Romania Agribusiness Q2 2018
We remain broadly positive on the Romanian agricultural sector, even after revisions in our production forecasts in thisupdate. Despite a downward revision for both corn and barley output through to the end of our newly extended forecast period to2022, we maintain our view that grains have high growth potential due to their competitiveness and exposure to the Middle Eastand Asia. The sector's exports will benefit from the abundant supply of wheat and the expected reduction of neighbouring Ukraine'sexport capacity of the crop. However, we caution that our forecasts for the grains sector remain subject to progress in the 2018 CAPreform process. In terms of European agricultural production, we are maintaining forecasts for now, but could revise themdownwards should there be new and onerous additions to the current regulatory environment. Meanwhile, we believe that thecountry's poultry sub-sector will continue to perform well across our forecast period to 2021/2022 outperforming the rest of thelivestock sector in terms of both production and consumption, owing to strong demand from Romania's population, andstrengthening in terms of production by an average rate of 2.2% y-o-y across our forecast period. Milk production will see limitedgrowth after the EU quota removal in March 2015, while the sugar sector will moderately benefit in terms of production, which werevised upwards in our Q317 quarterly update, following the removal of quotas in 2017.
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