Media Monitor

The UN FAO world food price index fell marginally in November, marking an eighth straight monthly fall since a record high in March. The index averaged 135.7 points in November, down from 135.9 for October, and is only 0.3 per cent higher than last November.

In its latest update, the World Bank predicts that, after an 18 per cent increase in 2022, world food prices will decline by 6 per cent in 2023 and stabilise in 2024. Global food prices peaked in April, but there are still risks in the supply chain.

Russian winter cereal planting has stalled due to poor weather, with 17.6 million ha planted as of 28th November. By comparison, farmers planted 18.3 million ha at the same time last year.

Ukraine’s farmers had sown 4.5 million ha – or 94 per cent of the expected area as of 29th November. Farmers had completed winter wheat sowing by the same date in 2021 with 6.2 million ha.

Ukraine has exported almost 18.1 million mt of grain so far in the 2022/23 season, down 29.6 per cent from the 25.8 million mt shipped by the same stage of the previous season. The volume included more than 6.9 million mt of wheat, 9.7 million mt of corn and about 1.5 million mt of barley.

Ukraine is pushing for larger ships to use its crop-export corridor to bolster volumes in the face of inspection delays. More than 500 ships have used the passage, with about half smaller than 15,000 mt.

Around 450,000 mt of Ukrainian grain are transported via Poland each month, up more than 50 per cent from the middle of the year.

The WSJ has investigated Russian shipments of stolen Ukrainian grain. (If you don’t subscribe to the WSJ, you can read the story on Fox News.)

Several countries will support Ukraine’s initiative to supply subsidised grain to Africa. Among the backers are the US ($20 million), France ($20 million), the UK ($6 million), Sweden ($9.5 million), Austria ($3.9 million), and Canada ($30 million).

Countries, charities — and Ukrainian farmers — will fund roughly 15 million mt of additional grain storage in Ukraine. Russia has knocked out 14 per cent of Ukraine’s grain storage, with overall storage capacity falling to 49.8 million mt.

After meeting the US Secretary of Agriculture, Mexico’s President said he is seeking a deal on Mexico’s ban on genetically modified corn in 2024. The US has threatened legal action against the plan. Mexico is the second-largest importer of corn in the world after China, and the ban could result in Mexico halving its US imports of yellow corn.

Farmers in eastern Australia face the challenge of washed-out roads and shuttered rail links as they prepare for harvest.

Last week I wrote that severe weather had less of a negative impact on agriculture in Spain than in Portugal. I spoke too soon. The Spanish government estimates climate-event damages in 2022 will likely surpass the more than 720 million euros registered in 2021.

France’s drought-hit sugar beet output is expected to fall more than seven per cent this year. Next season could see another drop in planted area if farmers switch to more profitable grain crops.

The US administration has proposed sweeping changes to the US biofuel mandate that shift the focus away from liquid fuels to a broader plan aimed at decarbonising transportation. The EPA has invited public feedback on the proposed changes to the 2005 Renewable Fuel Standard.

Soybean and corn futures fell on the news, with soy oil sliding as much as 6.3 per cent. Shares in ADM and Bunge also fell.

GASC, Egypt’s state grains buyer, has launched an exchange to purchase grain on international markets and sell it on the domestic market. (I am unsure how it will work – any clarification would be welcome!)

Cargill has acquired Owensboro Grain Company, LLC, a fifth-generation family-owned soybean processing facility and refinery in Owensboro, Kentucky.

Although container shipping rates peaked in Q2 this year, liner shipping companies could post a full-year 2022 net profit of $223.4bn, a 50 per cent improvement over the record profits made in 2021.

Some good news: European wildlife numbers are increasing again following years of decline. Even bison are making a comeback.

Brazil’s incoming president met with the soy industry to discuss a new pact to stop deforestation in the Cerrado savanna, modelled on a similar agreement signed in 2006 for the Amazon.

Some bad news: a new study published in Nature warns increasing ocean temperatures in the eastern Pacific will intensify the El Niño and La Niña phenomena that have been fuelling droughts and floods around the globe.

The BBC asks whether centuries-old wheat could help feed the planet. Geneticists are working with London’s Natural History Museum to find out.

The top fifteen commodity hedge funds have increased their assets by 50 per cent this year to $20.7 billion as investors look to hedge against inflation and profit from supply chain disruptions.

The London School of Economics estimates that Brexit has added £210 to food bills for the average UK household. Over the two years through the end of 2021, food prices rose 6 per cent because of so-called non-tariff barriers in the form of border checks.

Bloomberg has launched a new daily energy and commodities newsletter called Elements. (Bloomberg subscribers can sign up for it here.) In the first edition, Javier Blas looks at the 50 per cent fall in the cotton price and asks whether it is a sign that inflation has peaked.

Finally, UNESCO has put France’s beloved baguette on their cultural heritage list. The list already includes 600 traditions from more than 130 countries, such as truffle hunting in Italy, Czech handmade Christmas tree decorations, and Ukrainian borscht.

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The UN Secretary-General told the G20 Summit, “We are on the way to a raging food catastrophe,” with “five separate places facing famine.” He warned that this year’s affordability issues will lead to food shortages in 2023.

Ukraine’s 2022 grain harvest will fall to 51 million mt in 2022 from a record 86 million mt in 2021 because of Russia’s invasion. Farmers have so far harvested around 39 million mt.

Argentina’s third year of drought threatens the country’s farm sector. Some farmers have lost their entire wheat crop. If it doesn’t rain soon, soybean production could also be hit. Meanwhile, California’s historic drought could cost the state’s farmers $3 billion.

Floods in Australia could reduce the protein content of their wheat, turning much of the harvest into grain fit only for animal feed and reducing the quantity for flour milling.

