Cargill is worried that the US strategy to tackle the tariff issue with China will worsen trade tensions between the two countries. The US is considering imposing tariffs worth USD 50 million on Chinese goods in response to Beijing’s threat to impose duties on US soybeans and other commodities. As a result, China’s COFCO plans to buy more soybean from Brazil. A source said the company had expanded its teams that deal with farmers in Brazil. Olam and Wilmar, too, are looking to import from South American nations like Brazil and Argentina to avoid paying high taxes.
ADM and Bunge, on the other hand, expect they will benefit from the trade dispute, combined with the drought in Argentina. The CEOs of both companies said the uncertainty provided volatility and opportunities for arbitrage across origins which would help improve margins. Looking forward, however, ADM’s CFO is confident that China and the US will sort out their differences.
Another trade deal which is not going well is NAFTA. The negotiators from Canada, Mexico and the US are likely to miss the May 17 notice of intent deadline fixed by the House speaker so that the Congress could vote on it in December. The Mexican Economy Minister said the trade treaty was unlikely to be rewritten in 2018.
Olam reported its net profit rose by 10% on year to USD 118 million in Jan-Mar (Q1) due to lower taxation and finance cost. Sales volume soared by 56% boosted by grain trade.
Louis Dreyfus announced it has completed the sale of its metal segment – one of its most profitable – to China-based fund NCCL Natural Resources Investment. Louis Dreyfus had in December announced the sale of its metal segment as it looks to focus on its main agriculture trading business.
Bunge, meanwhile, announced on May 15 that it has filed for an IPO of its Brazilian sugar and ethanol arm Bunge Acucar & Bionergia with the Brazilian security commission. Bunge plans to keep a controlling stake in the unit after the public offer.
Alvean, the joint-venture between Copersucar and Cargill, has renewed its long-term supply contract with Dubai-based sugar refinery Al Khaleej. Al Khaleej already bought 20 million mt of raw sugar from them (and Copersucar prior to the creation of the JV) over the past 20 years.
However, a Saudi Arabia-based investor thinks there is potential for Dubai to grow more of its own food. The group has set up a vertical farm to grow vegetables and crops. The emirate currently imports around 90% of its food requirement.
Nestle will look to reduce the level of sugar by another 5% in its packaged food products amid growing preference for healthier foods across the world. The CEO said they have already reduced sugar content by 34% since 2000 and spent USD 1.7 billion in research and development in 2017. The group launched “Nestle for Healthier Kids” program which aims to make the life of 50 million children healthier by 2030. Nestle will add additional fruits, vegetables, fibre-rich grains and micronutrients to the foods and beverages for children. The company will also continue to cut salt as well as saturated fats. Nestle Bulgaria, meanwhile, announced it would reduce electricity consumption of its mills by another 2% as well as reduce the use of water.
At a time when consumers want to know more about their food, Cargill has launched a new interactive beef guide that explains beef production in the US and Canada. It has an online story map called ‘Raising Beef to Higher Standards’ with gives details about ranchers, stockers, feedlot operators and packing plant and other information that might be useful to cattle rearers. Users can virtually explore cattle ranches and feeder operations using aerial maps while also locating feeder lots and packing plants.
Finally, Scandinavia is witnessing a bout of cross border trade as consumers try to evade taxes. After Norway recently hiked its sugar tax by 83%, neighbouring Sweden’s border areas saw a surge in the sale of sugar containing products. A Sweden-based supermarket manager said sales of products affected by the sugar tax had shot up by 10-20% as a result, also aided by the weak Swedish currency.
This news summary has been produced by ECRUU
