Despite a series of downward revisions to our forecasts and mixed revisions to our historical data in this update, weremain broadly positive in our outlook for both production and consumption in Spain's agribusiness sector. Within this positiveoutlook, we are more bullish in our forecasts for output than demand across all the markets we track, with the expception of poultryin the livestock sub-sector. We hold the view that the dairy sector will be under modest pressure after the removal of the EU dairyquota. Dairy production in the country will now have to compete directly with German and French dairy farmers, historically knownfor superior levels of efficiency. The dairy sub-sector is now adapting to the end of the quota, and this will most likely imposesignificant pressure on producers in terms of competition. The livestock sector will witness a modest upward trend in terms ofproduction, driven by strong export demand for pork. Sugar production will grow modestly owing to the removal of the EU sugarquota in H217, but we note that Spain will not be able to compete with the strength of the French and German sugar producers. Wesee output in the grains market being fuelled by short-term gains in 2019 following a year of contraction in productionacross the barley, wheat and grains markets in 2018.
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