World Bank: Russia grain ban ineffective Russia's decision to ban grain exports through June 2011 will likely not lower do-mestic prices and could have significant negative impacts on the industry, the World Bank said in a November report on the Russia's economy.

The Russian government on Aug. 5 issued a temporary ban from Aug. 15 to Dec. 31 on grain exports in response to ris-ing grain prices brought on by a drought-induced shortfall. The ban on wheat, barley, rye and maize was extended to June 2011 while a ban on flour was not lengthened beyond the end of 2010. It was hoped the ban would protect Russia from rising grain prices by reducing grain exports to 3 million tonnes from the nearly 15 million tonnes initially projected for 2010-11. According to the Oct. 20 estimate, Russian farmers har-vested 62.3 million tonnes of grain in 2010, a drop of 36,S% from 2009. Given production estimates and a domes-tic con-sumption estimated at 78 million tonnes, the World Bank said Russia will be-come a net importer of grain, depending on the use of reserve stocks. Grain stocks are estimated at 26.3 mil-lion tonnes as of July 1; 9.6 million is part of the govern-ment's grain intervention fund. Due to these circumstances, the World Bank said the export ban will be ineffective in lowering domestic prices because they will continue to be influenced by world grain prices. Several unintended and undesirable side effects could oc-cur because of the ban, the World Bank said. These include undermining Russia's long-term goal of becom-ing an impor-tant player in the global grain market: encouraging hoarding in antici-pation of the ban removal; and distorting prices and affecting the investment and production responses.

Continued on page 3

This issue

Grain and rapes market Milk economy market

Fertilizers market Agricultural land market

Russia may become the world's largest supplier of cheap milk within 5yrs, thanks to foreign in-vestments and the ever increasing support for the domestic dairy in-dustry by the state, Andrei Danilenko, chairman of the Russian National Union of Milk Producers said last week. According to him, bright prospects for the Russian dairy market was one of the rea-sons for the recent deal between PepsiCo and Wimm-Bill-Dann (WBD). Danilenko said that Russia's potential as the world's largest supplier of cheap milk might be explained by its climatic conditions and geographi-cal location, as well as logistical issues and the prox-imity to the Middle East, Southeast Asia, and Central Asia markets, where the consumption of dairy products was growing fast. Russian analysts believe that the acquisi-tion of WBD by PepsiCo may stimu-late further development of the Russian dairy market, especially amid reports about the plans of PepsiCo to hugely invest in WBD's resource base and in the building of new processing facilities.

2011 January No. 1 (8)

AGROMEDIA

MONTHLY I SSUE ABOUT AGRO MARKET

GRAIN AND RAPES MARKET

According to the data by the Interna-tional Grain Committee (hereinafter IGC) of November, 2010, world grain harvest was reduced, consumption – increased. Total grain harvest should make 1,725 million tons, that is 5 mil-lion tons less than a month ago and 3.5% less than in 2009/10. The main reason is that smaller maize harvest is expected. Grain consumption in the world should increase by 1.6% in 2010/11 – to 1786 million tons, that is 1 million tons more than it was predicted in October. Pre-dictable smaller consumption of feed-ing grain will not compensate pre-dicted bigger consumption of grain for food and industry. According to the last forecast, USA grain consumption for ethanol may increase by 3 million tons (to 144 million tons). Although this number should exceed last year indicators almost by 7%, it also shows slowing speed of increase in the sector of ethanol production. According to IGC, 2010/11 (July-June) forecast in grain trade world was in-creased by 1 million tons because of bigger than expected purchase of feed-ing grain. Grain trade in the world should reach 241 million tons and ex-ceed the level of last year. 29 million tons decrease of export from the Black Sea region should be compensated by increased grain export from USA, Ar-gentina, Australia, Brazil and the EU. Transitional world grain resources of the end of 2010/11 trade year may de-crease to 340 million tons because of smaller grain harvest and bigger con-sumption. Maize resources may de-crease the most (to 31 million tons). Transitional resources in the main grain exporters (Argentina, Australia, Can-ada, EU, Kazakhstan, Russia, Ukraine, USA) were decreased by 55 million tons (to 105 million tons) – the smallest amount since 2003/04. According to the data by IGC analysts of November, 2010, 2010/11 forecast of wheat harvest remained the same, compared with the last month, and should make 644 million tons. That will

