Ag-Trader News

Markets

Brazil’s 2022/2023 summer grain production will exceed the country’s total storage capacity for the first time in 20 years. Farmers will harvest 189.5 million mt of soybeans, corn, and rice in the summer, but the storage capacity is 187.9 million mt. A good winter corn harvest may exacerbate the situation.

NASA calculates that Ukrainian farmers harvested 26.6 million mt of wheat in 2022, down from the previous year’s record harvest of 33 million mt but close to the five-year average of 27.9 million mt. Unfortunately, Ukraine cannot access 22 per cent of that wheat in the eastern part of the country due to the war.

The Ukrainian Grain Association (UGA) expects Ukraine’s grain and oilseed production to drop to 53 million mt in 2023, down from around 65 million mt in 2022 and 106 million mt in 2021. The UGA president said it is no longer profitable for farmers to produce grain.

As of 23rd January, Ukraine had exported 25.45 mln mt of grains and pulses, down 30 per cent on the previous season. Wheat exports amounted to 9.2 mln mt, down 45 per cent on last season. Corn exports amounted to 14.4 mln mt, up 3 per cent on last season.

Inspections of Ukrainian grain ships have slowed to half their peak rate, creating backlogs. Some US and Ukrainian officials accuse Russia of deliberately slowing down checks, which a Russian official denied.

The USDA said Russia’s official wheat production estimate of 104.43 million is “not feasible“. The USDA estimates Russia’s 2022 wheat harvest at 91 million tonnes.

The Indian government will provide three million mt of wheat to bulk consumers, such as flour millers, to cool record-high domestic prices.

Sugar mills in India’s western state of Maharashtra may close early due to poor weather, threatening export volumes, while a plague of rats is decimating sugar cane in Northern Queensland.

The Environment

Germany is considering phasing out biofuels produced from food or animal feed crops by 2030 by progressively reducing the maximum level of biofuel blending. About half of Germany’s total winter rapeseed area of 1.07 million hectares currently goes to biodiesel production.

In a blow to the European sugar beet industry, the Court of Justice of the European Union has ruled that member states can no longer offer exemptions to the bloc’s ban on crop seeds treated with neonicotinoids.

The UK government has ignored the ruling and authorized neonicotinoid pesticide treatments on this year’s sugar beet crop. It explains why here.

The UK government has (at last – phew!) published its plans to support farming post-Brexit. The government will base funding on environmental protection, such as conserving hedgerows and maintaining peatlands. The new incentives, called environmental land management schemes (ELMs), are worth £2.4bn a year for this parliament.

The FT argues that the new rules pose a significant risk to farm finances. The newspaper writes, “So-called “direct payments” from the EU based on land area made up 60 per cent of farm net income before Brexit. At a typical livestock farm, they accounted for the entirety of profits. Now they have been slashed by at least 35 per cent, with more cuts to follow.”

Louis Dreyfus Co. (LDC) has launched the Climate Resilience Prize, a new 100,000 Swiss franc award that supports start-ups working to drive climate resilience in agriculture and food value chains.

A new study questions the environmental benefits of rainforest carbon offsets, arguing that 90 per cent of them are worthless. The study could, however, be flawed and based on wrong assumptions.

Climate change will likely have a negative impact on coffee production, but the BBC explains how you can be a more environmentally friendly coffee drinker. (Spoiler: it involves capsules and pods.)

The FAO wants you to be a food hero to reduce waste.

Fertilisers

Rising prices led to a 70 per cent surge in Russia’s fertilizer export revenue. Despite expectations to the contrary, export volumes fell by only ten per cent. Retail fertilizer prices have now fallen to their lowest in 15 months.

BP Bunge announced that they will phase out the use of mineral fertilizers on their sugarcane fields by 2025.

The FT has interviewed the CEO of Yara (the world’s biggest fertilizer manufacturer) on the company’s decarbonization plans.

