Russia will talk with the UN in Geneva this week about renewing the Ukraine grain export deal. Ukraine will not speak directly with Russia but through its partners. The UN Secretary-General visited Ukraine last week to discuss the deal.
Russia has said that the current deal was only being “half-implemented”, raising doubts about whether it would allow an extension of the agreement due to expire next week. Russia said it would only agree to extend the if the interests of its agricultural producers are considered. Even so, Cargill’s Chairman is optimistic that the Black Sea deal will be renewed.
Ukraine exported 5.2 million mt of grain in February, bringing overall grain exports so far this season to 32.3 million mt, down almost 26 per cent on the previous season.
Ukraine’s grain harvest may fall 37 per cent to 34 million mt in 2023 because of a smaller grain sowing area and lower yield. In the short term, most of Ukraine’s winter grain crops – winter wheat and barley – are in good condition and could produce a good harvest.
Other market news
The UN FAO Food Index fell 0.6 per cent in February, down for an eleventh month in the longest run of losses in data going back three decades. The index is down 19 per cent from a record set in 2022.
LDC expects global food prices to stay volatile this year.
The US has requested formal trade consultations with Mexico over the country’s plans to limit imports of GM corn. If you, like me, struggle to follow the US corn dispute with Mexico, Reuters has a good explainer.
China looks to shore up its food security amid heightened geopolitical risks and wants to boost its grain production capacity by 50 million mt in 2023.
Climate / Weather
The La Nina weather phenomenon appears to have ended after provoking three years of crop-destroying droughts. Some meteorologists believe it will quickly transition to El Nino, even as early as this Northern Hemisphere summer.
Argentina’s farmers will be relieved. However, the damage has already been done. Forecasts for the country’s 2022/23 soybean harvest have been cut to 27 million mt, even worse than the 27.5 million mt harvested in the 2000/2001 season.
Drought has also affected corn production. The government will allow corn exporters to reschedule planned corn shipments.
Italy and France are bracing for a second consecutive year of drought after an abnormally dry winter.
There is confusing news from Australia where the BBC headlines the latest ABARES report with the headline Australia: Crop exports set for record high after heavy rains. At the same time, Bloomberg goes with Australia Sees Wheat Exports Plunging 20 Per Cent on Drier Climate.
North Korea is teetering on the brink of famine with a surge in deaths from hunger. The country’s leader has ordered urgent infrastructure improvements and farmland expansion to ramp up food production.
Brazil has approved the cultivation of drought-resistant GM wheat, making it the second country after Argentina to do so.
Further north, BASF is halting the development of hybrid wheat in North America after the results of seed trials failed to reach development goals. Growers fear it could drive more wheat acres out of the US.
Meanwhile, acres of non-durum wheat in Canada could rise as much as 7.3 per cent in 2023 as growers shift acres away from oats and pulses.
There is an increasing possibility that India, the third-biggest producer of wheat in the world, will import wheat to supply the domestic market.
Brazil will produce six billion litres of corn ethanol in the 2023/2024 season that begins in April, up 36.7 per cent over last season. Corn ethanol is expected to account for 19 per cent of all ethanol consumed in the country next season, up from 13.7 per cent in the current season.
Indonesia plans to require crude palm oil exports to go through a futures exchange to create the country’s own benchmark price.
A leading analyst told a conference that the EU’s deforestation law is unlikely to have a meaningful impact on palm oil demand as consumption is rising consumption in developing countries. Indonesia’s biofuel policy should also help to keep prices high.
Child labour and deforestation still plague the cocoa supply chain.
A new study warns that emissions from the food system alone will drive the world past 1.5C of global warming unless high-methane foods are tackled. The Washington Post suggests you eat these climate-friendly foods if you want to help. Unfortunately, avocado is not one of them.
Australia is pushing ahead with plans to phase out live sheep exports.
The debate continues over the pros and cons of vertical farming. Some believe that the bubble is finally popping.
India has withdrawn trading licences for oil tankers and bulk carriers that are more than 25 years old.
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