Author: jonkingsman

The FAO’s food price index declined 0.9 per cent in December but increased 28 per cent in 2021, averaging 125.7 points, its highest level since 2011.

Bloomberg argues that Chinese food stockpiles are contributing to rising world food prices and questions why less than 20 per cent of the world’s population holds 69 per cent of the world’s corn reserves, 60 per cent of its rice reserves and 51 per cent of its wheat reserves.

Low food prices may be bad for consumers, but they are good for farmers. Indeed, Germany’s Agriculture Minister argues that food prices should rise further, arguing that “junk prices” drive “farms into ruin, prevent more animal welfare, promote the extinction of species and pollute the climate.”

Covid continues to disrupt supply chains, with supermarkets in the US and Australia running short of groceries. The FT asks (in a long read) if there is an end in sight to these supply chain disruptions. The newspaper concludes that there probably isn’t and that it might be time to start moving production closer to consumption.

Bloomberg argues that freak weather and climate change will continue to disrupt our food supply long after Covid’s effects wear off. Unfortunately, the FT agrees. For example, unseasonably low rainfall across southern Africa threatens harvests and could lead to higher regional food prices later in the year.

Even food-producing countries are not immune. After palm oil surged to a record in October 2021 and posted a third straight year of gains, Indonesia’s government has said it will spend 3.6 trillion rupiahs ($250 million) to subsidise domestic cooking oil prices.

California’s Port of Oakland has said it will open a new container yard for agricultural exporters struggling with capacity shortages and high freight costs. Following delays due to flooding in Vancouver Port, farmers are resorting to desperate measures to export their produce, chartering three 747 aeroplanes to fly potatoes to Japan.

In environmental news, deforestation and other clearances of native vegetation in Brazil’s Cerrado rose 8 per cent to 8,531 sq km in the 12 months through July, the highest level since 2015. And in India, the BBC traces Delhi’s smog back to farmers’ poor water management.

A switch from arabica to robusta coffee could be one of the top consumer trends for the next few years as climate change makes arabica more challenging to grow. Changes in the way farmers grow, and process robusta could make it more palatable. Some predict that world robusta production could soon exceed that of arabica. (Meanwhile, for you coffee lovers out there, Seeking Alpha has an interesting piece on the speciality coffee sector and how the major brands are profiting from rising demand in Asia. )

On the good news front, scientists are genetically engineering soil microbes to reduce methane emissions from rice paddy fields.

Indonesia’s President has revoked more than 2,000 mining, plantation and forest-use permits due to non-compliance or because they had been unused. He said he was acting to improve governance and transparency in the natural resources sector.

The UK government will pay farmers in England to rewild their lands and has invited bids for 10-15 pilot projects, each covering at least 500 hectares and up to 5,000 hectares, to a total of approximately 10,000 hectares in the first two-year phase. Funding for the project could reach £700 – £800 million a year by 2028.

The Guardian is worried that these measures, plus others, will lead to a decline in UK farm production and increased food imports. A UK Parliamentary Committee has come to the same conclusion, arguing that the UK government has not established any way to measure whether £2.4 billion of annual post-Brexit farm payments will provide value for money.

Across the pond, the USDA will provide $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of “meaningful competition” in the meat sector.

In company news, Cargill has paid €915 million to acquire the majority of Croda’s industrial chemicals business. The acquired business sells nature-derived alternatives to chemicals now commonly made with petroleum used in products ranging from plastic mouldings for cars to food and beverage packaging.

The container shipping giant Maersk has acquired Hong Kong-based LF Logistics for $3.6 billion. The acquisition will add 223 warehouses to Maersk’s existing portfolio, bringing their total facilities to 549 globally. However, Maersk’s stated intention to transform itself into a logistics provider is causing conflict within the company.

The Chicago Board of Trade has sold what was formerly its largest trading floor at 333 S. La Salle St. to an electricity company that will transform it into a sub-station. CME closed most of its trading floors in 2015.

Finally, here is some new research on the top US states in renewable energy production.

© Commodity Conversations ® 2022

Many of the above links require subscriptions. Please support quality journalism.

The price for shipping a 40-foot container to the US West Coast from China has moved higher in the past two weeks to $14,825. While that’s down 28 per cent from a record of $20,586 reached in September, it’s still more than ten times higher than in December 2019. Analysts worry supply chain disruptions will continue well into next year.