Researchers continue their quest for alternative fertilizers, including human waste, although Wired Magazine believes that the world is hooked on phosphorous.

Animal protein

Reuters writes that lab-grown meat could become a reality in some US high-end restaurants as early as this year. Due to its cost, it could be a while before it hits supermarket shelves.

Bloomberg has an alternative take on the issue, arguing that alt-meat is just another food fad. The news agency is more optimistic about cow-free dairy products. The FT agrees.

Unsurprisingly, the privately held Impossible Foods disagrees with Bloomberg’s view on alt-meat, arguing that their alt-meat sales continue to grow.  Some believe, however, that plant-based meat’s error may be the exact thing that was supposed to make it popular: Its attempt to be indistinguishable from meat.

Investment is still coming into the sector with the launch of a new $300 million Smart Protein Fund to “back alternative proteins and decarbonize the food industry.”

A professor at Stamford University believes that even if alt-meat proves popular, it will not decarbonize the sector. He says we should instead concentrate on reducing GHG emissions from real meat (and dairy) production. Bill Gates agrees.

Could the dairy farm floating in Rotterdam harbour herald the future of livestock production?

In the meantime, we may already have reached peak real meat consumption.

Shipping

The Baltic Exchange’s main sea freight index has fallen to its lowest level in two years, dragged down by a dip in Capesize and Panamax rates. Falling shipping costs could be good news for inflation in the future.

MSC and Maersk – the numbers one and two in the global container shipping industry – agreed to end their 2M vessel-sharing alliance effective January 2025.

Maersk, one of the most prominent investors in methanol-fuelled ships, has invested in C1 Green Chemicals to mass-produce green methanol at a competitive price.

Neoline Armateur has launched the long-awaited construction of its first sail-powered cargo vessel. The ship will offer a capacity of up to 5,300 mt of cargo. Click here for more on sail-powered vessels and to watch a cargo ship kite surfing.

Company news

ADM estimates a record fourth-quarter profit in 2022 and predicts another very strong year in 2023. (Click here for an upbeat take on the ADM call.)

CHS and Cargill will expand the export capabilities of their joint venture, TEMCO LLC, with the addition of Cargill’s export grain terminal in Houston, Texas. TEMCO currently operates three facilities in the Pacific Northwest.

The Globe and Mail have a long read on Sucro Can, the new competitor in Canada’s sugar market.

Finally, here is a price graph that will resonate with ag-traders worldwide.

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Ag-Trader News

Türkiye’s President has said that Russia has agreed to ship wheat free of charge to Türkiye to be milled into flour and shipped to poor African countries. The idea was first raised last November when the two countries and the UN extended the Black Sea grain corridor.

Argentina’s drought-hit soybean crop could be the lowest since 2018, but Brazil is heading for bumper harvests in corn and soybeans.

India is harvesting a record wheat crop, up 5 per cent from last season, raising hopes that the government may soon ease export restrictions. Traders already expect the government to ease restrictions on rice exports.

US wheat exports were the lowest in over four decades in 2022 and down 26 per cent compared to 2016-17, the last year the US was the world’s leading wheat exporter.

Malaysia is considering halting palm oil exports to the EU in retaliation for the bloc’s new deforestation regulations. It has already agreed with Indonesia to (try to) work together on the issue.

Heavy rain has led to severe flooding in some areas of California. Virtually none of the storms has reached the Colorado River basin; the drought is not over.  A lack of infrastructure to store and move water means that the rains will not help the state’s almond farmers.

The FAO Food Price Index averaged 143.7 points in 2022, more than 14 per cent above the 2021 average, coming on top of a 28 per cent increase in 2021. US food prices rose 10 per cent in 2022 after a 0.3 per cent increase in December.

Although food inflation has eased, some believe the problem has not disappeared. Markets, however, have different ideas. After all, high prices are the best cure for high prices.

I wonder whether the Economist will one day realise that.