be 5% less than in 2009/10, but still would remain in the third place accord-ing to the size. While the harvest time has run up in the south hemisphere, bigger wheat harvest is expected in Brazil and Argentina. Continuous rain in East Australia stopped the harvest time, and the predicted harvest should make 23 million tons. However, there are more and more re-ports that wheat harvest may be smaller and of worse quality in some regions. Smaller wheat harvest is pre-dicted for USA and Ukraine. Wheat consumption in the world in 2010/11 was increased by 2 million tons (to 660 million tons), comparing November forecast with October fore-cast. The main reason is bigger than predicted purchasable feeding wheat amounts in the states of Asia-Pacific Ocean regions, including South Korea and the Philippines because of attrac-tive price. IGC analysts predict that wheat trade forecast in the world in 2010/11 should increase by 1.6 million tons (to 121.6 million tons), compared with October, because of bigger feeding wheat pur-chase. That will be 5.8 million tons less than in 2009/10, when the demand of alimentary wheat was higher in Middle East. According to the latest forecast, world grain resources in 2010/11 should de-crease by 16 million tons, compared with 2009/10, and make 180 million tons, in the presence of small resources decrease in Russia and the EU.

Wheat and rye procurement prices have increased in Lithuania in the beginning of December, 2010. Lithuanian grain procurement compa-nies bought wheat at the average price of 691.4 LTL/t during 48th week (11 29-12 05) of this year – at 7.7% higher price than a month before (44th week (11 01-07)). Rye average procurement price during the mentioned period increased by 12.4% (to 615.1 LTL/t). However, average procurement price of feeding barley (II class) decreased by 1.3% (to 553.1 LTL/t) during 48th week, compared with 44th week. Average rape procurement price has decreased by 3.3% (to 1259.1 LTL/t) during this period.

2

2010/11 forecast of world grain harvest reduced by 5 million tons

World Bank: Russian grain ban ineffective

The World Bank suggested alternative solutions for the short and long term. In the short term, it suggested using global markets to fill any temporary grain shortfalls and protecting the poor through reducing taxes and tariffs on key food products. The World Bank also suggested making full use of the grain intervention fund to reduce pres-sures on the domestic market.

For the medium to long term, the World Bank suggested targeting cash transfers to vulnerable groups. It noted that cash transfers are used by many countries including Brazil China, Mex-ico and South Africa, and are effective in ensuring income transfers to vulner-able population segments. In compari-son, export restrictions do not reduce farm-gate prices and result in a nega-tive supply response.

Another suggested strategy is to im-prove transport and logistics. These costs are often a key component of food prices and are generally higher than Organization for Economic Coop-eration and Development (OECD) benchmarks, the World Bank said. Countries can World to lower the over-all cost of do-mestic distribution. It said that severe difficulties in exporting Russia's 2008 bumper crop highlight the importance of sufficient and effi-cient transport and distribution infra-structure.

Russia recently announced that it is making an investment of S 1.64 billion to build new sea grain terminals and junction silos, and to create an inde-pendent Transport Grain Company to help competition development in the railway transshipment market. The pro-jects are expected to be completed by 2015, according to Sergey Levin, man-aging director of the United Grain Company, established last year as Rus-sia's nee state grain trader.

The World Bank suggested Russia encourage a more robust agricultural insurance framework. Farmers are con-cerned about high premium costs and inadequate claims settlements, and overall are seriously underinsured, it said. A more robust framework would boost investment in infrastructure such

as on-farm storage, which would make natural disasters more manageable.

The final suggestions included in-creasing public investment programs to support agricultural productivity improvements, national irrigation de-velop-ment and a rehabilitation pro-gram, nationwide price market price information services, and strengthen-ing the capacity for food policy forma-tion.

The drought — the worst in decades — has had a major impact on the na-tion's economy, the World Bank said. Close to 40% of the crops in the im-pacted regions — Central Russia and in the west along the Volga River — have been destroyed. Wheat prices saw the biggest jump since 1973, which has impacted a range of food prices. Prices for grains and related products have soared since July, the World Bank said. Buckwheat prices more than dou-bled from June through October, and potato prices increased by 30%. Simi-larly, prices of meat, eggs and cereals increased more than was typical during summer.

At the onset of the drought, 27 out of 88 regions in Russia declared an emer-gency. Price increases were seen throughout the country, but regions in Central and Western Russia were par-ticularly affected, the World Bank said.

Net effect of the price increases on household consumption was esti-mated as a loss in real household in-come due to an increase in expendi-tures as a result of higher food prices.

People on a fixed income will be the most impacted, with that group seeing a 2.6 percentage point increase in pov-erty. The World Bank said the impact on pov-erty was sizeable but tempo-rary.

