% above interven-tion, having dropped by 15% since late Septem-ber. Feed-grade prices have fallen by slightly less but are still at a €200/t discount to food-grade SMP. Demand has risen, with customers both within and outside the EU seeking to cover first quarter supplies. Exports have benefited from a fall in the € in the past fortnight. Butter prices have dropped by 5% since September to around 65% above inter-vention—now falling by around 1% a week. Butter prices range from €3,500/t - €3,700/t with forward prices into next year slightly lower. EU butter is still €400/t too ex-pensive for exports to pick up. Prices for cream and skim concentrate were rising last week, with output across the EU at its seasonal trough and demand rising for cream and fresh products in the run up to Christ-mas. Cream is now at a significant premium to the return from butter or

WMP manufacture. Production of WMP has been low, and the decline in WMP prices has now virtually stopped, with production at its sea-sonal trough, with EU WMP still at a premium to NZ supplies. Prices are, however, €400/t lower than the May peak. Whey powder prices, always volatile, are now close to a year ago. Cheese prices are unchanged with good de-mand, particularly from Eastern Europe. Cheese returns remain better than butter/powder and cheese pro-duction is likely to continue to grow. French milk supplies were still 7%-8% up on a year ago in early November, and up 3%-4% in Germany. Outside of the Baltic States, where milk prices are 50%-60% up on a year ago, milk sup-plies in Eastern Europe were still be-low a year ago into the autumn. Milk production across the EU is starting to increase seasonally, creating some uncertainty over whether future mar-ket trends will be up or down: that will largely depend on whether the world market remains balanced.

6

Demand and supply in some sort of balance

Milk deficit in Serbia became one of the most relevant state’s problems that are already being solved by the Government, while the media pre-dicts resignation of the Minister of Trade. In many shops, shelves of milk prod-ucts are empty. The lack of milk is felt because Serbian farmers sold 80 thousand of milch cows to abattoirs this year due to the crisis. Besides, state has reduced reduces benefits to milk producers, the state has suf-fered drought. According to the media, Serbian milk processing concern “Imlek”, reprehended by government for monopolistic activity and deliberate decrease of milk procurement prices, is also negatively related to the milk crisis in the state. Belarus exports fill gap As a consequence of the summer drought, milk production in Russia this year will fall by 2.3% and will continue to decline in 2011—and imports will rise sharply. The USDA reckon that Russian SMP imports will reach 190,000t this year, three times the expected figure before the drought. Belarus are apparently covering most of the growing im-port demand. They supplied 30% of Russia's cheese imports in the first 7mths of this year, 46% of butter imports,75% of milk powder im-ports and 89% of liquid milk im-ports. The NZ government have opened negotiations for a bilateral trade agreement with Russia to allow NZ produce access without the import tariff that was recently raised to 15%.

Prices barely moved at Fonterra's GDT auction last week, with the overall trade weighted index down margin-ally. Cheese and butter spot market prices have changed little in the past fortnight but powder prices were down $100/t with SMP falling the most. Overall spot prices have been stable since June and coupled with the GDT forward auction prices, world demand and supply would appear to be in balance. NZ's milk supplies are not rising as quickly as thought. Pro-duction is now past its seasonal peak, with early season supplies at about the same level as a year earlier but still only expected to be l%-2% up for the season. Australian production has

also been low. Demand has been ris-ing in 2010, with China importing 240,000 t of WMP from Jan-Sept, up 90%, and Russia importing 210,000 t of cheese, up 25%. Exports of US NDM/SMP were 45% up on a year ear-lier Jan-Sept at 270,000 t, with large rises in exports to SE Asia. Butter and cheese prices have fallen with more exports expected, especially for US Cheddar—at $ l,000/t discount to NZ prices, and still being sold with CWT subsidies. For the first 9mths of 2010 the US exported 128,000 t of cheese, up 64 %.