Technology

Alphabet (Google to the rest of us) has launched a new subsidiary, Mineral. Its mission is to “help scale sustainable agriculture” by “developing a platform and tools that help gather, organise, and understand never-before known or understood information about the plant world – and make it useful and actionable.”

Wheat provides 20 per cent of global calories – more than any other crop – yet most of it has limited genetic variation, leaving it vulnerable to climate change. Researchers in Mexico hope to correct that situation.

Forbes has an interesting article on how technology will transform the way that agriculture is financed. The magazine cites how various companies provide climate insurance to small farmers in developing countries.

The BBC joins the growing chorus questioning the potential for vertical farming, writing that the challenge is to keep energy use down when the alternative – growing outside – comes with free sunlight and rainwater.

John Deere has agreed to let its US customers fix their equipment.

Will lab-grown meat technology be one of the food trends to shape 2023? I am not convinced, but this article believes it will be.

Bill Gates (one of the largest owners of US farmland) is bullish alt-meat products and believes that “they will eventually be very good.”

The bee population has been declining for several years, but several companies are working to find a solution.

During the First World War, scientists discovered that certain types of yeast can produce oily lipids. National Geographic writes that it may compete with vegetable and palm oils.

Shipping

Cargill has joined forces with Mitsui & Co to order two methanol-fuelled bulk carriers with delivery scheduled in the first quarter of 2026.

Taiwan’s Evergreen Marine Corp. is celebrating a record year by awarding year-end bonuses equal to more than four years’ pay, on average. I wonder whether the captain of the company’s Ever Given ship – the one that ran aground in the Suez Canal – will receive one.

Ironically, the M/V Glory, a cargo vessel carrying Ukrainian grain, briefly ran aground in the Suez Canal before being refloated and towed away.

The Guardian kindly (and bizarrely) provides a step-by-step guide to what to do when a big ship sinks.

Customs officers at the port of Antwerp and Rotterdam seized a record 160 mt of cocaine in 2022. We guess they found most of it in containers.

Health

A new study suggests that a baking technology introduced in the 1980s to reduce fermentation times may cause the rising incidence of gluten intolerance.

Vox raises the issue of antibiotics used in livestock farming, while Yahoo resuscitates an old study that finds eating lentils could add ten years to your life. (Spoiler: You must eat a lot of them.)

Finally, three environmental groups are taking Danone, the company behind Evian and Volvic mineral water, to court for allegedly failing to reduce its plastic footprint. Perhaps the company could transform its waste plastic into a soil additive.

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PS Following reader feedback, I will send this report twice a month on alternate Mondays to the interviews.

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Media Monitor

Commodities have been the best-performing major asset class for the past two years, although the FT warns that commodity trading remains risky and volatile.

The UN FAO World Food Price Index fell 1.9 per cent in December, closing the year one per cent lower than in 2021, the first annual decline since 2018. The 2022 average was, however, 14 per cent higher than the prior year.

UK food inflation hit 13.3 per cent in December, boosted by animal feed, fertiliser, and energy costs. Fresh food inflation hit 15 per cent in the month, up from 14.3 per cent in November, the highest monthly inflation rate for fresh food since records began in 2005.

About 600 ships have left Ukrainian ports carrying 16 million mt of agricultural products under the Black Sea grain corridor agreement. Despite harvesting difficulties, Ukraine’s government says that the country’s farmers could have exported three times as much.

By 6th January, Ukrainian farmers had harvested 49.5 million mt of grain from 10.7 million hectares of crops, with the yield averaging 4.64 mt/ha. They had completed the 2022 wheat and barley harvests, threshing 20.2 million and 5.8 million tonnes, respectively. In 2021, Ukraine harvested 32.2 million mt of wheat and 9.4 million mt of barley.

Russia exported over 500,000 mt of wheat from Crimea to Syria last year, a 17-fold increase over 2021.

