Weekly News Summary

In an opinion piece in the FT, economists from CRU argue that there is nothing super about this commodity cycle. They believe that the current supply and demand imbalances will soon be resolved. Goldman Sachs seems to agree. In a research note this week, the bank writes that the US is in a one-time inflationary blip that will eventually become a one-off “disinflationary drag”. They see no signs that the US economy is overheating.

We may worry about Covid variants, but China’s pork producers are concerned over the spread of new variants of African Swine Fever. The new variants have a more extended incubation period, making them difficult to diagnose before the infection spreads across farms.

In a setback to the US biofuels industry, the US Supreme Court has made it easier for small oil refineries to win blending exemptions for ethanol and other renewable fuels. The court ruling gives the US Environmental Protection Agency (EPA) wide latitude to exempt refineries from federal mandates. Meanwhile, I recommend the latest HC Insider podcast; it shines a spotlight on the future of the biofuels sector.

Bloomberg takes a deep dive into the Suez Canal with one maritime captain saying, “I’d rather have a colonoscopy than go through the Suez.” Meanwhile, Egypt expects to finalize soon an agreement for compensation over the Evergreen container ship that blocked the Suez Canal in March – and that has been kept in the country ever since.  And while we are on the subject of canals, the Turkish president has inaugurated work on the controversial Kanal Istanbul.

Still on the subject of shipping, the port of Yantian in southern China is now fully operational after being closed due to a Covid outbreak. However, bottlenecks still exist elsewhere, for example, in the Port of Hamburg, where there is ‘high (container) yard density and exceptional waiting times’ for vessels.

Tanzania has started talks with China to revive the planned $10 billion Bagamoyo port project, 75 kilometres north of Dar es Salaam. Construction began in October 2015, but the government suspended the work shortly after.

The Guardian has seen a draft of FuelEU Maritime, the green fuel law for EU shipping, due to be published on 14th July. The European Commission has rejected requiring specific green fuels and instead opted to set stringent greenhouse gas intensity targets. The newspaper describes the draft law as an environmental disaster, saying it will lock in the use of fossil fuels for decades to come and make the EU’s target of net emissions neutrality by 2050 unreachable’.

A senior shipping official has also criticized the draft law, telling the FT that it will mean vessels will have to slow down. He argues that this will result in more ships on the seas, thus raising, not lowering, carbon emissions

The Nigerian central bank has restricted the use of the US dollar to import grain. Nigeria is Africa’s biggest buyer of wheat, and flour millers struggle to find dollars to pay for imports.

Remaining in West Africa, Côte d’Ivoire is building an electricity generating plant using waste biomass from cocoa farms. The facility will meet the electricity needs of 1.7 million people.

California’s drought has led to a shortage of irrigation water irrigation for the state’s almond producers. Farmers are letting many of their trees die.

In the UK, Foundation Earth, a government-backed NGO, has joined forces with Nestlé, Marks & Spencer, Sainsbury’s, the Co-op and Costa Coffee to introduce a pilot scheme for environmental traffic lights on food packaging, possibly a world first.

A new report by The Economist Intelligence Unit, commissioned by the WWF, has highlighted consumers’ growing awareness of the environmental impact of what they buy, particularly in the cosmetics, pharmaceutical, fashion and food sectors. The most dramatic growth in engagement and awareness has occurred in Asia, notably India, Pakistan and Indonesia.

In what might be another world first, the UK is considering a tax on meat to reduce consumption and help the environment. Meat processors around the globe are under pressure both to reduce their carbon footprint and prove that their cattle do not come from recently deforested areas.

Environmental and animal welfare activists are not just attacking the meat industry: they also have dairy in their sights.   The good news is that meat lovers in Israel can already try out lab-grown or cultured chicken.

The Guardian reports that the UK will face food shortages this summer due to a lack of lorry drivers. The lorry driver shortage is already affecting deliveries of fresh food. The newspaper highlights the looming shortage of tinned tomatoes – and what it may mean for the cost of your favourite pizza.

The Guardian also writes about the mismatch between the public perception of farming and its reality. The newspaper warns that the future of agriculture is at risk.  However, in a separate article, the Guardian argues that traditional farming could one day become obsolete. Food in the future will come from microbes grown in bioreactor vats and processed into dry protein powders.

Until then, the Wall Street Journal argues that combatting climate change and environmental damage will come at a cost to food companies. But there is hope. Scientists have published a study that shows innovation in technologies and agricultural practices could reduce GHG emissions from grain production by up to 70 per cent within the next 15 years.

As for this week’s long read, you might enjoy the FAO’s Biannual Report on Global Food Markets. I confess that I didn’t read many of its 188 pages. However, I did enjoy this piece on the history of palm oil – and how it became the most used and the most hated vegetable oil.

© Commodity Conversations ® 2021

One Reply to “Weekly News Summary”

  1. If the public perception of farming in the UK is distorted, in the USA it’s even worse. The country is increasingly focused on urban areas, urban needs, and increased hatred is being focused on rural areas. “Land can’t vote” is the slogan, but it translates to so many other things. So-called progressives are weakening the banks so that they can’t or won’t make loans to farmers. They are blaming farmers for pollution. Where China has its Green Wall and Africa has its Green Belt, the USA has begun cutting down the shelterbelts that did so much to decrease the winds that caused the dust bowl.

    Erin Brockovich’s new book, “Superman Isn’t Coming” is on my shelf, waiting to be read. I expect most of the water pollution issues in it will be related to fracking.

    Speaking of “traditional farming,” I recently listened to “The Dragon’s Gift by Deborah Brautigam, which is about Chinese aide programs to Africa. The book contains many interesting tidbits but like most writing about agriculture in Africa, she doesn’t mention the use of modern machinery to sow and harvest crops. One would assume that even if machinery could be transported, it could not be maintained. However it is frustrating that she pretends that combines do not exist, and that African farmers are simply too lazy to weed their fields when modern farmers everywhere else have machines to do it.

    Could this be the first year where there is a major crop failure in the USA? I think it’s possible, but I was worried last year too!

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