MBH Bank: the outlook for agriculture by the end of the first quarter worsened due to foot-and-mouth disease
The assessment of the situation in agriculture by the end of the first quarter deteriorated slightly, with the outlook deteriorating primarily for dairy farmers, pig and beef farmers due to foot-and-mouth disease – MBH Bank announced on Wednesday in its quarterly analysis of the financial institution’s agricultural and food business.
The value of the MBH AgrárTrend Index showed 32.4 points on a 48-point scale at the end of March, slightly moving away from the 35 points considered the equilibrium level. The 1.3-point decrease in both quarterly and annual comparisons can be explained primarily by the indirect and direct effects of foot-and-mouth disease, which appears after more than 50 years. The bird flu epidemic, tariff wars and margin restrictions have also increased uncertainty in agriculture in the short term, they added. The caution experienced in the sector is reflected in the fact that three of the 12 product tracks examined – the growers of field and open-field vegetables, and the grape and wine producers – continue to consider the outlook favorable. Thanks to the demand market, the wheat product track gave the most favorable assessment due to the good condition of the crops grown in the field, the demand experienced during the Easter period, and the good condition of the crops and the favorable purchase prices. In the case of arable crop production, which accounts for the largest part of the output of Hungarian agriculture, according to the feedback, the autumn crops are generally in good condition in most parts of the country, and somewhat weaker, satisfactory in regions with a lack of precipitation.
Domestic crop prices currently reflect a demand market, in contrast to global market trends, with favorable export conditions
Producer prices in the first quarter exceeded the base period by 20-25 percent. For fruit growers, the sudden spring frosts in some parts of the country took away most of this year’s harvest for several varieties, which the majority of domestic plantations cannot even partially compensate for. Significant crop losses must also be expected in larger fruit-growing countries, they explained. The outlook for vegetable growers in the sector, especially those in the field of horticulture, is the most positive, mainly due to the closed production environment and the improving Hungarian market positions. In the grape-wine category, prices increased by 5-8 percent in line with the increase in input prices, the analysis states.
The foot-and-mouth disease disease hit the cattle sector the hardest
The virus affected five dairy farms in Győr-Moson-Sopron county, causing damage of 25-30 billion forints. The further spread of the virus could affect a fifth of the domestic food economy – worth about 2,700 billion forints – and therefore protection is crucial – they emphasized. In the pig sector, they are ahead in protection due to previous experiences, while in the poultry sector, bird flu has worsened the outlook. For eggs, demand around Easter was relatively good, but the margin restriction left little room for pricing – they wrote.
MTI
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