The drought in Portugal has led to a 40 per cent drop in olive production and a 45 per cent drop in fruit production. Farmers in Spain seem less affected.

Higher interest rates will add to farm costs and may begin to impact US agricultural production. The sector’s total interest expense could hit $26.45 billion this year, nearly a third higher than last year and the highest in inflation-adjusted terms since 1990.

A threatened national rail strike in the US could add to farmers’ woes. CNN estimates it could cost the country $1 billion.

Truck drivers protesting the recent election results are blocking traffic in NNE Brazil. So far, the action has not affected exports, although truck freight rates have risen 20 per cent.

The UK is suffering an egg shortage following the country’s worst outbreak of bird flu on record. Bloomberg argues that the crisis is another example of the fragility of the food supply chain.

The US has blocked imports of sugar produced in the Dominican Republic by the Central Romana company on the suspicion that the miller employs forced labour.

Indonesia’s Bulog plans to import up to 500,000 mt of rice to add to reserves and buy another 500,000 mt of rice from local farmers.

The IMO will shortly introduce new environmental regulations that index the carbon intensity of individual ships. The measures seem to please no one. However, there is hope on the (distant) horizon. In the future, most cargo ships should be partially sail-driven.

In company news, Nestlé announced that it would invest $1.86 billion in Saudi Arabia over the next decade, starting with a factory to make infant products and ready-to-drink coffee. Meanwhile, Nespresso is launching compostable coffee pods to complement their (already recyclable) aluminium ones.

Cargill has a new CEO, the tenth in the company’s 157-year history.

Bunge has agreed to buy 49 per cent of France’s BZ Group, the owner of a silo facility in Rouen, which exports around 1.5 million mt of agricultural commodities annually.

In biofuel news, Brazil announced it will maintain its mandatory biodiesel blend at 10 per cent until 31st March 2023, when it will increase to 15 per cent. However, the incoming administration promptly said it would cancel that decision and increase the mandate to 14 per cent in January.

The percentage of the US labour force employed in agriculture is likely to fall even further with the advent of self-driving tractors and farm equipment. About 1.3 per cent of the US labour force is engaged in farming, down from 60 per cent in 1850 and eight per cent in 1950. (Agriculture employs up to 80 per cent of the workforce in some African countries.)

Regarding technology, the US is going the way of the Netherlands, the world’s second-largest exporter of agricultural products by value (after the US).

The Economist writes that attempts to increase cocoa prices and boost cocoa production in West Africa are not succeeding.

Wired Magazine argues we couldn’t feed the world without processed food (spam, anyone?). Wired is less optimistic about vertical farming, arguing that it will have little impact on the world food supply if it only grows salad.

Finally, the Visual Capitalist has some graphics that show where our food is grown – far from where most of it originated.

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The UN is optimistic that the Ukrainian grain deal will be extended beyond mid-November. However, Russia’s UN ambassador said Moscow must first see movement on its own exports.

Kyiv has accused Russia of blocking the full implementation of the current agreement, and the UN said that urgent steps are needed to relieve a backlog of more than 150 ships. Vessels now wait 14 days for inspection.  A total of 397 vessels have exported nine million mt of Ukrainian grains and oilseeds since the corridor opened in August.

Ukraine has kept its forecast for winter wheat sowing at 3.8 million ha, down from 6 million ha for the 2022 harvest (of which farmers harvested only 4.6 million hectares). Bloomberg has an interesting piece on the Ukrainian situation with an interview with the son of the late founder of Nibulon.

Pakistan’s tender for 500,000 mt of wheat kept traders busy this week. Russia’s state trading company Prodintorg (remember them) raised the idea of a government-to-government deal to exchange wheat for rice and potatoes.

Meanwhile, India is considering importing Russian wheat to process and reexport it as flour and pasta.

Drought could reduce Argentina’s 2022/23 wheat harvest to 13.7 million mt, down from a previous forecast of 15 million mt. The harvest could be the worst in seven years and well below the record 23 million mt last year.

Severe flooding is likely to reduce Australia’s wheat production. A farmer told ABC, “You spend all this money preparing your paddocks, sowing your crops, fertilising, and spraying them, only to see them wiped out a couple of weeks before harvest. It’s heartbreaking.”

Brazil’s soybean farmers are holding back new crop sales in the expectation that La Nina may cause drought losses. China is suffering a nearby shortage of soybean meal, leaving farmers short of animal feed. China’s soybean crush volume declined last week, as did soybean stocks.

French farmers have said high energy costs could lead to bottlenecks in the food supply chain. Swiss dairy farmers face an acute forage shortage after the dry summer. Fodder prices have increased 40 per cent since last year.

The EU has forecast its drought-hit maise (corn) harvest at a 15-year low of 54.9 million mt, down from an earlier forecast of 55.5 million.

Mexico will push ahead with its 2024 ban on GM corn. The government said the ban could halve US corn imports and expect domestic production to make up the shortfall.

India has approved GM rapeseed, paving the way for the commercial use of its first GM food crop.

Climate change could make coffee cultivation in India uneconomic. The sector is already struggling with high costs and a labour shortage.

Bolivia has suspended exports of food products, including soybeans, grains, sugar, oil, and beef, to safeguard domestic food security.

Hurricane Ian caused as much as $1.8 billion in damages to Florida agriculture last month, with the most significant losses coming from citrus.

The European spot price for gas briefly turned negative last week following a steep drop in consumption. The FT cites EU fertiliser production as one of the low-value-added businesses that ceased operating. Meanwhile, Brazil has reexported its second fertiliser cargo due to a lack of domestic storage capacity.

