|††Global Market Analysis|
The recovery in international prices of cassava products, which began early in 2006, has been sustained in the first 4 months of 2007.
Prices of Thai cassava flour and starch (f.o.b. Bangkok), denominated in US$, registered an increase of approximately 16†percent compared with the corresponding period in 2006, while prices of Thai cassava chips (destined for China) rose by around 13†percent. Much of the strengthening in these quotations can be attributed to the appreciation of Thailandís currency against the US$, which for example, has risen by 25†percent since the beginning of last year. Quotations for pellets destined for Europe (f.o.b. Rotterdam) still remain sparse signalling the continued lack of serious interest in the EU market for cassava feed ingredients.
Prospects for cassava prices for the remainder of 2007 will, by and large, depend on the buoyancy of demand in East and South East Asia and on the return of the EU on the international arena, which will ultimately rest on the price competitiveness of cassava products relative to domestic and imported grains.
The outlook for global cassava production in 2007 is generally favourable and output forecast, at 212 million tonnes, would surpass last yearís estimated record by 4 million tonnes. However, the outcome is subject to a large degree of uncertainty, since in many countries, roots can be left in the ground for over one year and are generally harvested when food shortages arise or prices are favourable.
In Africa, the major producing region, government support for the commercialisation of the crop in several of the larger producing countries, particularly Nigeria, underpins the continentís positive prospects. Production in Nigeria could reach 45 million tonnes, up 4†percent form 2006. However, in other parts of Sub-Saharan Africa where the root plays a critical role for food security as a primary staple or a subsistence crop, the production outlook remains mixed. In the Democratic Republic of Congo, despite favourable weather conditions, civil strife and internal conflict could adversely affect cassava cultivation. In the United Republic of Tanzania, well distributed seasonal rains ought to provide for favourable growing conditions. Good weather in Uganda is also likely to be supportive to the 2007 crop; however, the country reported an outbreak of the cassava mosaic virus and cassava brown streak disease which threatens to undermine prospects. Excessive precipitation in the cassava growing belts in Angola, Madagascar and Mozambique could also negatively impact cassava cultivation.
Cassava production is expected to expand in Asia, especially following the annual planting survey in Thailand which pointed to a 12†percent rise in production in 2007 to 25.3 million tonnes. International demand for Thai cassava products is the main growth driver for the countryís crop and is assisted by strong government support for the sector. In a bid to encourage farmers to harvest cassava more timely, intervention prices under the Thailandís cassava mortgage scheme were subject to incremental increases, from Baht 1.25 per kilo (US$†36 per tonne) in November 2006 to Baht 1.50 per kilo (US$39 per tonne) in April 2007. The measure has not been sufficient to stem the decline in domestic prices of roots which have fallen by 12†percent over the past 12 months. In Indonesia, Viet Nam and the Philippines, the regionís other major producers, less than favourable weather conditions are unlikely to impinge on concerted efforts to expand cassava production there. Robust industrial demand in the region for cassava products is behind drives to expand cassava area and to improve yields. For instance, Indonesia has set aside 2.2 million ha for the cultivation of cassava and sugarcane for bio-fuel production. Additional area for cassava-based bio-fuel production is also being made available in the Philippines, via public investments from China, while in Viet Nam, rapid growth in the demand for starch is providing a strong stimulus to the cassava sector.
The 2007 production outlook for Latin America and the Caribbean also bodes well, reflecting good prospects in Brazil, the regionís largest producer. The continuation of strong government support for the countryís cassava sector could see Brazilís output surpass last yearís bumper crop of 28 million tonnes. As for Colombia and Paraguay, the regionís other major cassava producing countries, little is known about the current situation, but both countries have experienced firm growth in cassava production in recent years.
Global trade in cassava products in 2007 is likely to reach some 12 million tonnes, on a pellet basis, exceeding the 2006 level of 10 million tonnes. The forecast is based on the sustained competitiveness of cassava relative to grains, combined with greater exportable supplies in Thailand, the worldís leading international supplier. This expectation is also in line with a stronger pace of cassava shipments by the country to date. Overall, the country is anticipated to ship 10.6 million tonnes (pellet equivalent) of cassava chips, pellets and starch in 2007, up 19†percent from 2006. Countries in Asia are once again expected to be the major destination of internationally traded cassava products. China has firmly established itself as the leading importer of cassava products. The implementation of a free-trade area between China and Thailand, with the abolition of a 6†percent tariff on Thai cassava products in 2007 has provided a further boost to cassava trade between the two countries.
Turning to chips and pellets, Thailand is foreseen to increase exports by 28†percent over 2006. In that year, China accounted for well over 90†percent of the global market for these products and is expected to remain the major destination in 2007. The suspension, introduced earlier in the year, on new grain-based ethanol plants in China has paved the way for large-scale imports of cassava chips to be used as a feedstock for Chinaís bio-fuel industry. The retreat from the import market of the EU, once the major destination of international cassava shipments, shows some sign of abating. Industry sources in Thailand are preparing to ship as much as 1 million tonnes of pellets to member states this year, three times the volume delivered in 2006, which would be on account of the increased price competitiveness of cassava feedstuffs vis-ŗ-vis domestically produced feed grains.
As for cassava starch and flour, growth in trade is not expected to be as dynamic as forecast for chips and pellets, but still rising by 12†percent from the previous year. The expansion in starch trade would similarly reflect the price advantage that cassava is forecast to maintain over maize and wheat starch. Again China is expected to be the principal buyer, with Indonesia and Japan also set to engage in significant international purchases. Earlier in the year, China imposed an anti-dumping duty on potato starch from the EU, levying 35†percent on imports over the next 5 years. The measure could allow for substantial inflows of cassava starch into China, given the close substitutability between starch products.
Table 6. Thai exports in Cassava 1
Source: TTTA, FAO.
1 In product weight of chips and pellets.
Industrial applications of cassava are anticipated to increase markedly, particularly in Asia, where rapid economic growth is stimulating demand for starch and ethanol (see Box).
Global cassava utilization as food, the bulk of which is consumed in sub-Saharan Africa and Latin America in the form of fresh roots and processed products, is anticipated to surpass last yearís level of 115 million tonnes. Production gains in both regions are expected to outpace growth in population, bringing about a moderate increase in per caput food availability. In Brazil, the Government policy, which mandates the inclusion of 10†percent cassava flour in wheat flour, has caused concern to the private sector. The policy seeks to reduce the countryís dependency on wheat imports and to provide a market outlet to cassava producers. Questions have been raised about whether the countryís cassava sector can meet this demand and regarding the possible impact of putting domestic blended flour at a disadvantage to imported wheat flour. In pursuit of the same objective, the Government of Nigeria announced a similar policy last year that also entails the 10†percent mandatory inclusion of cassava flour in the production of bread and confectionary products. Flour mills that do not comply face punitive measures including the closure of their business. Millers have established a N$500 million (US$4 million) fund to assist the cassava sector in producing industry grade flour. However, Nigeria recently lowered the import tariff on maize flour from 20†percent to 5†percent, which has put an added competitive pressure on the cassava sector.
Utilization of cassava as animal feed, in the form of dried chips and pellets, is mostly concentrated in Brazil and Colombia in Latin America and the Caribbean, Nigeria in Africa, China in Asia and the Netherlands and Spain in Europe. Current forecasts see global feed usage at some 61 million tonnes (root equivalent), 2 million tonnes higher than the previous year. The increase would reflect firm demand in Asia for non-grain feed ingredients, and also improved prospects for cassava as livestock feed in the EU.
|GIEWS||††global information and early warning system on food and agriculture|