The Baltic Dry Index began the New Year with its most significant daily percentage drop since 1984. However, Black Sea grain rates have risen to cover the higher cost of war risk insurance.

Thailand’s rice millers are worried that the country’s growers are illegally switching to cheaper and easier-to-grow Vietnamese rice.

Indonesia’s government has cut the amount of palm oil that producers can export to six times the domestic sales requirement, down from eight times currently.

The Hill compares European farming with US farming and finds the latter more efficient and sustainable. Meanwhile, Bloomberg writes that just three crops – wheat, corn, and rice – provide 50 per cent of the world’s calories. I am not sure that is correct, but the article has some great graphics.

In company news, Olam Group plans to list Olam Agri this year in Singapore, having completed the sale of a 35.43 per cent minority stake in Olam Agri for $1.24 billion to the Saudi Agriculture and Livestock Investment Co. (SALIC). The transaction was announced in March 2022 and values Olam Agri at $3.5 billion.

Although agriculture expansion has indeed driven some species to extinction, total agricultural land use may have peaked in 2000. It is now in decline due to a shift from grazing livestock to feeding them crops. (In Italy, farmers are once again grazing their livestock in the country’s forests, helping to prevent wildfires.)

At the same time, the EU’s import ban on products linked to deforestation could prompt other countries to do the same.

Many wild animals are making a comeback, including large animals such as whales and bison. Last year the first bison was born in the wild in the UK in thousands of years.

But it’s not just large animals. After nearly vanishing in the 1970s, there are more than 500 California condors in the US and Mexico, and ornithologists have discovered a nest of a titipounamu in New Zealand, a native bird thought to have been extinct for over 100 years. Lastly, there were 35 per cent more monarch butterflies in the Mexican forests in 2022 compared to 2021.

For biodiversity to thrive, the sector must continue to improve agricultural yields –which requires investment. Unfortunately, venture capital investment into the agri-tech and food sectors fell 44 per cent in 2022, while rising electricity costs are driving investors away from the vertical farming sector.

We also need governments to stop making idiotic decisions, as the Sri Lankan government did when they banned imports of fertiliser and chemical farm inputs. And although governments are encouraging sustainable farm practices,  we need them to be even braver in tackling agricultural emissions.

However, research continues, and progress is being made. For example, the US government has approved a vaccine for honeybees, while China has sent corn into space as part of research into new varieties. Finally, Syngenta will release a new type of hybrid wheat in the US next year, but only enough to plant 5,000 to 7,000 acres. (The company has been working on the project since 2010.

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Media Monitor

US consumer prices in November were up 7.1 per cent from a year ago, compared to an annual increase of 7.7 per cent the month before. US grocery prices rose 0.5 per cent in November, led by an 8.9 per cent jump in the price of lettuce. The cost of eggs was up 49.1 per cent from a year earlier.

China’s farmers have shrugged off droughts, floods, and Covid hurdles to produce a record 686.53 million mt of cereals, up 0.5 per cent over 2021. It is the eighth straight year that China has produced more than 650 million mt.

India’s wheat reserves in state stores totalled 19 million mt at the start of December, down from 37.85 million mt in 2021 and the lowest in six years. Meanwhile, India’s livestock producers have called on their government to restrict corn exports to ensure sufficient poultry feed supplies.

EU cereal production should rise next year after a poor 2022 harvest. Strategie Grains forecasts soft wheat production at 128.7 million mt, up from 125.5 million this year. It estimates corn output at 63.7 million mt, up 26 per cent from a 15-year low in 2022, and barley production at 52.5 million mt, up 2.5 per cent this year.

Belarus said it would allow, without preconditions, the transit of grain from Ukraine through its territory for export from Lithuanian ports.

The UN says that 200,000 Somalis are suffering catastrophic food shortages, and many are dying of hunger, with that number expected to rise to over 700,000 next year. A long-running Islamist insurgency has compounded the problem and hampered humanitarian access to some areas.