ADM reported a 96 per cent increase in its third-quarter profit, bolstered by high demand and tight global grain supplies. Bunge posted better-than-expected results for the quarter and raised its full-year earnings outlook. Analysts expect both companies to gain from the rise in US renewable diesel.

In what could have a significant impact on the European biofuel sector, the EU has agreed on a zero-emissions sales mandate for new cars and vans by 2035, effectively banning the sale of new internal combustion engine cars from that date.

The Global Alliance for the Future of Food published a report showing that global governments direct only three per cent of their climate dollars toward food and agriculture systems.

An Uyghur organisation and a human rights group are taking the UK government to court to challenge Britain’s failure to block the import of cotton products from China’s Xinjiang region.

Shipping companies are trying out technologies that blow bubbles underneath a ship’s hull to save fuel and reduce emissions.

Mondelez has said it would commit an additional $600 million in sustainability funding for cocoa until 2030, on top of $400mn invested over the past decade.

Callebaut has launched second-generation chocolate with around 50 per cent less sugar and 60-80 per cent more cocoa than traditional chocolate. The company wants to ‘put cocoa first, sugar last’.

Finally, a US billionaire wants to disrupt the food supply business with a van that turns up at your doorstep and cooks your dinner on the spot.

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The world is waiting to see if Russia extends the Ukrainian grain export corridor beyond its 19th November expiry date. Russia’s President has accused Ukraine of using the programme to commit terrorist acts. A Russian official said the deal’s extension depended on the West easing Russia’s agricultural and fertiliser exports. The UN is confident the agreement will be extended.

There were market rumours that the Great Odesa ports would soon be blocked because it takes 20-25 days for vessels to be processed and loaded.  A total of 160 ships currently await inspection in Istanbul. Only 14 vessels a day are being inspected, and Russia’s inspectors seem reluctant to speed up the process.

Russia may set a grain export quota at 25.5 mln mt next year, twice that set this year. It will not have a market impact as this year’s grain quota of 11 million mt was not fully used. The country has harvested a record grain crop this year, with wheat production already reaching 104 million mt and total grain output expected to reach 150 million mt.

Despite wet weather and missile attacks, Ukraine’s farmers have sown 2.78 million ha of winter grains, or 58.4 per cent of the planned area. Farmers planted 2.44 million ha of winter wheat or 61.4 per cent of the planned area.

The UK Consumer Price Index (CPI) increased 10.1 per cent in annual terms in September. Food prices rose by 14.5 per cent, the most significant jump since April 1980.

However, shoppers appear to accept rising prices, with Nestlé and P&G reporting better-than-expected sales.

Nestlé reported an increase in organic sales of 8.5 per cent in the nine months to end-September, driven by higher prices. The company reported exceptionally high sales growth in its coffee businesses. It also announced the acquisition of Seattle’s Best Coffee brand from Starbucks for an undisclosed sum.

Nestlé’s CEO expects inflation to continue into 2023, and the FT warns that shoppers may reduce spending or switch to own-brand goods. Bloomberg agrees, even though the CEO of Mondelez believes the problems lie elsewhere.

In an example of high prices being the best cure for high prices (by bringing in new production), Central Australia is harvesting its first wheat crop in 45 years.

India’s rice farmers are struggling with the country’s water crisis, finding it hard to wean themselves off subsidies. The government “seems to have given up” trying to persuade farmers to grow less water-intensive crops.

New Zealand’s livestock farmers continue to protest the government’s “burp and fart” tax.

In a sign of the future of shipping, a Chinese company has taken delivery of a new supertanker with four large sails that should cut fuel consumption by nearly 10 per cent. Meanwhile, container ship operators are removing capacity and laying up ships as they rationalise their networks in the face of falling demand.

The USDA will write off $1.3 billion in debt for about 36,000 US farmers who have fallen behind on loan payments or face foreclosure. It will fund the programme from the $3.1 billion in the Inflation Reduction Act.

Global fertilizer prices fell further as farmers cut back on their use. Brazil’s fertilizer prices are down by almost half from April’s highs, although they are still above long-term averages.

The Alliance for a Green Revolution in Africa (AGRA) has published its (119-page) 2022 Africa Agriculture Status Report that lays out the steps needed to reach zero hunger on the continent. The Africa Centre for Strategic Studies argues that conflict remains the dominant driver of Africa’s food crisis. More than 80 per cent of the record 137 million Africans facing acute food insecurity are in conflict-affected countries.

Climate change poses an “existential threat” to the UK potato industry. The sector is urgently trying to develop new varieties to cope with rising temperatures.

French cereal farmers are experimenting at scale with covering crops with solar panels to produce food and energy simultaneously.

Drought is slowing the seeding of Argentina’s corn crop.

Mississippi River water levels may fall over the next two weeks, further restricting barge traffic. Around 500 mln mt of goods – mainly agricultural products – move along the Mississippi River each year. The Mississippi River Basin produces more than 90 per cent of US agricultural exports and nearly 80 per cent of the world’s grain exports.

Could large-scale seaweed farming help curb climate change?

The FT asks whether the Brazilian presidential election has accelerated deforestation in the Amazon. It also asks if the world can feed itself sustainably. The newspaper presents seven graphs that suggest that providing food to 10 billion people doesn’t have to cost us the Earth.

The Guardian believes food is already costing us the Earth. The latest (60-page) Pesticide Atlas reports that pesticide use has increased by 80 per cent since 1990, responsible for 11,000 human fatalities and the poisoning of 385 million people yearly. It adds that their use caused a 30 per cent fall in populations of field birds and grassland butterflies.

