Grain and Feed Report 2012

An Expert's View about Crops and Support Services in Italy

Posted on: 20 May 2012

MY 2012/13 Italian wheat area is expected to increase by about 15 percent, recovering from the previous year.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 5/10/2012 GAIN Report Number: IT1212 Italy Post: Rome Italian Grain and Feed Report 2012 Report Categories: Grain and Feed Approved By: Jim Dever Prepared By: Stefano Baldi Report Highlights: MY 2012/13 Italian wheat area is expected to increase by about 15 percent, recovering from the previous year. Both soft and durum wheat acreage significantly increased due to excellent weather in the fall of 2011 and to relatively profitable prices. Italian corn area is forecast to increase also by about 2 percent from the previous year to approximately 1 million hectares, while rice sowed area is estimated to drop by almost 4 percent with a production expected to fall accordingly. 2,250 Soft wheat Durum wheat Barley 2,000 Rice Corn 1,750 1,500 1,250 1,000 750 500 General Information: 250 Total cereals area in Italy is estimated at 3.5 million hectares (MHa), which is equivalent to about 25-30 percent of total Italian agricultural area. Despite the sharp decline in durum wheat area over the past decade, durum is still the leading cereal crop, responsible for almost 40 percent of total Italian cereal area. Corn and soft wheat follow with 27 and 17 percent respectively. Durum is planted mainly in the south while soft wheat, corn, and rice are largely cultivated in northern Italy. 0 Planted area trend for main cereals (’000 ha) *Estimates Source: Istat, Enterisi. Wheat About 70 percent of durum wheat area is located in the south of Italy while 70 percent of the total soft wheat area is in the north. In general, yields are considerably higher in the northern regions mainly due to a much intensive use of inputs, innovation, and modern agricultural practices. However, soft and durum wheat yields have slightly increased for the last decade mainly in the south. Production, Supply and Demand of wheat (‘000 ha, ‘000 MT) W Estimate Estimate Forecast heat total 2010/11 2011/12 2012/13 Marketing Year Begins 07/2010 07/2011 07/2012 Area 1,810 1,630 1,870 Beginning Stocks 1,910 1,710 1,110 Production 6,490 6,120 6,750 Intra EU27 imports 4,850 4,100 4,300 Extra EU27 imports 2,681 3,100 2,920 Total imports 7,531 7,200 7,220 TOTAL SUPPLY 15,931 15,030 15,080 Intra EU27 exports 1,736 1,835 1,860 Extra EU27 exports 1,322 1,290 1,325 Total exports 3,059 3,125 3,185 Food 8,277 8,153 8,162 Seed 361 317 316 Industrial 414 355 356 Feed 2,110 1,970 1,981 TOTAL consumption 11,162 10,795 10,815 Ending Stocks 1,710 1,110 1,080 TOTAL DISTRIBUTION 15,931 15,030 15,080 Production MY 2012/13 Italian wheat area is expected to increase by about 15 percent, recovering from previous MY. Both soft and durum wheat acreage significantly increased due to excellent weather conditions in the fall 2011 and to relatively profitable prices. A three-week period of very cold weather in late January and the first half of February, the Italian wheat crop did not damage the crop partly due to the abundant snow coverage. MY 2012/13 wheat production is forecast to increase accordingly. Industry experts speculate that the severe drought occurred in early spring is not expected to affect negatively this year‟s harvest. While soft wheat supply and demand did not change much in MY 2011/12, Italian total wheat supply and distribution decreased significantly due to a sharp fall in durum wheat production and imports. In fact, MY 2011/12 durum wheat production decreased due to decreased sowings in fall 2010 and to not-exceptional yields. 