Commodity prices initially bounced when the US announced that it had reached a partial trade deal with China, although they eventually dropped back down once it emerged that it might take five-weeks for an agreement to be drafted. China reportedly agreed to double its import of US agricultural products and review some of its currency and intellectual property laws. However, an analyst called the trade targets “meaningless” until a proper breakthrough is announced, while a Chinese trader mentioned that trade negotiations were always one Tweet away from breaking down.
China has already started to increase the amount of US goods it imports, according to trade officials. Nevertheless, the country might be looking to buy more US products simply because the supply in other countries such as Brazil is starting to tighten, making US origins cheaper. Moreover, China has been very active in investing to improve Brazil’s export infrastructure so it is unlikely to completely switch to other import origins.
In the EU, the trade chief announced that the bloc will subsidise olive growers to help them deal with US tariffs. Under the plan, companies will receive money to buy and store excess olive oil. EU officials mentioned that the focus remained on finding a solution with the US to remove duties and address concerns around Airbus.
Indonesia and Malaysia plan to challenge the EU’s decision to phase out the use of palm oil as a renewable fuel at the WTO, while they warn that they will also limit European imports in retaliation. In response, a member of the EU Parliament said he was confident the WTO would agree with the EU’s environmental concerns. He also clarified that palm oil will still be allowed as a fuel feedstock although it will not be recognised in the Renewable Energy Directive II (RED II).
A French court announced a similar ruling as it maintained a law that would exclude palm oil from tax advantages in 2020 despite an appeal by Total. The group recently spent EUR 300 million to convert its La Mede refinery to process palm oil and warned that it will not be competitive if it has to use local rapeseed instead.
Palm oil producers who are certified as sustainable complain that large food companies refuse to pay a premium and that they mostly buy certified palm oil for European markets. Nestle revealed that 56% of the palm oil in EU goods was sustainable, compared to just 4% in India and 0% in China. In response, the Roundtable on Sustainable Palm Oil (RSPO) announced that members, including Nestle and Unilever, will now face fines unless they increase the proportion of sustainable purchases by 15% every year.
Meanwhile, India reportedly threatened to tax Malaysian palm oil in response to a comment by the Malaysian Prime Minister who criticised India’s Kashmir policies. A Malaysian minister said the country might import more raw sugar from India in order to ease trade relations.
The Mercosur bloc is planning to hold trade talks with Vietnam, Indonesia, South Korea and Singapore, according to Brazil’s trade minister. Mercosur also includes Uruguay, Paraguay and Argentina. Separately, Brazil’s space agency revealed that deforestation rates slowed in September but were still 96% above the same month last year. In the first nine months of the year, forest destruction was 93% higher, although the start of the rainy season should slow down burn rates.
Environmentalists criticised large food companies in the UK for still using soya beans sourced from deforested regions in Brazil. Although 23 brands, including many fast-food chains, signed the Cerrado Manifesto in 2017, the pledge was not signed by Cargill who is responsible for a large portion of the UK’s soya imports. The firm argued that boycotting an area simply moved the problem somewhere else or left more room for other buyers. And a Brazilian official noted that boycotts could prevent sustainable economic development and make the problem worse.
The CEO of Mondelez commented that food makers need to distinguish between consumer trends and actual purchasing behaviours. He argued that taste and not health will continue to be the main driver of purchases because of the “difference between what people say and what they do”. McDonald’s and Campbell Soup made similar remarks as their attempts to sell healthier products failed. KFC is another example and reportedly spent USD 8 million to make oven-grilled products, although consumers kept buying deep-fried food.