The WWF’s Living Planet Report 2022 (also 60 pages) reveals an (even more alarming) 69 per cent reduction in species populations since 1970. It warns that “we face the double, interlinked emergencies of human-induced climate change and the loss of biodiversity, threatening the well-being of current and future generations.”

The UN FAO celebrated World Food Day on 16th October.  You can watch the (cool) music video here.

Talking of videos, the FT has a 45-minute one that shows “how neoliberal economic thinking has broken our food supply chains.” (Whatever.) It also has a shorter one on organic regenerative farming in the UK.

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The FAO World Food Price Index fell 1.1 per cent in September but remains 5.5 per cent higher than a year ago. Vegetable oil prices led the decline, falling by 6.6 per cent over the month to reach their lowest level since February 2021. Malaysia’s rising palm oil inventories helped drive the fall in veg-oil prices.

However, the US consumer food price index rose 0.8 per cent in September, bringing the 12-month increase to 11.2 per cent. The wider CPI rose 0.4 per cent in September, bringing the 12-month inflation rate to 8.2 per cent.

The number of vessels waiting to sail to or from Ukrainian ports under the UN-backed grain deal reached a record high of 120 at the end of last week due to a shortage of inspectors. Ukraine has shipped more than 6.9 mln mt of grain and oilseeds since the deal came into force on 1st August.

Russia’s renewed bombing campaign drove wheat prices higher early in the week on fears Russia may not continue the deal when it expires in November. Russia’s Geneva UN ambassador added fuel to the fire when he told Reuters on Thursday that Moscow may not renew the agreement unless it addresses its demands on food and fertiliser exports.

Russia is considering abolishing its grain export quota due to a bumper crop. The county’s farmers have already harvested 103 million mt of wheat, up 36 per cent yearly.

China has set its 2023 grain import quota at the same level as last year, with wheat at 9.636 mln mt, corn at 7.2 mln and rice at 5.32 mln. China may import corn from Brazil as early as December to reduce its dependence on the US and replace supplies from Ukraine.

Argentina may tighten restrictions on wheat exports after drought reduced crop estimates from 19 mln mt to 16 mln.

US farmers are planting winter wheat through a third straight year of drought. Weather forecasts suggest dry conditions could stay. A lack of rain and snow has withered summer crops like tomatoes and onions and threatened leafy greens grown in the winter.

Heavy rainfall in India has damaged crops just before harvesting, raising fears that the government may impose additional restrictions on food exports.

A strong US dollar, high commodity prices and rising interest rates are destroying demand for grains and oilseeds in developing countries. Cargill’s head of trading told Bloomberg that, as a result, global trade flows might fall by 5-6 per cent for wheat and 2-3 per cent for corn and soybean meal.

Higher world wheat prices and a weak yen are already encouraging Japan’s food producers to promote domestic consumption of rice flour-based products. Domestic rice consumption has been falling over the years as more Japanese turn to bread and noodles.

Foreign Policy Magazine dedicates its autumn issue to food supply chains, arguing that “the solution to the global food crisis isn’t more food.” The FT also has a long read on the future of farming and regenerative agriculture.

In company news, Bloomberg questions why Cargill is so successful. (Spoiler: it’s private ownership.)

Brokers expect dry bulk freight rates to strengthen slightly into year-end and to weaken in 2023. However, 2023 could see net zero growth in the world’s dry-bulk fleet, while 2024 could see more tonnage exit the fleet than enter. Meanwhile, container rates have fallen to pre-pandemic levels despite operators removing tonnage.

Brazil’s so-called “Ethanol King” is hedging his ethanol investments and has bought a minority share in Vale, the Brazilian mining company. Vale is a major supplier of nickel, a key ingredient in electric-vehicle batteries.

Honeywell International will commercialise technology using ethanol to produce sustainable aviation fuel (SAF). The company says its technology can cut GHG emissions by 80 per cent compared with petroleum-based jet fuel.

In environmental news, US food producers are removing “best before” labels that account for seven per cent of US food waste — or four mln mt annually.

The UK government could lose farm votes if it abandons plans to replace EU land-based subsidies with environment-based ones.

Environmentalists have criticised the UK government over a plan to ban solar panels on farmland. The ban could threaten planned investments of £20 billion.

Even so, pilot projects in Spain show that solar panels can help farmers by creating shade and reducing water loss.

There was good news from India where farmers in Punjab are moving away from burning paddy rice stubble and ploughing it back into the land, where it breaks down and acts as a natural fertiliser.

There was bad news this week for alt-meat producers. A survey of Generation Z – people born after 1996 – found that just 14 per cent said they consume plant-based meat, and 23 per cent of those who do, say they plan to eat less plant-based meat in the future.

The plant-based Beyond Meat company may further reduce staff levels as rising inflation drives consumers toward less-expensive animal proteins.

National Geographic does a deep-dive into the future of alt-meat, asking if it will ever satisfy the US hunger for the real deal.

New Zealand plans to tax agricultural emissions from livestock and introduce an “agricultural emissions-pricing system” in 2025.  The country’s farming federation is “deeply unimpressed

Finally, a Turkish livestock farmer has fitted virtual reality (VR) headsets to his cows, transporting them to virtual pastures. It boosted milk yields.

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16th September 2022

Hurricane Ian has forced Florida fertiliser maker Mosaic Co. to halt operations and raised fears about supplies. The storm could also severely impact Florida’s citrus farmers, and orange juice futures traded higher.

Russia’s farmers have harvested a record 100 mln mt of wheat even as export taxes and logistical issues have slowed export flows. Farm associations warn that Russia’s partial mobilisation of reservists could disrupt the final stages of the harvest and the planting stages of the next crop.

Afghanistan’s ruling Taliban has signed an agreement with Russia to import two mln mt of wheat a year (until an unspecified date) at a ‘special discount’, payable in roubles.