The Conversation argues that colonial food production systems are the root of Africa’s problems, leaving Africa’s poorest people exposed, and vulnerable to climatic variability and economic shocks.

As many as 828 million people faced hunger in 2021, an increase of 150 million more people since 2019. There is enough food to feed everyone in the world today. What is lacking is the capacity to buy food that is available because of high levels of poverty and inequalities.

In 2019, the US wasted 80.6 million mt of food across all sectors, 35 per cent of the total food supply. More than one-third of that waste occurred in homes.

Meat consumption in Brazil fell sharply this year due to rising prices and health concerns. More than 90 per cent of Brazilians say they won’t return to their past meat-eating habits.

Slaughter-free meat may provide an alternative, but companies must prove they can scale up to reduce costs. Israel’s Believer Meats, known formerly as Future Meat, believe they can with their new facility under construction in the US. Equinom, another Israeli company, is concentrating on developing pea varieties for their plant-based meat products.

Could insects soon be on the menu? Adult crickets are 65 per cent protein by weight, higher than beef (23 per cent) and tofu (8 per cent).

If you struggle with which proteins have the least carbon emissions, this BBC article may help. It doesn’t include insects, but I was surprised to learn that cheese, not chicken or pork, generates the third-highest agricultural emissions, after lamb and beef.

The Netherlands, the world’s second-largest exporter of agricultural products (by value), may have to reduce livestock numbers by a third over the next eight years to halve the country’s total emissions by 2030.

In company news, Bunge Ltd will invest about $550 million to build a soy protein concentrate facility in Indiana to cater to the rising demand for plant-based food products and processed meats. The new facility will process 4.5 million bushels of soybeans annually. Construction will start in the first quarter of 2023, and the plant will be commissioned by mid-2025.

Bunge also announced it is moving its place of incorporation from Bermuda to Switzerland. Bunge’s operational headquarters will remain in St. Louis, Missouri, US.

Nestlé announced it would invest CHF 40 million in a new production site in Smolyhiv in the western part of Ukraine. The factory will employ 1,500 people and supply both Ukrainian and export markets with cold sauces, seasonings, soups, and instant food.

Meanwhile, Fonterra and Nestlé have sold their joint-venture dairy assets in Brazil owned to Lactalis for BRL700m (US$131.5m).

Cargill will donate $14 million over the next three years in its partnership with CARE to empower women in agricultural communities. Cargill and CARE have collaborated for over 60 years on the issue.

Louis Dreyfus Company (LDC) has created a food and feed solutions business line that will focus on developing the company’s presence in the lecithin, glycerine and speciality feed protein areas.

Unilever may sell a portion of its US ice cream portfolio valued at as much as $3 billion. The international labels Magnum and Ben & Jerry’s are not included.

Finally, a new report confirms what we all knew: higher prices – and not increased production – are the only way to lift cocoa farmers out of poverty. However, some good news for the world’s cocoa producers: analysts expect chocolate demand to recover to per-Covid levels this Christmas.

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The EU will ban imports of products that have contributed to recent deforestation or forest degradation. The ban will cover palm oil, cattle, soy, coffee, cocoa, timber, rubber, beef, furniture, chocolate, printed paper, and selected palm oil-based derivates.

An impact assessment from the EC estimates that the new law will protect at least 71,920 ha of forest annually and reduce annual global carbon emissions by 31.9 million mt.

Global conservation efforts, currently focused on the COP15 summit in Montreal, will fail unless they address the underlying issue of food production. A shift to vegan diets and cultured meats could help.

However, the FT questions whether people will want to eat lab-grown meat. As for plant-based meat, Beyond Meat product sales have fallen 22.5 per cent in one year, and their share price is down 77 per cent so far this year. (Tofu won’t save the planet, either.)

But if you want to reduce the carbon footprint of your food, focus on what you eat, not whether your food is local. (This is an excellent article. I highly recommend it.)