The US House of Representatives has passed the Ocean Shipping Reform Act of 2021, aimed at curbing the shipping container crisis by giving the Federal Maritime Commission (FMC) more power to penalise ocean carriers and require more public disclosure. The World Shipping Council said that the bill was a political expression of frustration and not designed to fix supply chain problems. The legislation now moves to the Senate.

US farmers have asked the US Department of Justice to investigate whether fertiliser companies are manipulating prices. Since the 1980s, the US fertiliser industry has shrunk from 46 to 13 firms, with two companies, Nutrien and Mosaic, controlling 93 per cent of the North American potash market

The market for manure has heated up as farmers hunt for alternatives to phosphate- and nitrogen-based fertilisers. Manure is primarily a local market, and truckloads don’t travel further than 80 kilometres. When fertiliser prices soared about a decade ago, farmers reintroduced hogs and cattle onto their land, in part for their manure. They may do it again.

Fortune Magazine has a piece on the feed-additive industry and its role in reducing methane emissions from cattle.

Following California’s record-breaking drought and heat this year, the state has said that it won’t give any water from the State Water Project to farmers next year unless conditions improve. An official from the California Farm Water Coalition said, “Farmers will either have to pump groundwater, if they can, or they’re going to be fallowing a lot of farmland.”

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARE) has forecast that Australia is heading to record gross agricultural production of $78 billion this year despite flood and rain damage in the eastern states. ABARE forecasts export value at an all-time high of $61 billion.

The FT writes that Silicon Valley continues in its efforts to ‘solve’ dinner. The NY Times argues that Sri Lanka’s countrywide move into organic farming has led to disastrous food shortages and higher prices.

The UN’s FAO has published a report criticising the ‘disastrous’ way farmers use plastic. The FAO recognises the benefits of plastic in producing and protecting food but said the use of plastics had become pervasive and that most were single-use and were buried, burned or lost after use.

The UK government may authorise the neonicotinoid Cruiser SB for sugar beet. The sector says it needs the pesticide to protect seeds from a disease called virus yellows.

Nature has published a report on research into sustainable rice production. The authors argue that global rice production could increase by 32 per cent, and excess nitrogen almost eliminated by focusing on a relatively small number of cropping systems.

Coffee leaf rust disease in Honduras, El Salvador, Guatemala, and Nicaragua is pushing coffee farmers to abandon their trees and migrate to the US. The fungal pathogen has been revived by the humidity from the hurricanes Eta and Iota, which hit Central America in late 2020.

The US EPA has retroactively reduced the 2020 biofuel blending obligation for refineries by nearly 15 per cent from 20.09 to 17.13 billion gallons. For 2021, it has reduced the obligation from 20.1 to 18.5 billion gallons, but for 2022, it has increased it to 20.77 billion gallons. The EPA has also proposed rejecting the 65 pending applications for small refinery exemptions – waivers requested by fuel producers.

Bayer has joined Amazon and Bushel to help ethanol producers track carbon emissions across their supply chains. Project Carbonview will enrol eligible farmers within 50 to 100 miles of selected ethanol plants in the Upper Midwest.

Bloomberg has a short video on the effect that renewable diesel will have on soybean demand and the interplay between the energy and agricultural markets.

The BBC writes about the environmental impacts of Indonesia’s biofuels policy. All diesel fuel in the country now contains at least 30 per cent biodiesel, which will rise to 50 per cent by 2025. It would require an increase in the palm area of 1.2 million hectares – to about a quarter of all palm oil cultivated in the country.  An Indonesian court has rejected a bid by two companies to reinstate permits for palm oil plantations in its easternmost region of Papua, which was seen as a test of the government’s pledge to contain deforestation.

Mounting employment costs and worker shortages in Malaysia’s palm oil sector could mean the country losing its edge and ceding market share to Indonesia. An analyst with LMC said that workers now have more options for urban employment and are less willing to do manual labour. “Soon, there will be no ‘cheap’ labour,” he added.

In company news, Nestlé is cutting its stake in the French cosmetics brand L’Oreal to about 20 per cent, selling shares worth 8.9 billion euros.

Margarita Louis-Dreyfus, the majority shareholder in Louis Dreyfus Company (LDC), has said that the company might not remain in family hands forever. She added that she does not rule out a company listing.