The CEO of Russia’s VTB Bank, which owns stakes in major Russian grain export hubs, has asked President Putin to prohibit companies belonging to “persons related to unfriendly states” from buying grain and oilseeds from Russian farmers.

Ukraine has expressed doubts as to whether the Black Sea export corridor will be extended. Russia’s mobilisation and war escalation could increase risks to world food supplies.

Ukraine’s wheat harvest finished at 19 mln mt, leaving it with at least 11 million mt for export. Next year, the country expects to produce 50-52 million mt of grains and 15-17 million mt of oilseeds. Ukraine’s winter wheat sowing campaign is 15 per cent complete.

The US administration held a one-day conference on hunger, nutrition, and health – the first since 1969 – to make America a stronger, healthier nation. Corporations and non-profit groups have pledged more than $8 bn to help achieve that goal.  (Click here for a summary of the event.)

France held a meeting on the margins of the UN General Assembly in New York to discuss the global food crisis. The head of the World Food Programme has urged donors to help tackle the fertiliser supply crisis.

EU vegetable farmers, particularly in northern Europe, are considering halting production due to rising energy costs. Supermarkets may have to source more supplies from North Africa.

Drought-affected harvests may lead to EU politicians loosening rules on gene-editing techniques like CRISPR.

Drought is not limited to Europe. The San Francisco Chronicle looks at what some describe as the ‘desertification’ of the state’s rice farming areas.

The Dutch government continues to struggle with their plans to reduce farm GHG emissions.

A study published in Nature argues that changes in global food production systems have enabled affordable diets but have had less favourable outcomes for nutrition, environmental health, inclusion, and equity. A separate study in Nature argues that declining crop yields will limit the potential of biofuels.

US farmers are urging the US government to challenge a looming Mexican ban on GM corn and glyphosate.

The UK government is rethinking plans for England’s post-Brexit farm subsidies. Environmentalists say the revised plans are an attack on nature.

Food inflation and tight budgets may encourage consumers to eat less meat, which some argue could end world hunger.  Even so, McDonald’s has pulled their McPlant burger in the US after disappointing sales, and retail US plant-based meat sales are also falling. Shares in Beyond Meat are down more than 75 per cent this year, and CNN asks whether the company is worth saving. Some question whether plant-based meat is better for the environment than real meat. One recent study claims it is, but the debate continues.

The cost of moving container freight has halved in the past three months and is the lowest in two years. Analysts expect further contractions in the coming weeks before a bounce-back later in the year.

Malaysian palm oil futures have fallen to a near 20-month low as recession fears hurt demand. Indonesia says it will maintain the Domestic Market Obligation (DMO) policy that requires producers to supply the domestic market before they export.

Confectionary News reports on the recent European Cocoa Forum amid fears that EU plans to make companies responsible for human rights abuses and environmental harm in their supply chain will put EU processors at a disadvantage to competitors in Asia and the US. Olam Food Ingredients has called for a level playing field.

In company news, Louis Dreyfus Company has bought Australian grain trader and bulk handler Emerald Grain. Cargill has opened a new corn wet milling plant in Indonesia. ADM has inaugurated a Science and Technology Centre at the University of Illinois. Nestlé and Samsung have joined forces to launch a digital health platform. Unilever’s CEO has said he will retire at the end of 2023. And in Switzerland, Lindt has won the ‘chocolate bunny battle’ after a court ordered Lidl to stop selling imitation bunnies.

ETC Group – an NGO – reports that ten companies dominate agricultural commodity trading. COFCO is the world’s second-biggest, behind Cargill, with ADM the third. The NGO says that the commercial seed market is even more concentrated, with two companies controlling 40 per cent of the market, compared with ten companies 25 years ago.

Finally, good news for all coffee lovers: a new study has found that coffee lowers the risk of heart problems and early death. (I think we already knew that!)

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Ukraine’s grain harvest could fall by 50 per cent next year, with the pace of winter-crop sowing three times slower than last year. As of 3rd October, farms had sown 1.1 mln ha of winter wheat compared with 3.1 mln planted on the same date in 2021.

Russia’s farmers have accelerated winter wheat sowing after recent rain, planting grains on 9.4 mln ha compared with 10.7 mln ha a year ago. Winter wheat typically accounts for 70 per cent of Russia’s crop. The country’s Agriculture Ministry expects Russia’s grain harvest will grow by about five mln mt next year following the annexation of four (predominantly agricultural) Ukrainian territories.

France’s drought-hit farmers predict their corn harvest will produce about ten mln mt, the lowest in 30 years.

Due to low water levels, the cost of transporting grains and oilseeds down the Mississippi river has soared nearly 80 per cent since the beginning of September and over 150 per cent since August.

Last week, the largest Mississippi barge operator declared force majeure, warning customers it won’t be able to make good on deliveries because of low water levels. A logjam of vessels threatens to bring river traffic to a halt.

Canada is also facing problems transporting its wheat because of a shortage of railcars.

A shortage of US dollars has resulted in up to 900,000 mt of wheat building up in Egyptian ports. Egypt has been increasing import spending, leaving the central bank short of foreign currency.

Kenya has lifted its ban on importing and producing GM crops following the country’s worst drought in 40 years. The authorities hope the move will improve crop yields and food security.

Some analysts expect the EU soon to lift its ban on genetically modified and gene-edited crops. The EU official handling the issue said, “we must ensure the technology is safe. Somehow, we must get the balance right.”

Others would prefer that we plant ancient grains like amaranth, quinoa, chia, bulgar, millet, sorghum, and Kamut, a grain found in King Tutankhamen’s tomb.