300 280 260 240 220 200 180 Durum wheat Soft 1and 60 durum wheat weekly farm gate price trend (€/MT) 140 Soft wheat 120 Source: ISMEA. Consumption Italian soft wheat consumption fluctuates around 7.5 million metric tons (MMT), mainly destined for the milling industry (approximately 70 percent is milled to produce flour for food purposes) and to the feed industry (25 percent). Italian durum wheat supply fluctuates around 7 MMT--almost all of which is utilized by the pasta industry. According to the International Pasta Organization (IPO), Italy is the largest pasta producer and consumer in the world. Italian per-capita consumption of pasta was estimated in 2011 at 26 kg, twice as Venezuela, which ranks second with 13 kg per person. Pasta is a traditional staple in the Italian diet. It is consumed on a daily basis, and its consequent status as a commodity means purchasing tends to be very much related to price, with little loyalty to brands. Pasta value and volume sales are set to decrease slightly over the forecast period. Expectations for domestic pasta consumption are not promising, due in part to expected cereal price volatility in the coming years, together with a possible reduction in consumer purchasing power and the offer in the market. Trade Italy imports good quality soft wheat for milling mainly from France and central-eastern European countries (Austria, Hungary, and Germany) and the United States, with smaller amounts from Canada. Italy imports medium-quality, low-price feed soft wheat from Ukraine and Russia. However, in MY 2010/11 feed wheat imports from Ukraine were replaced by increased imports from France, Hungary, Romania, Bulgaria, and other eastern-EU countries. Following Russia and Ukraine re-opening their exports in 2011, recent trade figures show these two countries regaining their position among Italy‟s major suppliers. Italy is the third largest durum wheat market in the world importing around 2.2 MMT, mainly from Canada, the United States, Greece, Mexico, France and recently also from Turkey. Pasta is mainly consumed in the domestic market but significant quantities are increasingly exported to EU (Germany, France, and UK) and non-EU countries (United States, Japan, and Russia). MY 2011/12 durum wheat imports declined due to Italian millers and pasta producers increasingly demanding for domestic production and stocks rather than importing from third countries. Italian millers started to purchase wheat on a monthly basis (short coverage) and mainly from domestic producers/stockers in order to avoid a strong price drop (possibly driven by the current Canadian durum wheat “dumping” strategy) and waiting for a positive domestic harvest in MY 2012/13. Soft wheat imports by trade partner ('000 MT) 2009/10 2010/11 Jul-Dec 2010/11 Jul-Dec 2011/12 EU-27 3,705 3,928 2,109 1,940 France 1,525 1,905 808 768 Austria 475 453 276 222 Hungary 455 433 360 285 Germany 626 367 175 170 Bulgaria 141 189 80 290 Romania 178 157 146 110 Netherlands 103 112 103 23 Extra-EU-27 935 956 455 844 United States 97 419 167 58 Canada 225 244 116 128 Ukraine 109 65 20 196 Russia 133 18 15 410 World 4,640 4,883 2,564 2,784 Source: GTA. Durum wheat* imports by trade partner ('000 MT) 2009/10 2010/11 Jul-Dec 2010/11 Jul-Dec 2011/12 EU-27 490 847 510 363 Greece 168 387 230 159 France 204 316 211 126 Extra-EU-27 1,720 1,717 1,053 854 Canada 621 749 519 496 United States 330 399 189 154 Mexico 332 316 208 55 Australia 125 181 81 100 World 2,210 2,564 1,563 1,217 *grain only, HS code 100110 Source: GTA. Pasta exports by trade partner ('000 MT) 2009/10 2010/11 Jul-Dec 2010/11 Jul-Dec 2011/12 EU-27 1,058 1,071 531 561 Germany 329 321 160 163 France 253 256 126 146 United Kingdom 204 210 105 106 Sweden 40 41 20 22 Netherlands 42 39 21 20 Austria 29 29 