Cargill plans to eliminate trans fats from its edible oils over the next two years, in line with a WHO goal of phasing it out of global diets by the end of 2023. Cargill is among the top three edible oil producers worldwide and is the first to announce plans to comply with the WHO’s goal.

A cyberattack on the largest US cheese manufacturer has led to a shortage of cream cheese, wreaking havoc on the country’s bagel shops and bakeries. The attack occurred at the height of annual cream cheese demand. Perhaps worse, Australians may run out of beer this Christmas. A shortage of wooden pallets is disrupting factory shipments.

Finally, my latest book, Commodity Crops & The Merchants Who Trade Them is now available on Amazon in paperback and ebook. A hardback version will be available shortly.

© Commodity Conversations ® 2021

Many of the above links require subscriptions. Please support quality journalism.

The FAO Index of world food prices rose 1.2 per cent in November and is close to the record highs seen in 2011. Grains and dairy prices led the rally, while vegetable oils and meat prices declined. Rabobank warns that food prices are likely to stay near record highs next year due to consumers stocking up, high energy and shipping prices, adverse weather, and a strong dollar.

India will pay record fertiliser subsidies of more than $20.64 billion in the 2021/22 fiscal year, almost double the amount budgeted. India caps the price of urea at 5360 rupees ($71.36) per tonne, while world prices have surged to around $990/tonne.

Reuters writes that the Indian government’s recent decision to abandon farm reform will mean that no political party will attempt similar reforms for at least a quarter-century. An economist warns that “inefficiencies in the system will continue to deliver wastage, and food will continue to rot.”

The UK government has published its Sustainable Farming Initiative to replace EU farm subsidies. Environmental campaigners say the plans display a ‘shocking lack of ambition’.

Farmers in eastern Australia are bracing themselves for further downpours after the country’s wettest November in 122 years. It is too early to evaluate the extent of crop losses or the quality of wheat that farmers will succeed in harvesting. On the other side of the Pacific, Californian farmers are concerned that drought could be a recurring problem and may lead them to rethink which crops they can grow.

The queue of container ships waiting to unload at the adjacent ports of Los Angeles and Long Beach, California, has risen to 96, a new record. The average wait for ships to unload is 20.8 days, almost a week longer than a month ago. Cargo ships are bypassing the Port of Oakland, the third busiest in California, and heading directly back to Asia. The port’s volume declined by 20 per cent in October compared to last year, while the number of vessels visiting the port fell 43 per cent.

Pre-tax profits for the container shipping industry could be more than $300 billion for the two years 2021 and 2022. The sector is forecast to make $150 billion in 2021, up from $25.4 billion in 2020, and could make even more in 2022.

Maersk will give its roughly 80,000 employees a $1,000 end-of-year bonus out of an expected 2021 income of more than $17 billion. The company awarded its workers a similar bonus in 2020 when it made $2.9 billion.

MSC’s recent buying and building spree mean it has overtaken Maersk as the world’s largest container-shipping company.  MSC has a net tonnage of approximately 4,239,668 TEU, 5,366 TEU more than Maersk’s 4,234,302 TEU.

Meanwhile, A.P. Moller Holding, the owner of Maersk, is diversifying outside the sector. It has bought Unilabs, a provider of medical diagnostic services, including COVID-19 tests.

Biofuel producers in the US are waiting for the administration to announce the quantity of biofuels refiners must blend into their fuel mix this year and next. The US administration is also expected to propose expanding the kinds of renewable fuel eligible for credits under the US Renewable Fuel Standard programme.

The business journal Barrons is bullish on biofuels, particularly renewable diesel, and recommends three stocks that could profit from the anticipated boom.

BASF will launch its Global Carbon Farming Program next year to help farmers reduce their CO2 emissions. BASF has committed to reducing CO2 crop emissions by 30 per cent per tonne by 2030. And if you have been wondering what people mean by regenerative agriculture, this article looks at four different ways of approaching it.

The anti-meat media campaign continues with Time Magazine declaring that Cows Are the New Coal. The magazine argues that “if the global livestock industry were its own country, it would be the world’s third-biggest greenhouse gas emitter, falling between US and India when it comes to total greenhouse gas emissions.”

