Commodity Conversations Weekly Press Summary

Extreme and unpredictable weather conditions across the world, combined with supply chain disruptions and stockpiling caused by the coronavirus, are pushing up the price of many essential crops. The US, Russia and parts of the EU are facing extremely dry weather, while Vietnam, Malaysia and Indonesia have seen crops destroyed by storms and floods. The situation is even more complex when you factor in the sharp drop in the commercial flights which usually collect weather data. Meteorologists warn that they are struggling to make weather forecasts as a result. 

At the same time, China is maintaining its buying spree. The country is expected to issue additional corn import quotas to replenish reserves and meet feed demand for the growing hog population, according to sources who said COFCO was already benefiting from an additional quota. The surge in Chinese demand is also helping other trade houses like the US-based Scoular. The 128-year-old group has reported a spike in sorghum shipments since the Phase One trade deal was signed in February. And ADM sold the first shipment of US rice to China. The California-grown rice was unloaded in China this week and marks the culmination of a decade of regulatory and political work.

The food sector is in a much better place to deal with further coronavirus waves as it has set up systems to shift the food usually delivered to restaurants and caterers to retail stores. Besides, the head of ADM highlighted that being a global company provided clear advantages to deal with a worldwide pandemic. Highlighting ADM’s 118-year history, he mentioned: “That’s what our company does: it adjusts constantly”. Health experts are not so confident about the meat packing sector in the US, however, despite claims by JBS and Perdue Farms that they are prepared for further outbreaks. The major risk factor remains the speed of processing lines, while most plants are still running at the high rates authorised by an emergency decree.

While the first wave of stockpiling was categorised by a focus on comfort food and trusted brands, Nestle noted that consumers were now focusing on healthier purchases. The firm’s health-science unit reported better than expected sales thanks to a growth in demand for vitamins, minerals and supplements. Unilever reported a similar trend and has been working on making some of its products healthier. To be sure, people are still buying comfort food and Unilever revealed that sales of at-home ice cream had fully offset the drop in out-of-home sales.​

Not to be outdone, ADM’s health department said it would increase the production of probiotics five-fold thanks in part to the expansion of a factory in Valencia, Spain. Bayer, meanwhile, signed a USD 4 billion deal to buy Asklepios BioPharmaceutical. The gene therapy firm is looking to use a harmless virus to deliver “genetic repair kits”. 

Further out in the field of future food science, the debate is growing on whether lab-grown meat will ever be able to compete with traditional meat or its more direct rival, plant-based meat. Sceptics highlight that cost and perception will remain the main challenges for widespread adoption. Nonetheless, some firms are reportedly making lab-grown beef patties for just EUR 9, compared to the EUR 250,000 it took for the first experiment in 2013. The sharp drop in cost is similar, or even faster, than the scaling of the Internet and other digital technologies. One analysis suggested that Moore’s Law could be a good way to predict the future of the sector. 

The head of Impossible Foods certainly has a strong opinion on the subject as he argued that cultured meat is “never going to be a thing. I’d put any amount of money on that.” The cost involved makes the technology much more suited for therapeutic use, he added. Nonetheless, some 80 start-ups are currently studying lab-grown meat and one hopes to launch seafood products made from fish cells in mid-2021. Another group, Israeli-based Aleph Farm, is focusing on using its cell-based 3D bioprinting meat platform in space. After a successful test on the International Space Station, the firm is now partnering with space agencies to develop a solution suitable for Mars. 

Some promising progress is also being made to make traditional meat production more sustainable. Aemetis announced that it had started producing biogas from the methane collected at two dairy operations. The renewable natural gas is then processed into fuel ethanol at a Keyes, California, plant. The group hopes to expand the project to 17 dairies next year.

Amid all this talk of potential food disruptions, Oreo fans can rest easy as Mondelez built a vault to protect the cookie from disasters, including an asteroid that is expected to pass close to the Earth in November. Called the Global Oreo Vault, the facility is built right next to the Global Seed Vault in Svalbard, Norway. 

This summary was produced by ECRUU

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