15 15 Belgium 28 29 12 16 Extra-EU-27 524 594 291 279 United States 115 125 62 69 Japan 84 88 40 39 Russia 24 36 19 19 Switzerland 28 27 14 13 Canada 21 23 12 13 World 1,582 1,665 822 839 Pasta includes durum wheat uncooked pasta and couscous (HS codes 190219, 190230, 190240), not converted to wheat grain equivalent. Source: GTA. Corn Corn is mainly cultivated in the North of Italy particularly in the Po Valley where abundant water allows farmers to irrigate over the summer when rainfall is scarce. Corn is planted in Italy between the end of March and mid-May while the harvest season begins in late August-early September and runs through the end of October. Production, Supply and Demand of corn (‘000 ha, ‘000 MT) C Estimate Estimate Forecast orn 2010/11 2011/12 2012/13 Marketing Year Begins 10/2010 10/2011 10/2012 Area 915 970 990 Beginning Stocks 1,000 900 1,150 Production 8,650 9,220 9,300 Intra EU27 imports 2,012 1,900 1,800 Extra EU27 imports 714 700 450 Total imports 2,726 2,600 2,250 TOTAL SUPPLY 12,376 12,720 12,700 Intra EU27 exports 107 135 130 Extra EU27 exports 25 35 30 Total exports 132 170 160 Food 277 293 291 Seed 33 54 54 Industrial 943 921 915 Feed 10,091 10,132 10,070 TOTAL consumption 11,344 11,400 11,330 Ending Stocks 900 1,150 1,210 TOTAL DISTRIBUTION 12,376 12,720 12,700 Production MY 2012/13 Italian corn area is forecast to increase by about 2 percent from the previous year to approximately 1 million ha. The acreage increase is mainly driven by growing corn prices despite soybean area is increasing as well due to its higher profitability linked to high prices and lower costs. According to the Italian corn growers association (AIM), the European Corn Borer (Ostrinia Nubilialis), ECB, reduces the maize production by 7-20 percent, and increases by many folds the presence of fumonisins, a group of mycotoxins produced by some molds (Fusarium Verticilloides) especially on ears damaged by ECB. Some BT maize varieties have demonstrated to be much more efficient than chemical pesticides on ECB control. Piglets fed on BT corn with lower fuminisins are healthier and have a higher weight increase. Despite these advantages for farmers, feeders and the environment, Italian farmers cannot use BT seed for their crop and researchers are not allowed to do field trials, because of the bad image that GMOs have in the public opinion. Currently most of the feed sold in Italy is labeled for the presence of GM (soybean) nevertheless 300 275 250 225 200 175 maize growers cannot use BT maize hybrids registered on the EU common seed catalog to preserve the so-called good image of the made-in-Italy food. AIM also estimates that the 15 years ban on BT maize ha1s cos5t Italia0n maize producers at least € 2 billion and a similar amount to animal farms. Corn weekly farm gate price trend (€/MT) 125 100 Source: ISMEA. Consumption Almost 90 percent of Italy‟s corn available supply is consumed by the livestock sector, either as simple or compound feeds. The remainder is utilized to make starch (around 8 percent), food products (around 2.5 percent) and for seeds (0.3 percent). The Italian starch industry produces starch for ingredients for the beverage and sweet industry, for industry (paper, pharmaceutical, chemical industry) and feed (corn gluten meal and feed). Biogas plants also employ a small but increasing share of total corn consumption. Trade Italy imports about 2 MMT of corn annually. The majority of the imported corn comes from EU-27 Member States, from the Balkans and some Eastern countries such as Ukraine and Russia. Corn imports by trade partner ('000 MT) 2009/10 2010/11 Oct-Dec 2010/11 Oct-Dec 2011/12 EU-27 2,021 2,012 664 532 Hungary 946 1,016 292 196 Austria 331 309 139 170 France 393 