The New Statesman says that ‘we are committing ecocide on a biblical scale’ due to deforestation for cattle and soy in the Amazon. In a separate article, the magazine writes that methane is much worse than CO2 for the planet – but comes up with suggestions for what we should do about it.

A Norwegian technology company thinks it has already found a solution to stop slurry (the fertilising mixture of manure, hay and water) from emitting so much methane. The new technology uses a plasma torch to add nitrogen from air to the slurry to stop methanogenesis – the breakdown of methane microbes that release the gas. The company says their technology reduces methane emissions from slurry by 99 per cent and cuts ammonia emissions by 95 per cent.

Impact NRS, an American Israeli innovation company, has established a joint venture with Ben-Gurion University and the Volcani Center to develop cattle feed that reduces methane emissions from cows.

Another Israeli company, Israel Chemicals Ltd (ICL), has opened an $18 million production facility in St Louis to produce plant-based alt-meat. The plant can make more than 15 million pounds of alt-meat each year. Meanwhile, the alt-meat company Impossible Foods want to persuade UK farmers to give up cattle farming and plant trees instead.

Workers have accepted a new labour contract at Cargill’s Canadian beef processing plant in Alberta, averting a strike. The plant accounts for about 40 per cent of Canada’s beef supply.

Lastly, palm oil producers in Malaysia are worried that the omicron outbreak could lead countries such as Bangladesh and India to close their borders, exacerbating the acute labour shortages in the palm sector. Malaysian-listed FGV Holdings told Bloomberg that it currently has only 70 per cent of its required labour and hopes that 7,000 foreign workers will arrive by the end of the first quarter.

© Commodity Conversations ® 2021

Many of the above links require subscriptions. Please support quality journalism.

Fertiliser has become political. The FT warns that governments are worried that rising fertiliser prices, because of the increase in the cost of natural gas, will boost food inflation, and food shortages may result in social unrest. As the newspaper argues, “freezing in the dark while hungry does not make happy voters.”  The BBC believes that poorer countries are most at risk.

A lack of trucks and railcars may lead to localised ethanol shortages in the US. Unlike crude oil and other refined products, which can be transported by pipeline, ethanol is shipped primarily by train. Ethanol prices are up more than 50 per cent in the year to date and are contributing to the rise in gasoline prices. The WSJ wonders whether this will reignite the food versus fuel debate.

The EU Parliament has approved the EU Commission’s proposed reform of the Common Agricultural Policy (CAP), which at 387 billion euros ($436 billion) accounts for around a third of the EU’s 2021-2027 budget. The reform will require that farmers spend 20 per cent of their subsidy payments on “eco-schemes” from 2023-2024, rising to 25 per cent in 2025-2027. In addition, at least 10 per cent of CAP funds will go to smaller farms, and all farmers’ payments would be tied to complying with environmental rules.

The FT reports that Brazil’s foreign minister has attacked the EU for “trade protectionism” over a proposed ban on agricultural imports from deforested areas. Bloomberg argues that the way the Brazilian government is rebooting the Bolsa Familia may weaken the country’s currency and further boost commodity exports.

The Indian government’s decision to abandon farm reform will have a broader negative effect on the country’s economy. Bloomberg argues that with 43 per cent of the workforce stuck in agriculture – and the average farmer earning 27 rupees ($0.36) a day – the country lacks the labour and capital to industrialise.

The UN FAO has published its report on the State of Food and Agriculture 2021, in which they ask whether our food supply is at risk.

NASA reports on how their research to growing food in space has led to vertical farming, a global market now worth $2.9 billion and predicted to reach $7.3 billion by 2025.

Wired writes on the future of food tech, arguing that it is better to phase out meat production than find technical solutions that reduce the sector’s greenhouse gas (GHG) emissions. However, the FT reports that US alt-meat sales are losing their sizzle, with sales down year on year. Alt-meat companies say it is because consumers are eating less at home than during the Covid lockdowns, but the bigger problem may be alt-meat’s 30-40 per cent price premium over meat.

Even so, Impossible Foods has raised nearly $500 million in a funding round, making it the most well-funded and richly valued plant-based meat startup in the United States, with more than $2 billion raised since its founding in 2011. Impossible Foods, valued at about $4 billion in its last fundraise in 2020, has said it hopes to eventually IPO at $10 billion.