7

Global certain dairy products price LTL/kg

Product name Average price

USA CME, FOB

2009 2010 Change %

46 week

(11 09-13)

43 week (10

25-29)

44 week

(11 01-05)

45 week

(08 30-09

03)

46 week

(11 08-12) week year

Butter, AA

CME

7,87 12,41 11,5 10,93 10,91 -0,17 38,61

Cheese Ched-

dar tipe, units 8,11 9,42 8,35 7,68 8,00 4,18 -1,33

LMP, Central and Easten

region, FOB 6,63 7,07 6,71 6,76 6,92 2,39 4,29

NPA, Nacional, FOB 7,64 9,60 9,21 9,25 9,47 2,39 23,91

Whey powder, Central

region, FOB 1,87 2,02 1,94 1,94 1,99 2,39 6,63

Western Europe exports, FOB

2009 2010 Change %

44-45 week

(10 26-11 06)

42-43 week

(10 18-29)

44-45 week

(11 01-12) 2 week year

Butter, 82% fat. 10,64 14,12 12,94 -8,33 21,67

WMP 7,29 8,05 7,01 -12,93 -3,74

SPM 8,56 10,14 9,05 -10,76 5,77

Melted butter 10,99 15,37 14,09 -8,33 28,33

Whey powder 2,49 2,49 2,29 -8,33 -8,05

Oceania exports, FOB

2009 2010 Change %

44-45 week (10

26-11 06)

42-43 week

(10 18-29)

44-45 week

(11 01-12) 2 week year

Butter, 82% fat 7,23 11,73 11,12 -5,17 53,87

WMP 6,82 8,36 7,54 -9,81 10,48

PM 7,29 9,44 8,65 -8,33 18,73

Cheese Cheddar tipe 8,44 11,05 10,26 -7,21 21,50

FERTILIZER MARKET

Nitrate prices have moved up yet again; AN prices in France have risen by another €5/t and AN in the UK by £12/tonne. Yara also announced higher prices for CAN taking the price to €243 cfr bulk delivered inland. Nitrate markets however are generally pretty quiet but prices are very firm. Behind this are strong urea prices with granular trading in Egypt at $410 fob although demand for December could be fairly thin with limited interest today in Europe and fading prices in a quiet US mar-ket not supporting levels of $400 let alone $410. UAN markets are quiet although there has been some de-mand in Spain with about four car-goes booked taking tonnes from Egypt and Romania. Phosphate buy-ers appear to be returning to the market with fresh sales into Italy after several months of abstinence and we could see French buyers follow on next week. Higher potash prices are still expected as of 1 Janu-ary but exact increases have still to be determined.

European fertilizer prices

8

Data source: Fertecon European Fertilizer Fax, 26 November 2010

Belgium - €/t bulk 26 November 12 November

CAN 27% del retail 243-252 243-252

KCI (G) fot ex-store 322 322

DAP fob/fot bulk $ 608-612 605-610

France- €/t bulk

AN 33,5% gran del 310-315 270-310

AN 33,5% prill fot bgd 275-285 275-287

Urea prill fot 320-325 n.m.

Urea gran fot 335-340 305-315

DAP fot 450-455 430-435

KCI gran fot 320-323 320-323

Germany - €/t bulk

CAN cfr imp inland 230-239 230-239

Urea prill cfr 285-286 275-276

15-15-15 cif inland 325 320

DAP fot seaport 449-450 440-443

Ireland - €/t bagged

Urea gran del 280-282 n.m.

CAN 27,5% del 298-300 n.m.

27-6-6 del 285-287 n.m.