Perhaps the solution is to close livestock farms. The Dutch government is doing just that by planning to purchase and close up to 3,000 farms to comply with EU environmental mandates to slash emissions. The government will offer farmers “well over” the worth of their farm to encourage them to sell voluntarily.

New Zealand is trying a different approach with its proposed fart tax on livestock methane emissions. With more than 50,000 farms, over 10 million cows and 26 million sheep, farming is responsible for more than half of the country’s GHG emissions.

Cargill’s CEO told Bloomberg that the sluggish pace of vessel inspections has recently slowed Ukraine’s grain exports. “The challenge is the working conditions for the port workers and all the infrastructure that goes into getting the crops out,” he said.

He added that Cargill sticks by its decision to keep operating in Russia. “We feed the people of Russia, and that food also feeds people in the Middle East and Africa. For us to leave would’ve been detrimental,” he said. However, if they decide to leave, there is a buyer for Cargill’s (and Viterra’s) Russian assets.

Russia’s total grain exports, excluding supplies to Kazakhstan, Armenia and Belarus, are expected to reach 26 million mt in July-December, up 10 per cent from a year ago.

At a time when the West should be doing all it can to help Ukrainian farmers, Poland has asked the EU to impose restrictions on imports of some foods from Ukraine.

The WSJ reports that a Russian oligarch has seized 400,000 acres of Ukrainian farmland, becoming one of the biggest farm operators in the country.

Contrary to what you might have read, at 270,000 acres, Bill Gates is not the largest owner of US farmland. The title goes to the chairman of Liberty Media Corp, who owns 2.2 million acres. But even that is small beer compared to the 900 million farm acres in the US.

It’s been a tough weather year for California’s farmers, although advances in plant breeding have made modern crops more resilient to dry weather than they were 20 years ago.

Australian farmers have had better luck and could produce a record wheat crop despite heavy flooding.

Brazil is also doing well. Conab has forecast Brazil’s total grain crop at a record 312.2 million mt, up 15 per cent from the previous year. The government agency pins soybean production at 153.48 million mt, up 22.2 per cent year-on-year, and expects corn output to jump 11.2 per cent to 125.83 million mt.

India’s spending on subsidized food grain to the poor may rise to 2.7 trillion rupees ($32.74 billion) this fiscal year, 30 per cent more than the 2.07 trillion rupees ($25.14 billion) estimated in the budget.

The easing of Covid restrictions in China may ease some pressure on farmers struggling to get their crops to market.

The European Commission has extended the EU authorization for the use of the herbicide glyphosate until the end of 2023. The authorization had been due to expire on December 15 of this year.

A post-Brexit farm-subsidy scheme designed to reward landowners in England for environmental work is going forward after a controversial review. Even so, the National Farmers Union has warned that the UK is sleepwalking into a food crisis, fuelled by rising costs, falling yields, and labour shortages.

UK supermarkets, meanwhile, are making record profits. The country’s government has said it will not intervene in food pricing.

In biofuel news, Bunge’s CEO sees a future in renewable fuels despite a potential shift to electrification.

Finally, some good news for farmers and consumers everywhere: fertilizer prices continue to fall from the highs made earlier this year. Lower energy prices and slow demand are behind the weakness. Freight rates for bulk carriers are also falling – down 50 per cent from a year earlier.

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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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Russia is extending Ukraine’s agricultural Black Sea export corridor for 120 days despite reservations over its food and fertiliser exports. Since July, Ukraine has shipped 11.1 million mt of agricultural commodities under the deal, including 4.5 million mt of corn and 3.2 million mt of wheat.

Unfortunately,  more must be done to evacuate the hundreds of seafarers stuck on vessels in Ukrainian ports.

Ukrainian farmers had harvested 39.1 million mt of grain from 81 per cent of the expected area as of 17th November. Farmers had completed the 2022 wheat and barley harvests, producing 19.4 million and 5.6 million mt, respectively, down from 32.2 million mt of wheat and 9.4 million mt of barley harvested in 2021.