As the world‘s third largest grain ex-porter, the drought also impacted global food developments, but less than was expected, the World Bank said.

Brought to you by “World grain”, December 2010

Putin says Russia may be forced to import grain Domestic grain price hikes may force Rus-sia to start importing grain, Russian Prime Minister Vladmiir Putin said on Nov. 29. "If necessary. when we see that prices are growing, we‘ll implement those ag-reernents (on imports) and channel additional grain supplies to the do-mestic market," Putin said. Russia earlier this year imposed a tem-porary ban on grain exports while the country's Agriculture Ministry said it was negotiating grain purchases from Ukraine and Kazakhstan. Putin said he had agreed with some of this counterparts from the countries which had not suffered from the drought or suffered less than Russia that they would set aside necessary grain volumes. Putin said the government had "enough instrurnents to restrain grain prices."

3

Marubeni aims to take on big five crop traders

Japan's biggest grain trader, aims to take on the world's largest agricultural comrno-diny traders by shipping more crops on the back of strong demand for food in emerging Asia. according to a Nov. 28 article in the Financial Times.

Marubeni. presently the sixth-largest grain trader by volume in the world. ex-pects to ship 25 million tonnes to cus-tomers by 2012 or 2013, up from an ex-pected 20 million tonnes this year, chief executive Teruo Asada told the Finan-cial Times.

The company has nearly doubled its grain shipments in the past five years. Japanese trading companies have tradi-tionally focused on importing oil and other commodities to their resource-poor home market. But with Japan's popula-tion shrinking and its economy long past its high-growth phase, Marubeni and competitors Itochu, Mitsubishi, Mitsui and Sumitomo are now turning abroad. After focusing on oil, metals and miner-

als for decades, the Japanese trading houses have identified agricultural commodities as a source of growth as concerns about food security spread in Asia on the back of the food shortages in 2007-08.

To break into the top five traders would require Marubeni to take market share from Archer Daniels Midland Co., Bunge and Cargill of the U.S. France's Louis Dreyfus, and Swiss-based Glencore.

Asada told the Financial Times that Ma-rubeni was better positioned than its U.S. and European rivals to take advan-tage of new opportunities in Asia, espe-cially China.

"The grain majors are simply supplying corn, soy and other grains to China. But we are using our grain to get into re-lated businesses like rnilling and animal feed processing," he said. ""That's the sort of thing that only a general trading com-pany can do."

Rusgrain Holding announces ap-pointments Rusgrain Holding OJSC announced on November 8 several appointments for member companies. Timur Butov was appointed CEO of Rus-sian Grain LLC, the managing company of the agricultural holding, as well as general director of Russian Grain Trad-ing House LLC. This is the first time that the CEO position has been introduced at Russian Grain due to significant business growth. Day-to-day management of the agricultural holding, as well as further development of the company's presence in the agricul-tural market, will fall within the CEO's role. Butov has 12 years of management ex-perience in some of Russia's leading agri-cultural holding companies. Earlier, Butov headed Razgulyay Grain Company CJSC, member of the Razgulyay Group, for two years. Maxim Chemikov was appointed to lead Russian Grain's foreign economic activ-ity department, a position he had previ-ously held in the Razgulyay Group. "We are glad that our management team will be reinforced by such professionals as Mr. Timur Butov and Mr. Maxim Chemikov. Mr. Butov has an extensive management extensive at grain compa-nies, and we believe that employing such a professional manager will con-tribute to further development of the trading and production divisions of the Group, as well as to a more efficient daily management of the Group‘s activi-ties from the single headquarters," said Alexey Verkhoturov, general director of Russian Grain.

4

Procurement prices of agricultural products increased by 19.8% within a year

According to the data by the Statistics Agency, procurement prices of agricul-tural products increased by 19.8% in November, 2010, compared with the same period in 2009. During this year, procurement prices of crop products have increased by 37.7%, animals and stock-raising – 8.9%. Prices of fruits (4 times), buckwheat (3.1 times), corns (2.4 times), rye (2.3 times), triticale (2 times), pulses grain (78.2%), wheat (65.2%), potato (64.3%), barley (58.0%), rape seeds (49.7%), maize (49.4%) and vegetables (49.2%) have increased the most. Among animals and animal prod-ucts, procurement prices on sheep and goats (40.7%), natural milk (24.0%) and livestock (13.5%) have increased. Prices on eggs have decreased by 24.5%, pigs – 8.0%, birds – 1.8%. During one month (November, 2010, compared with October, 2010), pro-curement prices of agricultural prod-ucts increased by 6 percent, because procurement prices of animals and stock-raising increased by 0.9%. Such