Brazil should produce a record ten mln mt of wheat this season, up from a previous estimate of 9.67 mln. Brazil is currently a net wheat importer, but the government hopes to be a net exporter in ten years.

Brazil imported a record quantity of fertilisers this year. Their silos are full, and prices are sliding as farmers reduce applications. European farmers are looking at reducing fertiliser use, planting less acreage or switching crops. Even livestock farmers could be negatively affected.

The EU Commission has reduced the residue limits for two neonicotinoid pesticides, clothianidin and thiamethoxam, a move which may limit EU food and animal feed imports. The new rules come into force early in 2023, but third countries will have up to three years to adapt to the new regulations.

JBS, the world’s biggest meat producer, has pulled the plug on its US plant-based meat division Planterra Foods, maker of the OZO brand, closing a factory it opened in Denver in 2021. The company will keep its plant-based operations in Brazil and Europe. Is it a bad sign for plant-based meat? Do consumers consider fake meat too woke?

Beyond Meat doesn’t think so. It is sticking to its mission of making animal-based meat obsolete with innovations, such as its forthcoming vegan steak. Meanwhile, US firms eagerly await US government permission to start marketing lab-grown meat. They expect an announcement soon.

Plant-based milk may also be coming off the boil.

Tesco, the UK supermarket chain, has accelerated its plans to halve food waste in its operations, bringing the deadline forward from 2030 to 2025. The company has linked directors’ bonuses to achieving the goal.

Rising food prices could encourage consumers to waste less but ditching “best before” labels could also help. Wired Magazine believes the solution lies in eating your garbage – making enticing dishes out of the food you would otherwise jettison.

In shipping, Cargill plans to boost its use of biofuels in its fleet and to order methanol-fuelled ships as part of its plans to cut emissions.  Maersk has ordered a further six ocean-going container vessels with dual-fuel engines able to operate on green methanol, bringing their total order to 19 ships.

Maersk recently raised its full-year profit forecast from $24 to about $31 billion. The consultancy Drewry estimates that the entire container-shipping industry will make an operating profit of $270 billion this year, more than ten times the profit of $26 billion in 2020.

Nestlé was in the environmental news last week. The company pledged to spend more than CHF 1 billion by 2030 to source coffee sustainably, more than double the previous pledge. In a revolution for UK chocolate lovers, Nestlé will ditch the foil wrappers it has used for Quality Street for the past 86 years in favour of more environmentally-friendly paper.

The company has also scrapped the gold foil on its KitKat bars, replacing them with wrappers made with 80 per cent recycled plastic. It has also said it will stop sourcing from an Indonesian palm oil producer accused by environmental groups of land and human rights abuses.

On the financial side, Nestlé’s CEO said in an interview that the company is ready to make acquisitions in any of its business lines.

John Deere plans to build a world of fully autonomous farming by 2030, while Huawei believes smart farming is the start of sustainable food. Some argue that the future lies in vertical farming, where yields are higher than in traditional farms.

A coalition of farming and environmental groups have asked the UK government for a level playing field for food and animal welfare standards in future post-Brexit trade deals. The call follows a bitter row over the Australian deal, which the National Farmers Union (NFU) called a “betrayal” of British farmers.

As if the UK is not going through enough (many self-inflicted) difficulties, the country is suffering its worst avian flu outbreak in history. There are fears of a Christmas turkey shortage.

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India has banned broken rice exports and imposed a 20 per cent duty on exports of various grades of rice, excluding parboiled and basmati rice. India accounts for over 40 per cent of global rice shipments, exporting a record 21.5 mln mt in 2021, more than the combined shipments of the world’s next four biggest exporters: Thailand, Vietnam, Pakistan, and the US. Rice loading has stopped, and nearly one mln mt of rice is trapped in the ports as buyers refuse to pay the export levy.

The move caught markets by surprise as monsoon rains, delayed in parts of India’s northern and eastern rice-producing regions, have improved over the last couple of weeks, boosting crop prospects.

Russian President Vladimir Putin wants to revisit the UN-brokered Ukrainian grain export deal, saying it has “cheated” developing countries.  He claimed that only two out of 87 ships, carrying 60,000 mt, have gone to developing countries. He added that he wants to limit grain and other food export destinations.

However, the data shows that a significant percentage of the more than two mln mt of grains shipped under the agreement has gone to developing countries, with 400,000 mt shipped to Africa and more than 600,000 mt going to Asia and the Middle East.

Even so, Turkish President Tayyip Erdogan said Putin was right to complain that grain from Ukraine was going to wealthy rather than emerging countries.

Rather than being worried that Ukrainian shipments aren’t going to developing countries, Russia’s gripe is that Western sanctions restrict Russia’s ability to export grain and fertilizers. UN and Russian officials discussed the issue at a meeting last week in Geneva.

Russia’s foreign minister called for the removal of “logistic sanctions that prevent the free access of Russian grain and fertilizers to world markets.” He said, “Our Western colleagues are not doing what the UN Secretary-General promised us.” President Erdogan will meet President Putin next week to discuss the issue.

Ukraine says Russia has no grounds to review the Black Sea grain deal.

Last Sunday, Ukraine dispatched its biggest convoy of grain vessels under the deal after 13 ships carrying 282,500 mt of agricultural products left the Black Sea ports of Odesa, Chornomorsk and Pivdennyi.

However, at the current rate of exports, it will take around six months to ship the rest of the grain from Ukraine’s last harvest. The dangers of sending ships into the heavily mined Black Sea, along with a lack of large vessels, means volumes transported are well below Ukraine’s goal of doubling farm exports to at least 6 million tonnes by October. Ukraine’s farmers have already begun to sow their winter crops.

