Commodity Conversations Weekly Press Summary

The drop in soy demand caused by the African Swine Fever outbreak in China will mean that COFCO will source less soy from Brazil this year, although the director said he hoped the group will be able to compensate by boosting corn exports. He noted that Brazil holds great potential for agricultural expansion that will be key to expand future food production. The state-controlled company said it will continue to invest in the country, although very cautiously. COFCO has already spent USD 4 billion in acquisitions recently, which enabled it to quickly grow in Brazil’s grains, oilseeds, sugar, coffee and cotton sectors. 

Argentina overtook Brazil as the largest beef exporter to China as beef sales more than doubled in the first seven months of the year. The overall protein demand has surged following the sharp drop in the local pig population. The swine fever has also impacted the supply of edible oils in China, which are produced during the processing of soybeans used to feed pigs. The country doubled its import of palm oil in August compared to last year in order to compensate. Palm oil is also replacing the beans that would have been imported from the US. 

In Indonesia, the state-owned PTPN III  – one of the largest land-owners in SouthEast Asia – said it raised USD 640 million to finance its capital and expand activities in palm oil, rubber, tea and sugarcane. The group manages 1.18 million ha of palm oil plantations. Meanwhile, the Center for International Forestry Research revealed that the deforestation rate related to palm oil on the island of Borneo has steadily been declining since 2012, mainly because of low palm oil prices and government moratorium on new plantations. The center unveiled a new tool, called Borneo Atlas, which lets anyone track deforestation on the island and the companies responsible.

Some 87 companies around the world have now agreed to join the UN’s Global Compact and align their operations to limit global temperature rise to 1.5°C. Unilever was one of the first groups to follow the pledge announced back in June, which now also includes Danone, Nestle, Novozymes, Royal DSM and Natura. Many of these companies also launched the One Planet Business for Biodiversity ahead of the UN Climate Action Summit in NY, highlighting the risks attached to the loss of biodiversity. Two-thirds of the world’s crop production is based on only nine plants: sugarcane, corn, rice, wheat, potatoes, soybeans, palm oil fruit, sugar beet and cassava. 

Similarly, Harvard joined the Cool Food Pledge and will work to reduce its greenhouse gas emissions related to food by 25% by 2030. Nonetheless, students note that the University still refuses to divest from fossil fuel investments, as the University President argues that the USD 39 billion endowment was not a tool for social change. The endowment has also tried to diversify from the risks of conventional stocks by investing in direct agriculture holdings across the world. The process was seen by many as a failure and the total value of the investments was written down from USD 4 billion to USD 2.9 billion. 

Some experts speaking at the UN summit attempted to defend the role global food trade can play in fighting climate change by disputing the idea that importing food always leads to more carbon emissions. Buying locally produced food only makes sense when the produce is in season, and driving a long distance to buy goods could emit more carbon than air freighting fresh produce from across the world, according to the Hoffmann Centre for Sustainable Resource Economy. A recent survey showed that people were also confused about how and why almost a third of all food produced is wasted. Food waste was not as much of a factor for a majority of people when dining out, while people said their biggest reason to limit waste was to save money. 

Farmers in the US highlighted that barley is particularly vulnerable to sudden weather changes, such as drought, heat or floods, which means climate change could potentially threaten our beer supply. To anticipate the issue, beer makers created the Brewery Climate Declaration and are testing other small grains such as winter barley, wheat rye or rice to ensure that future generations can also drink good beer. 

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