change was influenced by procure-ment prices of animals and live-stock products, which increased by 1.8%, and crop products, which decreased by 0.1%. In terms of crop products, prices of fruit (3.7 times), maize (13.1%), pulses grain (7.3%), corns (7.2%), rape seeds (7.0%), wheat (4.2%), rye and bar-ley (at 2.2%), potato (2.0%) and vegeta-bles (1.3%) increased the most. Prices of triticale (7.4%), corn mixes (2.9%), buckwheat (0.5%) and corns for proc-essing (0.3%) decreased. In terms of animals and stock-raising, prices of live-stock (9.2%), birds (6.6%) and natural milk (0.9%) have increased. Prices of pigs (1.8%), sheep and goats, and eggs (at 1.2%) have decreased.

MILK ECONOMY MARKET

Export of some milk products to the third countries in-creased in Holland in January-August, 2010 Holland exported 383.09 thousand tons of cheese in January-August, 2010 – 6% more than during the same period last year. Export of this product to other countries grew by 4% (to 320.42 thousand tons), and to the third countries – even by 24% and made 62.67 thousand tons. Cheese export to Russia increased by 44% (to 4.23 thousand tons), to Germany – 9% (to 135.35 thousand tons), but decreased to France and Belgium and respectively made 4% (to 41.23 thousand tons) and 10% (to 36.21 thousand tons). During the analysed period, 75.52 thousand tons of butter and melted butter were exported to other EU countries – 20% more than in the same period in 2009, but export of this product to the third countries has decreased by 5% and made 27.73 thousand tons. The biggest amount of this product was exported to Germany (24.36 thousand tons), Belgium (21.80 thousand tons) and Iran (4.97 thousand tons). Export of skim milk powder (SMP) in Holland increased both to the third countries and other EC countries in January-August, 2010. 39.55 thou-sand tons of SMP were exported to the third countries – 36% more than in January-August, 2009, and amounts of this product, exported to other EU countries, have in-creased by 10% and made 21.98 thousand tons. The biggest amount of SMP was exported to Belgium (9.107 thousand tons) and Nigeria (7.26 thousand tons). Holland exported 94.77 thousand tons of whole milk powder (WMP) to the third countries in this January-August – 9% less than in the same period in 2009. However, the export of this product to other EU countries has increased by 5% and made 9.71 thousand tons. The biggest amount of WMP during the analysed period was exported to Germany (4.17 thousand tons) and Nigeria (20.09 thousand tons).

The European Commission offers new means of increasing milk sector stability

Average natural milk procurement price LTL/t of Lithuanian biggest

milk shoppers

5

On 9 December, the European Commission

(EC) agreed for concerted relations in milk

sector, in order to improve the position of

milk producers in milk supply chain and

assure bigger sector‘s orientation towards

the market and stable future.

Possibility to make agreements in writing, bargain together for conditions of the agreements through producers organiza-tions, in order to assure balance of power of milk producers and main processing com-panies, was projected in the offer for milk producers and processing companies, as

well as special EU rules, applied for inter-branch organizations, and means for in-creasing clearness of market were indi-cated. It is offered to adopt the means until 2020, preparing two transitional reviews till that time. Appropriate quantitative restric-tions and other special protection means, indicated for collective bargains, should help increase negotiating power of milk producers, keeping competition and pro-tecting interests of small and medium com-panies. Besides, EC accepted milk market report, where smooth and gradual cancella-tion of milk quotas system is discussed.

Name of a company

Average natural milk procurement price,

LTL/t

Milk, for which

deductions due

to quality were

not applied

Milk, for which

any deduction

due to quality

was applied

Average

milk pro-

curement

price

AB "Pieno zvaigzdes" companies group 1042,5 716,4 1036,1

UAB "Marijampoles pieno konservai" 940,2 748,5 937,2

AB "Rokiskio suris" companies group 982,4 777,2 977,0

AB "Zemaitijos pienas" 1028,7 863,8 1022,7

UAB "Vilkyskiu pienine" 941,1 708,9 927,1

AS (Agricultural society) "Salteksnis" 896,2 1124,4 953,2

UAB „Vikeda“, Kedainiai 1271,6 1271,6 Bariunai AS (Agricultural society), Jo-

niskis district 758,2 535,2 756,8

Dairying cooperative "Zalmarge" 809,6 578,7 803,3

Average milk procurement price, Lt/t 1005,4 799,4 999,1

Powder prices edge up

World prices for powder are rising, but butter and cheese prices remain unchanged. US SMP/NDM prices are also rising with reports of higher ex-port demand, reflecting more uncer-tainty over supplies in 2011, with an 11% cut in Fonterra's SMP supplies at the GDT auction. NZX WMP futures have also trended higher with trades of $3,750/t for next March. NZ milk supplies are falling seasonally with the decline accelerating due to drought on the North Island—10wks earlier than last year. Australian farm-ers have been facing floods and pro-