In a fascinating video, Bloomberg takes us inside the world’s first vat-grown meat factory, belonging to Upside Foods—formerly Memphis Meats—backed by Bill Gates and Richard Branson. The company is betting that consumers will go for vat-grown meat and that factories such as theirs will eventually replace abattoirs.

Bloomberg also has an interesting piece on the Indonesian government’s attempts to persuade millenniums to take up farming and reverse the exodus from the countryside to towns. The project appears to be working. The news agency also looks at the way China’s agriculture ministry is laying the groundwork to allow the country’s farmers to grow genetically modified (GM) soybeans, rice, and corn for the first time.

In this piece, Bloomberg discusses the meaning of ‘regenerative’, the new buzzword in the sustainability space, and how people are now applying it to sectors other than agriculture. The term was first used in the 15^th century to describe a spiritual rebirth.

Supply chain chaos has allowed shipping lines to charge their customers 20 times more per container than they did before the pandemic. But their underlying expenses haven’t changed much, allowing cargo carriers to keep almost all the price increase as profit. Quartz looks at how the shipping companies are spending those profits. Some invest in the supply chain while others expand their fleets, buy cruise ships, airlines, ports, or simply repurchase their shares.

Under recently introduced new data laws to enhance their national security, China’s shipowners are turning off their ships’ AIS tracking systems. The move is making it harder for analysts to monitor commodity trade flows and port congestion.

In company news, US antitrust officials have sued to block Louis Dreyfus Co.’s deal to sell its Imperial Sugar unit to US Sugar. They argue that it would leave just two producers supplying 75 per cent of refined sugar sales across the country’s southeast. The lawsuit is part of a push by the Biden administration to toughen antitrust enforcement.

The FT looks at two startups offering crop insurance to smallholder farmers. Pula bundles insurance into sales of other products such as seed, fertiliser, and loans to farmers in Africa. At the same time, Stable operates a platform that allows smallholders to insure their production.

After slipping to number two last year in the annual ranking by Forbes, Cargill is once again the largest private company in the US. The company’s revenue grew by 17 per cent through May to $134.4 billion. Koch Industries, which displaced Cargill last year, fell back to second with estimated revenue of $115 million.

Bunge is paying premium prices to growers who avoid deforestation even if they have a legal right to do so. Bunge aims to cut carbon emissions directly tied to its operations by 25 per cent by 2030 from 2020 levels.

Brazilian orange juice producer Cutrale has suspended exports of orange juice concentrate to the US, arguing that a new export tax has made them unprofitable. Cutrale will instead supply customers from Mexico.

Finally, there is some good news for us coffee addicts. A study of 200 Australians over one decade has found that drinking coffee may make you less likely to develop Alzheimer’s disease. “Flat white, anyone?”

© Commodity Conversations ® 2021

Many of the above links require subscriptions. Please support quality journalism.

The Indian government has announced it will repeal three contentious farm laws that prompted a year of protests and unrest in India. The government passed the three farm laws in 2020 to overhaul India’s agriculture sector by rolling back farm subsidies and price regulations on crops. The country’s PM said he was adamant that the laws were necessary reforms but acknowledged that they were unfeasible given the fierce opposition from farmers.

Cargill’s CEO has warned that disruptions to the global supply chain may persist, keeping food prices high through 2022. He said, “I thought inflation in ags and food was transitory. I feel less so now because of continued shortages in labour markets.”

Bloomberg, however, argues that shipping costs are beginning to trend lower and wonders whether the worst supply chain problems may now be over.

Arabica coffee prices have hit ten-year highs and are nearly double a year ago. With a La Nina pattern forecast for early 2022, some analysts worry it could take years for the market to recover. Coffee connoisseurs are worried that roasters will downgrade quality by using more of the cheaper robusta beans.

Prices are also rising in Italy for food staples like tomatoes, pasta, and olive oil. The cost for tomatoes increased 12 per cent last month compared to a year ago, while pasta saw an almost 5 per cent rise.

The ports of Los Angeles and Long Beach delayed to 22^nd November their plan to fine shipping companies that let cargo containers stack up at terminals. Both ports have seen a “significant improvement” in clearing the containers out of the shipping terminals since they announced the $100 per day fines for leftover cargo on 25^th October. “Sweeper ships” have taken away many of the empty containers.

