This week’s big news was ADM making a takeover bid for Bunge. Analysts argued that not much is expected to happen in the near term as Bunge will want to keep its options open. In addition, a deal would likely face challenges in terms of regulatory approval. It does make people wonder, however, whether ADM has changed strategy since its announcement three months ago that it would reduce capital spending on oilseed crushing. (You can see Commodity Conversations’ take of the story here.)
Credit Suisse says Glencore could make a more formal offer for Bunge after the latter’s results on February 1. Bunge is expected to reach or even exceed the goal of saving USD 100 million in 2018 as part of its USD 250 million cost-cutting plan, although this will not be enough to offset the low margins and weak environment. The bank predicted below-normal margins for Bunge and ADM in 2018, partly because of competition from Argentine exports and delayed pricing by farmers.
Meanwhile, ADM announced this week a partnership with China-based Qingdao Vland Biotech to develop and commercialise feed enzymes for animals.
The world of GMO soybean is about to get crowded. BASF SE and DowDuPont are hoping to take advantage of Monsanto’s struggles with its Roundup Ready seeds where accusations related to drifting dicamba have lead to many lawsuits and restrictions in several US states.
Monsanto is still trying to solve antitrust issues so that it can be bought by Bayer AG. It is also facing issues in Brazil where the Association of Soya and Maize Producers of the State of Mato Grosso (Aprosoja) asked the government back in November to void one of its soybean patents.
Louis Dreyfus concluded the first agricultural commodity trade using blockchain technology in December when it sold a US soybean shipment to China’s Shandong Bohi Industry. Dreyfus said the process involved digitised documents, which reduced processing time by a fifth while also reducing the risk of fraud and human errors. However, the group’s Global Head of Trade Operations said there was still a long way to go before the technology could be really scaled up. Until then, Dreyfus is likely to use a hybrid model.
Food industrials have been talking about their commitment to sustainability and the environment. Unilever has called on other stakeholders in the consumer goods industry to adopt 100% reusable plastic packing by 2025, in line with its own goals, to reduce plastic waste in the ocean. Similarly, Coca-Cola announced it is targeting 100% recyclable packaging by 2030 and will recycle one bottle for every one it sells. The group has already reached the milestone of replenishing 100% of the water it uses in final products, five years ahead of target. Both Coca-Cola and Unilever will be using more plant-based resins to replace plastic.
In the same vein, Budweiser beers in the US will soon unveil a new packaging to show consumers the beers are now being made using 100% renewable electricity.
Cargill has announced that its plant in Germany will shift from making corn-based starch and sweeteners to producing advanced biofuel and other food-based products from wheat, including starch that could be used for packaging. The transition, which is expected by 2020, comes at a time when the EU is targeting all plastic packaging to be recyclable by 2030. You can get more information on the EU’s Plastic Strategy here.
Cargill, along with Arabian Agricultural Services Company, unveiled a new corn mill in Saudi Arabia which will be run by their joint venture, the Middle East Food Solutions Company (MEFSCO). The new mill will increase MEFSCO’s glucose and starch production capacity by 100%, and total production volume by three times as well, as adding high-fructose corn syrup to its portfolio.
Cargill sees Asia playing an important role in its quest to feed the world in a safe and sustainable way. Its Asia Pacific CEO said the company is planning a totally transparent and sustainable supply chain for palm oil by 2020. As part of its transparency efforts, the group will not only make public its plans and progress reports but also acknowledge forest fires in Indonesia and put hotspots online.
Meanwhile, more and more people are putting butter in their coffee, a trend that seems to be particularly popular in the Silicon Valley. Nestle is jumping on the trend and will introduce ketogenic creamer brand Know Brainer as a part of an accelerator programme. The company is using consumer and market research data to develop a brain-boosting butter coffee product which will be unveiled in March 2018.
Nestlé also announced it was moving its chocolate research centre from Switzerland to England. We may see more changes within Nestle given that hedge fund Third Point, which owns 1.25% stake in Nestle, has urged the company to divest underperforming businesses and evaluate its 23% holding in L’Oreal.
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