duction from July to October was only just above a year ago. More irrigation water could boost milk supplies later in the season, and ABARE forecasts a 1.4% rise for the 2010-11 season. US butter and cheese prices have plum-meted during the past 2mths, and are now well below world price levels. Up to October, the US exported 140,000t of cheese and 48,000t of butter in 2010, 60% and 160% up on 2009 re-spectively.

Markets more positive

UK commodity markets are increas-ingly positive, with more optimism that prices in the New Year will not plum-met. The butter market has stabilized at £2,800/t-£3,000/t with discounted parcels now rare and manufacturers looking to hold prices. Cream prices have been 145p/kg-160p/kg for some weeks, with January prices only 15p/kg down, helped by a fall in the £/€ rate in the past fort night. SMP prices have been rising, reflecting higher EU prices. The milk equivalent but-ter/powder price is around 27ppl. Butter output was up 13% year-on-year in October, but is now at its seasonal low and the market is tight, with very little SMP or butter avail-able outside regular contracts. UK cheese manufacture rose by 2% year-on-year in October, but Cheddar output in England and Wales was marginally down, with no reports of excessively large stocks. Mild Ched-dar prices have been fluctuating and are £2,560-£2,900, with perhaps a few more discounted parcels around, but are currently stable. For the first 2wks of December, UK milk deliveries were only 1.8% up on last year, and affected by spells of cold weather, which will continue to bring some disruption. Tesco, Sains-bury and Marrison’s have raised liq-uid prices to £1.55/4 pints, with Asda still selling at £1.25.

Markets firm, SMP tight

Despite the disruption of Christmas demand and difficult weather, EU markets are firm, with some future uncertainty. SMP prices have surged almost 10% in 5wks with the gap be-tween food- and feed-grade powder continuing to close, now €100/t com-pared with €200/t in November. Prices are more than 25% above inter-vention at €2,100/t-€2,200/t. At their first sale since early October, the EU Commission last week sold, 4,500t of intervention powder at €2,071/t to €2,121/t, which will ease the tight supply. Little is available for spot sale, with speculation that Algeria bought 35,000t. Although 195,000t of SMP is in intervention, only 26,700t is for sale —product that entered stores before May 2009 and not reserved for future charity schemes. The EU is likely to export nearly 400,000t of SMP in 2010—more than 35% of output, and the highest since 1992. The €/$ has fluctuated but has had no overall trend in December, stabilizing export returns. EU butter prices are stable, tipping 60% above intervention, having fallen by 5% since early October—and still above world market prices, in the range €3,500/t-€3,600/t, as the market quietens. Butter output has been be-low a year ago for much of 2010, re-sulting in manufacturers struggling to fill domestic EU demand, and keeping prices high, although the growth in milk supplies over the past 3mths has

enabled more butter manufacture than expected. PSA stocks total 33,000t, with around 4,000t a week coming onto the market, and may now be sufficient to meet demand over the next 2mths, being only 5,000t down on a year ago. Butter ex-ports are expected to be around 140,000t in 2010, less than 10% of production, and similar to the amount exported in the past 2yrs. WMP prices are up by 5% since mid-November at €2,800/t-€2,900/t, bene-fiting from more export demand. Ever-volatile whey powder prices have risen by €100/t in a month, approach-ing €800/t at the end of last week. Cheese production has been rising, up by 2% year-on-year from April to September, and along with fresh prod-ucts, has been absorbing the higher milk supplies, with demand firm and stocks low for this time of year. Cheese prices are 15%-20% up on a year ago and are expected to remain stable in January. In France and Ger-many, the year-on-year gain in milk supplies over last year has shrunk to 2%-2.5%, which could be weather re-lated or reflecting increased feed costs. If it is the latter, this will help markets remain firm into 2011.