The Washington Post (via yahoo) has a good round-up of the toll that hot weather and drought have inflicted on US farmers.  CNN looks at how Europe’s drought could mean a one-third drop in Spain’s olive oil production. (Spain is the world’s biggest producer of olive oil.)

Some European farmers are shutting down operations and reducing production because of the energy crunch. There are worries that high energy prices will lead to food shortages this winter, mainly fruit and vegetables.

The FT has a long read on Japanese agriculture that argues the case for reform. But reform is not easy. Holland’s Agriculture Minister resigned this week, indicating that the government is losing its battle to reform agriculture and reduce emissions. (The Netherlands is the world’s second-largest exporter of agricultural goods.)

Could meat go the same way as tobacco and sugar? The Dutch city of Haarlem certainly hopes so. It will become the first city in the world to ban meat adverts from public spaces.

Plant-based meat might not be the climate saviour that some predicted. Food Navigator writes that it is becoming the biggest category failure in food history. Plant-based meat does not live up to its hype, and manufacturers aren’t delivering the taste and texture consumers need to repeat purchases.

Will bean-free coffee and chocolate have more success?

Yara, the Norwegian fertilizer giant, is close to acquiring Petrobras’ fertilizer unit, known as UFN-III, based in Mato Grosso do Sul state. It could cost less than $100 million as the unit is not yet operational. Yara already owns five plants and 24 mixing facilities in Brazil.

Reuters reports that US ethanol plants produce more than double the GHG emissions per gallon of fuel production capacity than oil refineries. Meanwhile, carbon capture could give a new lease of life to algae biofuel.

The current downturn in the Capsize freight index is the sharpest since 2008. Average cape rates are under $6,000 daily, less than half of operating expenses.

Meanwhile, the container shipping industry may be heading for a hard landing after making more money in the last three years than in the previous six decades.

Finally, there has been some talk of imposing windfall taxes on food traders, but no one has mentioned the big investment banks. The big banks made record profits trading agricultural commodities in January-June this year – an estimated $600 million, twice the $300 million they made in 2021. However, this compares with the estimated $6.6 billion they made in oil and gas markets and the $3.1 billion they made in metals.

Click here for Bloomberg’s take on the past week’s food and agriculture stories.

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The UN FAO world food price index fell for the fifth month in a row in August, averaging 138.0 points versus a revised 140.7 in July. The index has fallen from 159.7 points in March but is still 7.9 per cent higher than a year earlier.

As a hopeful sign, fertilizer prices are easing (a little). Even so, Forbes argues that farmers still need to up their N-game and use fertilizers more efficiently.

Freight rates are also falling. Container rates have fallen 40-46 per cent from last year, while Capesize time charter rates have dropped below $1000/day on the transatlantic route,  beating a March 2016 record low of $1,015 per day.

By the end of August, 62 ships had left Ukrainian ports, transporting about 1.5 mln mt of grains and oilseeds. However, the UN warns that Ukraine must ship millions of tonnes of grain from its previous harvest to make room in their silos for the new crop.

To facilitate shipments, Ukraine will allow merchant sailors to leave Ukraine if they receive approval from their local military administrative body. The government bans men aged 18-60 from leaving the country.

A new 320-nautical-mile route for shipments from Ukraine’s ports of Odesa, Chornomorsk and Pivdennyi/Yuzhny may also facilitate shipments.

The UN has scaled down its talk of a food crisis and says the problem is affordability, not availability. Business Insider disagrees. It predicts that next year’s food crisis will be worse than this year’s due to a drop in production, particularly in Ukraine. It quotes a McKinsey report that estimates Ukraine’s grain production will drop by 35-45 per cent next harvest.

As of 25th August, Ukrainian farmers had harvested 25.3 mln mt of new crop grain, including 18.8 mln mt of wheat. The Food Ministry expects grain and oilseed production to reach 65-67 mln mt this year.

The FAO has lowered its forecast for global cereal production in 2022/23 to 2.774 billion mt, down 1.4 per cent from last season. The agency pegs world cereal use at 2.792 billion mt, leading to a projected 2.1 per cent fall in global stocks.

The USDA estimates US agricultural exports for the fiscal year 2023 at $193.5 billion, down from a record $196 billion in 2022. The USDA sees lower exports of cotton, beef, and sorghum partially offset by higher exports of soybeans and horticultural products.

For the past 30 years, the average return on US farmland, adjusted for inflation, has been around 5 per cent, making it an attractive investment. The USDA estimates that non-farming landlords own 30 per cent of the country’s farmland.

Canada’s wheat production will increase 55 per cent this year to 34.6 mln mt as yields improve amid better moisture and more moderate temperatures, making 2022 the third best harvest since records began in 1908. Last year’s drought-stricken crop was the worst since 2007. Canadian farmers will harvest more canola, barley, oats, soybeans, and corn in 2022 compared to last year.

Malaysia’s palm oil industry fears a significant drop in production this year due to a shortage of around 120,000 workers. Producers expect to leave six mln mt of fresh fruit bunches unharvested, equal to one mln mt of vegetable oil.

This year, drought and extreme heat have decimated Texan cotton production, costing farmers at least $2 billion.

Politico argues that the 350 companies that account for more than half of the world’s food and agriculture revenue are not doing enough to adapt to climate change.  It writes that many companies are continuing to operate as if it’s business as usual.

In an exception that proves the rule, wine producers may benefit from hotter and drier climates.

China is investing heavily in overseas agriculture.  Goldman Sachs reports that Chinese grain yields are 40 per cent lower than in the US, putting production costs about twice as high as America’s. It takes Chinese farmers between 6 and 26 per cent more grain to produce a kilo of pork or chicken than it does their American counterparts.