The ‘storm of the century’ in British Columbia has left the Port of Vancouver, Canada’s largest port, stranded without access to trucks and rail cars. Water and landslides have blocked the tracks of the nation’s two major railways and washed away parts of the main east-west road artery, the Trans-Canada Highway.

Satellite data from Brazil’s national space research agency INPE showed about 877 square kilometres of Amazon rainforest forest were cleared last month, up 5 per cent from October 2020 and the worst October deforestation since the current monitoring system began in 2015.

The EU has unveiled new regulations to curb deforestation that cover imports of soy, beef, palm oil, wood, cocoa, and coffee and some derived products such as chocolate, leather, and furniture. The plan will require backing from member states and the European Parliament to enter into force.

China bought at least 30 soybean cargoes from the US and Brazil last week, with more than half from Brazil. If Brazil continues to steal market share from the US, it could further weaken Chicago soybean futures prices. Soybean futures in Chicago are already down about 25 per cent from a high reached in May.

A US Senator has introduced legislation to halt the import of Brazilian beef into the US after media reports that Brazil delayed reporting two cases of mad cow disease. The US imported $62.3 million of beef and beef products from Brazil in the first nine months of this year, up 36 per cent over the same period a year earlier.

Dutch speciality chemicals company DSM may soon bring their cattle feed ingredient Bovaer to market following a positive assessment by the European Food Safety Authority (EFSA). DSM says the ingredient cuts cattle’s methane emissions by between 20 and 35 per cent without affecting production.

Bayer and Microsoft have announced plans to collaborate on developing digital tools and data science capabilities for agricultural businesses and associated industries. Plans include helping companies better process satellite imagery, tracking farm inputs and practices to follow environmental regulations.

ADM has invested in Farmers Business Network (FBN). FBN’s platform has been dubbed a “Google for farmers”, providing its 33,000 members new distribution outlets for their crops and alternative options to purchase seeds and chemicals. The investment comes five weeks after ADM and its rival Cargill sold their farmer facing digital joint venture GrainBridge to software company Bushel.

CME Group Inc.’s plan to move core trading systems to Google Cloud could impact high-frequency traders (HFTs) who have installed their computers as close as possible to the CME’s computers. HFCs may need to restructure and rethink their systems if CME moves their trading infrastructure to the cloud.

The US Environmental Protection Agency (EPA) has proposed giving oil refiners more time to prove compliance with the nation’s 2020 and 2021 biofuel blending mandates. Several oil refiners have slowed or stopped buying compliance credits in a bet the EPA would ease the requirements.

© Commodity Conversations ® 2021

Many of the above links require subscriptions. Please support quality journalism.

A new week and a new record number: 111 container ships are currently waiting to offload at Long Beach and Los Angeles. Starting on 15^th November, the two ports will begin fining shipping companies $100 a day for containers left on the docks, but the logistic companies say they have nowhere to move the containers and will pass on the fines to their customers.

The New York Times reports on a recent survey that found that 22 per cent of the US’s foreign agriculture sales are being lost because of transportation challenges. Port delays have particularly affected container shipments of cheese, butter, meat, walnuts, and cotton.

Germany’s Hapag-Lloyd, the world’s fifth-largest ocean shipping line, posted a record quarterly profit of $3.92 billion in Q3 2021, up from $756 million in Q3 2020. The company earned an average of $4,468 per forty-foot equivalent unit in the third quarter, up 106 per cent, year on year. Rates in the trans-Pacific averaged $6,244 per FEU, up 112 per cent year on year.

These record profits are leading to accusations of profiteering. British trade groups have called on the country’s Competition and Markets Authority to investigate “cartel-like” pricing in the shipping industry.

There is some relief for importers, with spot container rates falling nearly 5 per cent in the first week of November. Some analysts predict that average spot rates are past their peak. Dry bulk rates have also fallen sharply, but this analyst believes the fall to be temporary and expects rates to move higher again in 2022.

The Guardian reports that merchant ships account for around 3 per cent of man-made GHG emissions. The International Maritime Organization (IMO) predicts that, on current trends, the industry’s emissions could be 30 per cent higher in 2050 than in 2008.