Italy - €/t bagged

Urea gran fot 335-340 335-340

Urea prill fot 320-325 320-325

CAN (27%) fot 250-255 250-255

DAP fot 450-455 440-445

Netherlands - €/t bulk

Can cif del inland 230-235 230-235

KCI (G) fot ex-store 322-323 322-323

Spain - €/t bulk

CAN 27% fot 250 250

Urea prill fot 315-320 305-310

DAP fot 440-445 420-428

15-15-15 fot 320-325 320-350

United Kingdom - £/t bagged

AN 34,5% del farm 290-295 287-294

AN cif import 270-275 270-275

Urea prill cif bulk 255-265 250-255

Urea gran cif bulk 285-295 280-290

DAP cif bulk 393-395 380-385

Baltics - US $/t 28 October 14 October

Urea prilled bulk 362-365 350-360

Ammonium Nitrate prilled 280-295 265-275

UAN 32%N 265-280 265

DAP 567-573 540-568

MAP 567-573 540-568

KCI standard grade 396-403 409-417

Belarus will supply milk powder and tractors to Venezuela

In the middle of October, Dutch ma-chines Vervaet Beet Eater 625 and Vervaet Beet Eater 617 took the two first prize places in international automotive sugar-beet digging combines’ competition “Beet Europe 2010” in Lelystade, Holland. Over 2 thousand of visitors, half of whom were foreigners, watched the battle of combines. 10 sugar-beet digging combines participated in the com-petition (see the results’ table be-low). Vervaet Beet Eater 617, manufac-tured in Holland, was the best. Ropa Euro Tiger took the second place, Kleine SF10 – the third. According to Adwin Vervaet, owner of the company “Vervaet”, Dutch combines are distinguished for their exclusively good quality of cleaning beet. “We know how to clean the roots well. In Holland, large part of sugar-beets is grown in lands, taken from the sea, where soil is very sticky. So when constructing the tractors, we paid big attention to cleaning system”, - A. Vervaet names the advantages of the technology. Besides, Vervaet combines are lighter than analogical technologies by other producers - they are easily controlled and regulated. About 30 automotive sugar-beet digging combines are produced in Dutch company annually. Three models of digging machines are offered – six rows and 17 tons capacity Vervaet 617. Vervaet combines have been lead-ing in Holland since 1992, while the company was established in 1957. According to A. Varvaet, the most important markets for Dutch com-bines are Holland, Belgium, England, Sweden and Ukraine.

According to “Mano ukis” (“My Farm”), on Monday, Nicolas Maduro, Minister of Foreign Affairs of Venezuela, an-nounced that Belarus will supply milk powder and agricultural machines to Venezuela, informs “RIA Novosti”. With the agreements, signed in Cara-cas, Belarus has obliged to supply 16 metric tons of milk powder, 570 trac-tors and hundreds of trucks to Vene-zuela. N. Maduro has also claimed that Bela-rus will also help Venezuela build three agro-industrial complexes. He has added that Belorussian specialists

are already working in house con-structions of 7000 poor Latin Ameri-can families. Collaboration between Belarus and Venezuela became more intensive, when the President of Belarus Alexan-der Lukashenko turned to the West and started looking for alternatives for Russian oil supply. Oil from Venezuela is transported to port of Odessa in Ukraine, later – to Belarus by railway. One more agree-ment for oil supply was signed during the President of Venezuela Hugo Chavez visit in Minsk in October.

7

New generation of tractors

The most powerful tractor Same Deutz-Fahr of CVT series has been granted the most honourable place in company‘s stand in EIMA agricultural exhibition in Italy that was opened this week. Named as Deutz-Fahr TTV 7.260, the tractor reaches 260 horsepower, using newly created 6-cylinders turbo diesel engine Deutz TCD 6.1 with inter-cooler, four-valve technology and Deutz Common Rail fuel injection sys-tem. It is not only the biggest CVT Deutz-Fahr tractor, it is also one of the first company‘s tractors that meet the newest standard of Stage 3b engines created on the basis of SCR (Selective Catalytic Reduction) technol-ogy. According to the edi-torial office of “Savas ukis”(“Own Farm”), it is the first step towards saving energy, be-cause the roof of trac-tor cabin will be cov-ered with solar ele-

ments that will produce energy for cabin’s electronics. These elements are believed to be sufficient in sunny climate zones to generate the re-quired amount of energy to ventilator in the tractor’s cabin even when trac-tor and ignition are shut down, and if required, to load mobile phone with-out any bigger problems. It should also be mentioned that farmers, whose fields are at bigger distance, will appreciate this tractor. With the help of this tractor, it will be easier to take longer distances as the speed of the tractor reaches 60 km/h.

Editorial: AB “Agrowill Group”, Smolensko g. 10, Vilnius Tel./fax +370 5 2335340; +370 5 2335345; e-mail: info@agrowill.lt

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Data sourses: Fertecon European Fertilizer Fax,

26 November 2010, Dairy Industry Newsletter November 23,

2010, Vol 22, No. 15, World Grain Nowember 2010,

Agro rinka, Nr. 22 (149)/2010 m., www.vz.lt; www.valstietis.lt;

www.ukiozinios.lt; www.lrytas.lt, zum.lt,

manoukis.lt, savasukis.lt, Web sites of

other companies and other public sour-

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AGRO TECHNIQUE MARKET