257 64 43 Slovenia 152 154 54 52 Romania 63 140 67 42 Germany 89 99 26 24 Extra-EU-27 203 714 68 177 Ukraine 7 218 7 23 South Africa 0 181 0 35 Serbia 62 75 23 9 Croatia 119 70 31 27 United States 2 48 1 0 World 2,225 2,726 732 708 Source: GTA. Rice Production, Supply and Demand of rice (‘000 ha, ‘000 MT) R Estimate Estimate Forecast ice 2010/11 2011/12 2012/13 Marketing Year Begins 09/2010 09/2011 09/2012 Area 248 247 238 Beginning Stocks 156 159 143 Milled Production 1110 1006 1010 Rough Production 1516 1441 1450 Milling Rate 0.73 0.70 0.70 Intra EU27 imports 31 35 30 Extra EU27 imports 68 66 65 Total imports 99 101 95 TOTAL SUPPLY 1365 1267 1248 Intra EU27 exports 653 620 622 Extra EU27 exports 116 110 115 Total exports 769 730 737 Domestic consumption 437 394 401 TOTAL consumption 437 394 401 Ending Stocks 159 143 110 TOTAL DISTRIBUTION 1365 1267 1248 Statistics reported on a milled equivalent basis (except for rough production) Italy is the leading rice producer in the European Union with approximately 50 percent of the total EU-27 harvest. Although Italy accounts for less than 1 percent of global production, it is currently the fourth-largest rice-exporting country after Thailand, United States, and India (counting intra-EU trade). Rice cultivation in Italy is mostly located in the northern regions (Piemonte, Lombardia and Veneto) where water is relatively abundant (and cheap) and the rice crop can be raised in flooded fields. Numerous varieties are cultivated in Italy, of which around 70 percent are „indica‟ varieties (Ariete- Drago, Arborio, Baldo, S.Andrea, Carnaroli) and the remainder are „japonica‟ varieties. Rice area (around 240,000 ha) has been increasing for the last decade due to improved agronomic techniques, good export performance, and higher profitability compared to other arable crops (such as irrigated corn). The combination of high-quality varieties, farms sufficiently large to realize economies of scale, and the EU‟s coupled rice payments have allowed Italian rice producers to compete well with other EU rice producers so far. However, from MY 2012/13 on, Italian rice farmers will not receive anymore the specific aid (EC Reg. 73/2009) which has been decoupled. Production MY 2012/13 sowed area is estimated to drop by almost 4 percent with a production expected to fall accordingly, after few years of record area and output. Uncertainty over future CAP payments to the rice sector and decreasing prices (more than 30 percent lower than in spring 2011) made some rice farmers shift to other more profitable crops such as corn. MY 2011/12 Italian rice production decreased by almost 10 percent due to hot temperatures over late July, August, and September, that negative affected yields. Moreover, quality is also reported to be relatively low due to the high temperatures to several attacks of Pyricularia Grisea (a major rice pathogen). Consumption Except for rough (unmilled) rice exports and domestic seed sales, virtually all the Italian rice is marketed as a whole-kernel milled product. Italian domestic rice consumption is stable at 400,000 MT, equal to approximately 40 percent of total production. Trade Italy exported 769,000 MT of rice (milled equivalent basis) in MY 2010/2011, almost 70 percent of total production. A large part of Italy‟s rice is exported to the EU-27, especially to France, Germany, and UK. However, a significant share is exported to extra-EU countries, including Switzerland and some Mediterranean countries such as Turkey, Syria, and Lebanon. Milled rice* exports by trade partner ('000 MT) 2009/10 2010/11 Sep-Dec 2010/11 Sep-Dec 2011/12 EU-27 588 584 222 183 France 123 129 42 43 Germany 119 114 42 40 United Kingdom 80 61 19 11 Netherlands 40 49 19 14 