But will current trends continue? Some argue that decarbonising the global economy will indirectly solve the issue for the shipping sector. They predict that a sharp reduction in the demand for coal, iron ore, bauxite, and other ingredients for heavy industry, along with reduced tanker demand, will result in a dramatic reduction in tanker and bulker fleets.

DTN reports that fertiliser prices continue to shatter records. The average US retail price of a ton of anhydrous fertiliser rose 38 per cent from the previous month to a record $1,113. The seven other fertilisers tracked by DTN saw increases ranging from 9 to 36 per cent.

This brief video looks at the impact of high fertiliser prices on US farmers and their planting decisions.  In Brazil, farmers are worried that the fertiliser they have bought may not be delivered, potentially reducing next year’s corn and soybean production. In India, a shortage of fertilisers is disrupting winter planting and fuelling civil unrest. Farmers have clashed with police, and, in some states, the police are distributing bags of fertilisers at police stations to keep law and order.

Sri Lanka faces a different problem.  The government imposed a ban last May on chemical fertiliser imports to promote organic agriculture. The government also banned chemical pesticides and herbicides. As a result, paddy rice production could fall by 40 per cent this year.

But it’s not just fertiliser prices that are rising; cotton prices have hit ten-year highs, up over 50 per cent since the start of the year.

The UN’s FAO reports that GHG emissions from agriculture and food production have risen by 17 per cent over the past 30 years, accounting for 31 per cent of greenhouse gas emissions in 2019. Deforestation accounted for about 6 per cent, while transport, storage, and food preparation accounted for more than 50 per cent.

Twenty-seven firms, including Sainsbury, Nestle and Danone – accounting for 60 per cent of the UK’s soy imports – have signed the UK Soy Manifesto. It ensures physical soy imports aren’t grown in areas where forests were cut down, or native vegetation was converted into farmland after January 2020.

While agriculture may be one of the drivers of climate change, it is also a victim. Bloomberg Green warns of an apocalyptic future where climate change could result in food shortages and push almost 2 billion more people into hunger.

Perhaps the future is already here. The UN’s FAO reports that weather disasters linked to climate change cost the farming sectors in developing countries over $108 billion between 2008 and 2018.

A study published in Nature asks whether Brazil is reaching a climatic limit to rainfed production of soybeans and corn. The study argues that regional warming and drying have pushed 28 per cent of current agricultural acreage out of their optimum climate space. It projects that 51 per cent of the region’s agriculture will move out of that climate space by 2030 and 74 per cent by 2060.

India has approved a proposal to achieve 20 per cent ethanol-blending with gasoline by 2025, five years ahead of its previous target. The government also hiked the price of sugarcane ethanol for blending in petrol.

However, in the EU, there are concerns that the bloc’s strict rules will cause a shortage of biofuels. Brussels has set a 7 per cent limit on the quantity of crop-based biofuels used in the transport sector while giving biofuels feedstocks a percentage score based on their contribution to indirect land-use change (ILUC). It effectively bans palm oil as a transport fuel in the EU.

Meanwhile, Indonesia’s palm oil industry is training farmers and teachers and running social media campaigns to highlight the positive aspects of the crop.

Several countries, including Japan, the UK, and the US, have written a joint letter to the Chinese Customs Minister asking him to delay the introduction of new regulations that require food importers to meet new registration, inspection, and labelling requirements by 1^st January 2022.

Brazil has become the first country to allow imports of flour made with genetically modified wheat. However, shipments of the new variety developed in Argentina are unlikely anytime soon due to opposition from Brazilian millers and consumers.

A new study found that palmitic acid may encourage the spread of mouth and skin cancers in mice. Other fatty acids did not show the same effect. Neither of the fatty acids tested increased the risk of developing cancer in the first place. The study was widely reported in the popular press.

In company news, Reuters looks at Beyond Meat’s disappointing third-quarter results and the relatively slow rollout of the company’s products. Remaining on the subject of meat, Royal DSM has announced that it will build a £100 million factory in Scotland to manufacture its new feed additive Bovaer. The company says the additive can reduce methane emissions from livestock by approximately 30 per cent.

My recommended long read this week is from The New Yorker Magazine on the great organic food fraud. But, if podcasts are more your thing, try this one from Bloomberg on the vagaries of the lumber market.

© Commodity Conversations ® 2021

Many of the above links require subscriptions. Please support quality journalism.