The UK’s Agriculture Minister has told the FT that British farmers have nothing to fear from newly signed trade agreements with Australia and New Zealand.

The container-shipping line AP Møller-Maersk has completed its $3.6bn acquisition of LF Logistics, announced in December. Maersk and other container shipping lines are reinvesting record profits to build integrated supply chains.

Synthetic milk, produced using fermentation, may threaten the dairy industry.  Unlike artificial meat – which can struggle to match the complexity and texture of animal meat – synthetic milk is touted as having the same taste, look, and feel as regular dairy milk.

Brazilian Presidential candidate Lula has pledged to step up the conservation of the Amazon rainforest by bolstering the environmental protection agency Ibama and increasing enforcement.

A new report finds that the US government drastically underestimates the social cost of carbon dioxide emissions. The US currently puts that cost at around $51/mt, but new research puts the figure at $185/mt.

Scientists are studying the effect of ozone pollution on crop yields and are working on new crop varieties.

Finally, Sifted questions whether vertical farming will survive a recession. Will people buy vertically grown basil in a cost-of-living crisis?

You can find Bloomberg’s weekly food supply summary here.

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Hot and dry weather in much of Europe will substantially reduce crop production, particularly corn, soybeans, and sunflowers.

The European Drought Observatory reports drought is affecting a staggering portion of Europe, with 47 per cent of EU land under the level of “warning” and 17 per cent at the more severe “alert” status.

French farmers are asking their government for billions of euros in compensation for crop and livestock losses.

Politico believes that European farmers have little choice but to adapt to climate change. On the same theme, the Guardian suggests five crops that could feed a climate-changed world: amaranth, fonio, cowpeas, taro, and kernza. (No, I hadn’t heard of them either.)

The world’s cotton crops are suffering from hot, dry weather, with yields falling in India, Brazil, and China. Drought has killed the cotton crop in Texas, but higher cotton prices could spark a revival of cotton in wetter Louisiana.

With almost all of Texas in drought, ranchers are sending more cattle off to slaughter.

Corn prices moved higher this week on evidence that the drought across the US Midwest would reduce yields.

The drought in China is threatening food production, prompting the government to order local authorities to take all available measures to ensure crops survive the hottest summer on record.

China is particularly concerned about its rice crop. The six worst-affected regions, Sichuan, Chongqing, Hubei, Henan, Jiangxi, and Anhui, account for almost half of China’s rice output.

More than 70 days of extreme temperatures and low rainfall have wreaked havoc along the basin of the Yangtze, which supports a third of the country’s crops. The government is using drones and chemicals to seed rainclouds.

The government warns that the country’s temperatures are rising faster than the global average and says it is a sensitive region in global climate change.

India announced restrictions on wheat flour exports. Wheat flour exports jumped 200 per cent after India banned wheat exports last May. There is talk that the country may import wheat and abolish its 40 per cent import tax.

Ukraine has exported almost ten mln mt of agricultural products since Russia invaded, including nearly two mln mt since the beginning of August.

Citing fake shipping documents, Turkey said it will re-impose phytosanitary certification requirements for imports from Ukraine.

Ukraine has restored a rail link to Moldova after a 23-year hiatus. The connection could carry ten mln mt of freight a year.

The UN is working with the EU and the US to overcome obstacles to Russian food and fertiliser exports.

Yara, one of the world’s largest fertilizer makers, is slashing ammonia production due to soaring gas prices. The company announced a 50 per cent cut to its ammonia-based urea and nitrogen fertilizer production in Europe, citing record high gas prices. There are worries that soaring fertiliser prices will deepen Africa’s food crisis

The closure of the UK’s biggest ammonia fertilizer plant could lead to a shortage of CO2, a by-product used in the beer and soft drinks industry and by abattoirs to stun animals before slaughtering them. The plant closure could result in beer shortages and pig pileups, causing alarm among the bacon and beer-loving British.

It is ironic that the world should suffer a shortage of CO2 when there is too much in the atmosphere. At the same time, global methane emissions are rising. The FT warns, “If you think of fossil fuel emissions as putting the world on a slow boil, methane is a blow torch that is cooking us today.”

On a more optimistic note, Brazil’s presidential frontrunner Luiz Inacio Lula da Silva said his country does not need to cut a single tree to plant more soybeans and sugarcane or raise cattle. He promised to restore law enforcement in the Amazon rainforest to curb deforestation.

The Boston Consulting Group has published a report on alternative proteins, writing that investing in the sector is the most efficient way to reduce global GHG emissions.

The Guardian has called for a windfall tax on food companies. The newspaper erroneously reports that the four ABCD companies – ADM, Bunge, Cargill and LDC– control 70-90 per cent of the global grain trade. (Seven companies – ABCD+ Wilmar, Viterra, and Olam – account for an estimated 45 per cent of the seaborne trade in grains and oilseeds.)

Earlier this year, the UK charity Oxfam also called for a windfall tax on food companies. They made a similar call in 2011 during the last food crisis. (I had forgotten that we had a food crisis in 2011.)

In 2015, the USDA, EPA and FDA set a goal to reduce food loss and waste by 50 per cent by 2030. They still have a long way to go, but new technology, such as an artificial ice cube, could help.

Finally, Bloomberg asks if sail is the future of commercial shipping. The news agency reports that adding a sail to an existing cargo ship can reduce GHG emissions by 20-30 per cent. You can find Bloomberg’s weekly food and agriculture summary here.

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Comment

The UN estimates that retail establishments and the food service industry waste around 931 mln mt of food each year worldwide. If food waste were a country, it would be the third biggest source of greenhouse gas emissions, accounting for nearly 10 per cent of global GHG emissions.