Czech Republic 40 46 16 13 Poland 36 35 20 8 Hungary 23 23 12 7 Belgium 21 20 7 8 Slovakia 16 19 6 8 Extra-EU-27 118 107 39 29 Turkey 38 26 13 4 World 705 691 261 212 *HS codes 100630 - 100640 Source: GTA. Other grains Production, Supply and Demand of barley, (‘000 ha, ‘000 MT) Ba Estimate Estimate Forecast rley 2010/11 2011/12 2012/13 Marketing Year Begins 07/2010 07/2011 07/2012 Area 272 247 300 Beginning Stocks 100 100 100 Production 944 900 1,060 Intra EU27 imports 876 840 725 Extra EU27 imports 20 60 40 Total imports 895 900 765 TOTAL SUPPLY 1,940 1,900 1,925 Intra EU27 exports 7 9 8 Extra EU27 exports 1 1 1 Total exports 8 10 9 Food 100 100 100 Seed 75 78 79 Industrial 415 420 422 Feed 1,241 1,192 1,215 TOTAL consumption 1,831 1,790 1,816 Ending Stocks 100 100 100 TOTAL DISTRIBUTION 1,939 1,900 1,925 Production, Supply and Demand of sorghum, (‘000 ha, ‘000 MT) stimate Estimate Forecast Sorghum E 2010/11 2011/12 2012/13 Marketing Year Begins 07/2010 07/2011 07/2012 Area 40 42 34 Beginning Stocks 0 0 0 Production 276 299 225 Intra EU27 imports 11 10 17 Extra EU27 imports 33 25 85 Total imports 44 35 102 TOTAL SUPPLY 320 334 327 Intra EU27 exports 4 4 5 Extra EU27 exports 0 0 1 Total exports 5 4 6 Food Seed 1 1 1 Industrial Feed 314 329 320 TOTAL consumption 315 330 321 Ending Stocks 0 0 0 TOTAL DISTRIBUTION 320 334 327 Production, Supply and Demand of oat (‘000 ha, ‘000 MT) O Estimate Estimate Forecast at 2010/11 2011/12 2012/13 Marketing Year Begins 07/2010 07/2011 07/2012 Area 130 110 124 Beginning Stocks 40 35 35 Production 289 267 295 Intra EU27 imports 40 50 35 Extra EU27 imports 0 1 2 Total imports 40 51 37 TOTAL SUPPLY 369 353 367 Intra EU27 exports 5 3 3 Extra EU27 exports 2 2 1 Total exports 6 5 4 Food 50 45 40 Seed 31 28 32 Industrial 0 0 0 Feed 247 240 251 TOTAL consumption 328 313 323 Ending Stocks 35 35 40 TOTAL DISTRIBUTION 369 353 367 ITALIAN CEREALS ASSOCIATIONS ANACER Italian cereal traders association Contact info: Via Lovanio 6 - 00198 Rome Tel +39 068416554 ITALMOPA Italian wheat millers association Contact info: Via Lovanio 6 - 00198 Rome Tel +39 066785409 E-mail italmopa@italmopa.com Website: www.italmopa.com AIDEPI (UNIPI) Pasta and bakeries industry association Contact info: Viale del Poggio Fiorito, 61- 00144 Rome Tel +39 068091071 E-mail aidepi@aidepi.it Website: www.aidepi.it AIRI Italian rice millers association Contact info: Via B. da Feltre 6 – 27100 Pavia Tel +39 0382720479 E-mail airi@rice.it Website: www.rice.it Abbreviations and definitions used in this report: Ha Hectare; 1 ha = 2.471 acres MT Metric ton = 1,000 kg MS EU Member State(s) MY Marketing Year. Post and USDA official data both follow the EU local marketing year of July to June except for corn, which follows an October to September calendar and for rice which follows a September to August calendar. Trade data cited in this report was derived by using the following tariff codes: All wheat (including flour, durum wheat, semolina, uncooked pasta and couscous): 1001, 1101, 190219, 190230, 190240 Corn: 1005 Rice: 1006 Barley: 1003 Oat: 1004 Rye: 1002 Sorghum: 1007 Conversion factors and methods used in this report Flour, semolina and wheat products (uncooked pasta and couscous) are converted to Wheat Grain Equivalent by multiplying the product weight by 1.368. Rough or Paddy rice (100610) trade data X 0.70 =milled equivalent basis Brown rice trade data X 0.88 = milled equivalent basis Sources used in this report: GTA Global Trade Atlas Istat Istituto Statistico Italiano/Italian statistical center ISMEA Istituto di Servizi per il Mercato Agricolo Alimentare/Center providing services for the agricultural and food market
Posted: 20 May 2012

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