The FAO Food Price Index fell for the seventh month in a row in October, averaging 135.9 points. The index has fallen 14.9 per cent from its peak in March this year but remains two per cent above a year ago.

The FAO warns that the world’s food import bill could climb to a record $1.94 trillion in 2022, $128.6 billion more than predicted in June.

UK food price inflation hit an annual rate of 16.5 per cent in October, the highest for 45 years. The increase could add £682 to the average British household’s yearly shopping bill. Annual food price inflation was 10.9 per cent in October in the US  and 13.1 per cent in the EU.

Cargill’s CEO is optimistic that food prices will decline next year, although he warns, “All it takes is one really bad crop, let’s say in North America or South America, to really send prices higher.”

Scientists in Israel are creating a gene bank from the seeds of local wild crops that may help farmers deal with a harsher climate. The seeds come from the Fertile Crescent region, the birthplace of crop cultivation.

The FT believes the mood is shifting on public acceptance of gene-edited crops compared to gene-modified ones. Not everyone agrees.

Kenya will soon import GM corn for the first time, but the decision remains controversial. Meanwhile, India’s farmers have taken the country’s decision to allow gene-edited rapeseed to the supreme court.

Low water levels in the Mississippi River continue to present shipping problems. PBS has an excellent video on the subject, while Newsweek also looks at the situation. A threatened rail strike could aggravate delays.

The New York Times has a long read on the record-high price of US farmland and how it impacts local communities. Land prices may, however, have plateaued. Meanwhile, farmers criticise Bill Gates over his extensive land purchases.

The European Commission has published a plan to ensure the availability and affordability of fertilisers.  Few think it will work.

The UK government is again tinkering with the country’s £3 billion agriculture support payments post-Brexit. Meanwhile, some UK supermarkets are limiting egg purchases per customer in the face of avian flu.

The COP27 climate summit has been in the headlines. The world’s major agricultural commodity suppliers presented a strategy to reduce agricultural emissions and end deforestation as part of a pathway to keep global warming below 1.5°C. The Guardian was unimpressed.

Egypt presented an initiative called ‘Food and Agriculture for Sustainable Transformation’ (FAST). With the FAO as a facilitator, it aims to unite nations under a vision to “transform” agriculture and food systems this decade, aligning them with a 1.5C temperature.

The UN published a report on how cold food chains can reduce food waste. The UN estimates 14 per cent of the total food produced for human consumption is lost, while 17 per cent is wasted, enough to feed around one billion people. (The world is making little progress on reducing food waste. The average American wastes more than 700 calories of food per day – about a third of recommended daily intake.)

Reuters reports that farmers across the globe are losing the battle to preserve their soil in the face of climate change. The situation is particularly dire in East Africa. Forbes argues that farmers must do more to embrace sustainability to feed the eight billion people living on our planet (up more than five billion in my lifetime).

A Dutch vertical farm has successfully grown wheat on an indoor farm without soil. It says that at scale, vertical farming could yield the equivalent of 117 mt/ha per year or 26 times that of open-field farming yields. However, some question whether vertical farms are environmentally friendly.

The Guardian quotes a report arguing that we could rewild 75 per cent of agricultural land if we replaced livestock farming with fermentation.

In a first for the US, the FDA has given a safety clearance to a California-based company that makes meat from cultured chicken cells.

The Washington Post examines the reasons for the drop in plant-based meats and dairy demand. Nestlé remains bullish on plant-based meat, believing that future growth will come from flexitarians rather than vegetarians or vegans. Cargill has a roughly similar outlook for the plant-based dairy sector.

Finally, a message to dog owners: feed your pet dry, rather than wet, food. Wet food creates 690 per cent more greenhouse gas emissions than dry food. Regarding food consumption, a ten-kilogram dog eating wet food has an annual carbon “pawprint” roughly equal to the human footprint.

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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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