6

Cheese down to 9mth low

Milk deliveries up 1.8 % in first half of 2010

EU milk deliveries, which were a combined 7% under quota for 2009-10, were up 1.8% in the first half of the current year, Apr-Sept, accord-ing to figures just released by the European Commission. Biggest in-creases were recorded by Ireland (+7.4%), Latvia (+5.4%), Belgium (+4.5%), UK (+3.7%), France (+ 3.4%), the Netherlands (+ 3.3%) and Austria (+ 3.0%). By contrast some member states, mainly in eastern Europe, showed major declines compared with last year: Hungary (-9.1%), Romania (-7.7%), Slovakia (-5.1%) and Bulgaria (-4.9%).

Ukrproduct Group, in a trading up-

date for the year to December 2010,

said full-year sales were expected to

be in line with the previous year,

while gross profit in the branded

products segment was expected to

nearly double in the second half,

largely as a result of growth in the

profitability of packaged butter and

spreads. The group's profit before tax

in the second half was also expected

to be nearly double what it was in

the first half. Pre-tax profit for the

full year was expected to show low

double digit growth year-on-year.

Net profit might be affected by more

stringent tax regulations. The pur-

chasing power of the Ukrainian

population had deteriorated further

in the second half of 2010 with infor-

mation from food retailers suggest-

ing that the value of an average retail

food bill fell by 20% to the beginning

of November, the company said.

A cold and snowy December has hit milk flow in the eastern half of the US. In addition, processors are already planning for reduced milk output in 2011 as the implications of negative margins (lower milk prices, higher feed costs) play out. In the short term, how-ever, cheese supplies are long and prices fell to their lowest level since March as manu-facturers look to pare holdings before the end of the year. Holiday pipelines are filled and users are keeping orders to a mini-mum until they see how the season finishes. Also, more milk is usually channelled into manufacturing in the second half of December, so cheese stocks are building. On the other hand, firm international markets are supporting US butter, NDM and whey prices. The butter market was bid

back up to $1.6525. Exports remain good and competition for cream has been strong though now slowing. Production will pick up after the start of the year but tight inventories re-main a concern. NDM prices have crept above $1.20—the highest since July—as steady export business con-tinues to clear seasonally increasing production. Whey prices are firm with little spot supply available. Both but-ter and NDM futures settled at new contract highs last week, reflecting more bullish expectations for the up-coming year. Butter futures for 2011 average $1.73, which would be the highest for a full year since 2004. NDM futures average $1.22. Whey futures are on the rise again as well; 2011 contracts average 38.5¢

7

Global certain dairy products price LTL/kg

1 prices in foreign countries (Lt) made in accordance with the exchange rate on the date of LB 2 compare with latest two weeks 3 comapre 2010 y. and 2009 y. the data for the periods 4 compare 2010 46-47 weeks to 44-45 weeks

Product name Average price

USA CME, FOB

2009 2010 Change %

48 sav. (11

23-27)

45 sav. (11

08-12)

46sav. (11

15-19)

47 sav. (11

22-26)

48 sav.

(11 29-12

03)

week year

Butter, AA

CME

7,75 10,93 10,91 9,84 9,00 -8,51 16,07

Cheese Ched-

dar tipe, units 8,28 7,68 8,00 8,30 8,67 4,36 4,70

LMP, Central and Easten

region, FOB 6,76 6,76 6,92 6,94 7,14 2,80 5,53

NPA, Nacional, FOB 7,42 9,25 9,47 9,50 9,76 2,80 31,56

Whey powder, Central

region, FOB 1,85 1,94 1,99 2,01 2,07 2,80 11,70

Western Europe exports, FOB

2009 2010 Change %

46-47 sav.

(11 09-20)

44-45 sav.

(11 01-12)

46-47 sav.

(11 15-26) 2 week year

Butter, 82% fat. 11,53 12,94 13,04 0,77 13,08

WMP 7,77 7,01 7,16 2,07 -7,85

SPM 9,09 9,05 9,23 1,92 1,47

Melted butter 11,77 14,09 14,41 2,30 22,44

Whey powder 2,50 2,29 2,55 11,33 1,76

Oceania exports, FOB

2009 2010 Change %

46-47 sav.

(11 09-20)

44-45 sav.

(11 01-12)

46-47 sav.

