The weather pattern carries the most weight with regard to the estimated price differentials. Our baseline projections start from a lower base than last year and hold this level for the next two to three years. There is little hope for near term optimism given the current global projections. Global economics are expected to decline over the next two to three years by about 0.5 percentage points from 1998. Taken in conjunction with the fact that baseline projections are conditioned on trend levels of technology growth and average weather, it is unlikely that current stock levels will be significantly reduced.
China continues to be a major factor in the equation.
There is considerably more optimism this time around with regard to China's yield growth. A reevaluation of the last two years suggests a more aggressive pace than was factored into previous analyses. An additional near term caveat is weather. Holding prices at near term levels, as projected over the next two to three years, will require at least average weather in all years. Although stock levels are projected higher, they do not compare with levels carried under previous government programs.