Boston, MA -- (SBWIRE) -- 09/25/2013 -- BMI View: We expect the Kazakh grain sector to outperform, especially as Kazakhstan sees more export opportunities to Central Asia and China. We expect limited growth for the livestock and dairy sectors, as export potential for both industries will remain limited. Only domestic demand, which we expect to be strong, could partially encourage domestic production. That said, cheap imports from Russia could put local growers at a disadvantage. We have not identified any major public company operating in the sector that we would highlight.

Key Forecasts

- Wheat production to 2016/17: -23.7% to 17.4mn tonnes. Efforts to diversify into oilseeds and other field crops and little potential for a repeat of the perfect conditions of 2011/12 will see production fall over our five-year forecast period.
- Cheese consumption growth to 2017: 51.5% to 81,300 tonnes. This will come from increased demand for value-added dairy products on the back of accelerating urbanisation and improvements in infrastructure.
- Beef production growth to 2016/17: 35.7% to 576,700 tonnes. The comprehensive overhaul of the beef herd continues apace as imported breeding stocks improve quality.
- 2013 real GDP growth: 5.4%, up from 5.0% in 2012.
- 2013 average consumer price inflation: 6.2% year-on-year (y-o-y), up from 5.1% y-o-y in 2012.
- BMI universe agribusiness market value: 35.5% y-o-y decrease to US$6.9bn in 2012/13, forecast to grow on average 9.8% annually between 2011/12 and 2016/17.

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Key Revisions To Our Forecasts

- 2013/14 wheat production revised up from 16.0mn tonnes to 17.0mn tonnes on the back of the latest official estimates.
- 2014 wheat consumption revised up from 6.9mn tonnes to 7.2mn tonnes as lower prices boost local demand.
- 2012/13 poultry production revised up from 120,000 tonnes to 125,000 tonnes as the impact of higher grain prices seems to be wearing off.
- 2012/13 pork production revised down from 231,000 tonnes to 215,000 tonnes owing to lower preference among the local population and subdued prospects for exports in the short term.
- 2012/13 poultry consumption revised up from 369,000 tonnes to 379,500 tonnes because of local preference for the meat and its price competitiveness compared with other meats.

Industry Outlook

We believe Black Sea countries will see increased grain demand from Asia in the coming years after the region was largely ignored for at least the past three seasons. Disappointing harvests in Asian countries' traditional suppliers, mainly the US, Australia and India, partially account for this. In addition, rising middle classes and changing dietary habits are increasingly putting strains on the region's grain production balance; this will force Asian importers to look for increased volumes and lower prices for grain purchases in the medium term.

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