(11 15-26) 2 week year

Butter, 82% fat 8,53 11,12 11,45 2,98 34,22

WMP 7,89 7,54 7,76 2,98 -1,56

PM 8,24 8,65 8,97 3,71 8,89

Cheese Cheddar tipe 9,12 10,26 10,69 4,22 17,19

FERTILIZER MARKET

World prices of urea ammonium saltpetre (UAS) remained quite stable. Product of Romanian pro-duction was sold at 721 LTL/t. In Egypt, UAS price was a little smaller and made 708 LTL/t (FOB conditions), and in USA – a little higher – 734 LTL/t. World prices of both ammonium nitrate and ammonium sul-phate are also rapidly increasing. The price and demand of the lat-ter is closely related to UAS. The price of ammonium nitrate has increased to 747 LTL/t (FOB con-ditions) in the port of the Black Sea, and ammonium sulphate – to 567 LTL/t. In Brazil, ammo-nium sulphate was sold at 605 LTL/t (CFR conditions) in the be-ginning of November, but till the end on the month prices in-creased to 670-683 LTL/t. Turkey sold ammonium nitrate at 755 LTL/t for CIS states for December, but later bargains were made at 773 LTL/t price. In Mexico, granu-lar ammonium sulphate was sold at 708-721 LTL/t. Prices of ammo-nium sulphate remained a little smaller in Asia for some time. In Indonesia, these fertilizers were sold at 528-541 LTL/t (CFR condi-tions), in China – at 464-477 LTL/t and South Korea – 515 LTL/t (FOB conditions).

Prices are increasing in world nitric fertilizers market

8

World urea prices increased by 20-25% in the end of year (in November), compared with the beginning of 2010 (in January-February), and compared with the beginning of summer (June), urea prices increased by more than 40%. Although this situation is not satisfying to the buyers of fertilizers, increase of world demand provides conditions for growth of price. India bought 500 thousand tons urea con-signment, which consisted of fertiliz-ers, produced in China, Iran and Ukraine, during the last biggest bar-gains. Price of Chinese fertilizers made 953 LTL/t. Urea, bought in port Yuz-hny, cost 927 LTL/t, and urea of Iran – 966 LTL/t. While urea price in port Yuzhny made 678 LTL/t (FOB conditions) in July, the price for trade in December reached 966-979 LTL/t. Urea, produced in Tur-key, was sold a little cheaper (953 LTL/t), and the product from the Baltic States was sold at 861 LTL/t. Urea in Egypt port, sold for trade in Europe, cost 1,056-1,236 LTL/t. However, Bra-zilian customers have suspended bar-gains, where urea price reached 1,005 LTL/t (CFR conditions), and USA cus-tomers were glad because of slightly decreased urea prices, which made 953-966 LTL/t (FOB conditions). In Thailand, granular urea was sold at 1,056 LTL/t (CFR conditions), in China – at 1,082 LTL/t and in Bangladesh –

at 922 LTL/t (FOB conditions). Increasing prices of ammonium sul-phate induce the increase of urea price. That shows that urea prices will continue to grow in the short run. In-dia has bought 50-60 thousand tons of urea in the region of the Black Sea, Ukrainian port Yuzhny, and reserved a cargo of another 20 thousand tons at 979 LTL/t for the beginning of Decem-ber. Brazil bought 30 thousand tons in November and ordered 25-30 thou-sand tons of urea for December. The factory “Dniepr” in Horlivka renewed production of urea and ammonium in order to prepare about 50 thousand tons of urea for their customers on time. Russia sold 10 thousand tons of urea at 927 LTL/t in December. No-vosibirsk “Eurochim” sold urea at 966 LTL/t. Romania sold urea of their pro-duction for European markets at 1,005 LTL/t in November, and the new bar-gains were already at 1,030 LTL/t (FOB conditions). Urea price of Baltic States’ producers in St. Petersburg port ranged from 927 LTL/t, and in more southern ports – to 953 LTL/t and more. In Canada, urea was sold at 1,005 LTL/t (FOB conditions), USA bar-gains were made at 966 LTL/t, and in South and Central America prices were a bit smaller. In Guatemala, urea was sold at 927 LTL/t, and in Peru, the price of this fertilizer made 927-938 LTL/t.

Market of ammonium is still condi-tionally stable. CIS (Commonwealth of Independent States) states supplied ammonium to port Yuzhny at 1,005-1,017 LTL/t (FOB conditions). It was attempted to sell ammonium at 1,030 LTL/t, but the customers refused and no new bargains were made. The cur-rent price is quite affordable, because there is no need to transport the product from far states. Besides, after Gorlovka renewed the lines of ammo-nium and urea, additional 5 thousand tons of these products should be car-ried to the port till the end of Novem-ber for December selling. Morocco

has reserved 23 thousand tons of am-monium at 1,120 LTL/t (CFR condi-tions) in port Yuzhny even earlier. The price of ammonium for December was reduced by 25.76 LTL/t in port Tampa in the Gulf of Mexico. Such conditional stability should remain till the end of December. Though, after good autumn season in USA, needs for phosphates and nitrates may in-crease in the first quarter of 2011.

