Commodity Conversations Weekly Press Summary

Iran is threatening to source its food supply, especially corn, away from Brazil if Petrobras continues to refuse to refuel its government-owned vessels that are stranded outside Paranagua port. Some of the ships had brought petrochemicals and were planning to go back carrying corn. Petrobras says it won’t sell them fuel because of US sanctions and the Brazilian President said he is aligned with US policies on the matter. The Iran-Brazil Chamber of Commerce had earlier said that both governments were looking into a barter system to cope but the situation is now escalating. 

Bunge and BP confirmed a plan to merge their Brazilian cane milling businesses this week. The joint-venture, BP Bunge Bioenergia, will be the third biggest milling group in the country and will focus on ethanol and electricity. Bunge said this was a “major portfolio optimization milestone.” 

Olam bought the remaining 25% shares in Rusmoloko, a major dairy producer in Russia, becoming the group’s only owner. This makes Olam the biggest foreign investor in the country’s dairy industry, followed not far behind by Vietnamese group TH. Olam plans to double the group’s milk production in three years. 

Cargill announced a new initiative, BeefUp Sustainability, which aims to reduce the group’s North American beef supply chain’s greenhouse gas emissions by 30% by 2030. The company will be working with The Nature Conservancy as well as joining the Manure Challenge, a US-based competition to find the best ways to deal with manure through cross-industry collaboration. 

Meanwhile, sources said that Louis Dreyfus is yet again making internal changes, including appointing several new heads of department and merging palm and oil businesses into one, among other changes. 

Coca-Cola reported net revenues of USD 10 billion in Q2, up 6% on year thanks to a 4% volume growth. The CEO said this was thanks to a growing demand for their no-sugar drinks and smaller packages. Reformulated and new products now bring in a quarter of the group’s revenues, from 15% in 2017. Similarly, sales of healthy snacks, sparkling water and smaller packaging helped Pepsi’s net income increase to USD 2.04 billion in Q2, from USD 1.82 billion in the same period last year. PepsiCo said it will be spending USD 1.7 billion to buy South Africa’s Pioneer Foods as part of a plan to expand in sub-Saharan Africa. The strategy includes growing the sustainable farming program in the region. 

Coca-Cola and PepsiCo both left the Plastics Industry Association, a move which was hailed a victory by Greenpeace. Several companies have left the lobbying group over the past year amid concern over sustainability issues and reducing plastic use. Greenpeace argued the association was responsible for lobbying for laws in 15 US states that prevent local governments from banning or taxing plastic bags. Tyson Foods, meanwhile, is being sued for false advertising about its environmental commitments. The organisations behind the lawsuit argue that, with hundreds of wastewater violations and ongoing use of dangerous chemicals, the organisation is misleading consumers. 

A new report by the World Resources Institute said it was necessary to increase the use of genetically modified (GM) crops to feed the estimated 10 billion people the world will have in 2050. It forecast that the world needs to produce 56% more food than in 2010, for which it would need an additional 1.48 billion acres of land all the while meeting the Paris agreement greenhouse gas emissions targets. At the moment, only 12% of the world’s agriculture is genetically modified. 

Intergovernmental bodies met with NGOs and members of the private sector in Geneva last week to discuss a strategy to fight illicit trade. Smuggling and adulteration of food are major obstacles to reaching the UN’s Sustainable Development Goals, including traceability and sustainability in the supply chain, according to a recent report

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