European fertilizer prices

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CAN 27 % CAN del retail

KCI KCI (G) fot ex-store

DAP 14-46% DAP fob/fot bulk $

AN AN 33,5% gran del

Urea Urea prill fot

UAN UAN 32%N

Data source: Fertecon European Fertilizer Fax, 23 December 2010

Belgium - €/t bulk 23 December 10 December

CAN 27% del retail 248-50 243-252

KCI (G) fot ex-store 340-342 322

DAP fob/fot bulk $ 615-620 610-615

France- €/t bulk

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

AN 33,5% prill fot bgd 295-305 275-285

Urea prill fot 320-325 320-325

Urea gran fot 330-335 340-345

DAP fot 470-475 455-460

KCI gran fot 340-342 320-323

Germany - €/t bulk

CAN cfr imp inland 235-247 235-247

Urea prill cfr 310 285-286

15-15-15 cif inland 325 325

DAP fot seaport 473-488 463-464

Ireland - €/t bagged

Urea gran del 375-380 380-385

CAN 27,5% del 295-300 298-300

27-6-6 del 380-385 385-387

Italy - €/t bagged

Urea gran fot 350-360 345-350

Urea prill fot 340-350 335-340

CAN (27%) fot 270-275 260-265

DAP fot 475-480 455-460

Netherlands - €/t bulk

Can cif del inland 235-243 235-243

KCI (G) fot ex-store 340-342 322-323

Spain - €/t bulk

CAN 27% fot 250-258 250-258

Urea prill fot 330-335 325-330

DAP fot 460 460

15-15-15 fot 340 320-325

United Kingdom - £/t bagged

AN 34,5% del farm 295-305 295-305

AN cif import 270-275 270-275

Urea prill cif bulk 280-285 270-275

Urea gran cif bulk 290-295 285-290

DAP cif bulk 395 395-400

Baltics - US $/t 23 December 10 December

Urea prilled bulk 355-376 350-370

Ammonium Nitrate prilled 295-305 295-305

UAN 32%N 365-270 265-285

DAP 567-573 567-573

MAP 570-585 570-574

KCI standard grade 370-405 355-375

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

Subscribe to free updates in the website www.agrowill.lt

On 15 December, the Government of the Republic of Lithuania has con-firmed new preparation and imple-mentation rules for land consolidation projects, as announced by the Minis-try of Agriculture. Land consolidation, implemented in Lithuania, will allow using land plots more effectively, im-proving farming conditions and de-veloping rural facilities. The Govern-ment agreed to change the decision, valid since 2005, specifying proce-dures of project preparation and im-plementation rules. The body in charge of preparation of consolida-tion projects was also confirmed by the new order, delegating this func-tion to the state enterprise “State Land Fund”, instead of heads of dis-tricts. List of subjects, which can par-ticipate in the process of land consoli-dation, was complemented in rules of land consolidation projects. Right to participate in the projects has been extended to municipalities and state land trustees. Considering the experience of prepar-ing and implementing the first 14 land consolidation projects in 2005-2008, provisions of preparing land evaluation plan and components of land consolidation project have been specified in the new rules.

During the implementation of land consolidation, borders of land plots, located in a particular rural territory, were rearranged in a complex way, joining them in order to form ration-ally managed agricultural domains and create proper rural infrastructure. Consolidation helps improve farming conditions, forming less land plots of better form by joining them. In Lithuanian Rural Development pro-gramme of 2007-2013 it is predicted that implementation of land consoli-dation projects will be fully financed by European Union, so owners of land do not have to invest their money. Land owners, especially farmers, who want to improve the domains of their land, are encouraged to submit appli-cations to “State Land Fund” and ac-tively participate in land consolidation projects. Contacts for further information as in-dicated by the Ministry: “State Land Fund”: Konstitucijos pr. 23, phone: (+370 5) 2623 000, Information about land consolidation: phone: (+370 5) 2391 320, e-mail: giedre.leimontaite@nzt.lt

MARKET OF AGRICULTURAL LAND

Data sourses: Fertecon European Fertilizer Fax,

23 December 2010, Dairy Industry Newsletter 21 December ,

2010, Vol 22, No. 17,

Agro rinka, Nr. 23 (150)/2010 m., www.vz.lt , www.fendt.com,

www.valstietis.lt; www.ukiozinios.lt, www.lrytas.lt, zum.lt, manoukis.lt, savasu-

kis.lt, Web sites of other companies and other public sources of information

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New preparation and implementation rules for land consolidation projects confirmed