Author: jonkingsman

The price for shipping a 40-foot container to the US West Coast from China has moved higher in the past two weeks to $14,825. While that’s down 28 per cent from a record of $20,586 reached in September, it’s still more than ten times higher than in December 2019. Analysts worry supply chain disruptions will continue well into next year.

The US House of Representatives has passed the Ocean Shipping Reform Act of 2021, aimed at curbing the shipping container crisis by giving the Federal Maritime Commission (FMC) more power to penalise ocean carriers and require more public disclosure. The World Shipping Council said that the bill was a political expression of frustration and not designed to fix supply chain problems. The legislation now moves to the Senate.

US farmers have asked the US Department of Justice to investigate whether fertiliser companies are manipulating prices. Since the 1980s, the US fertiliser industry has shrunk from 46 to 13 firms, with two companies, Nutrien and Mosaic, controlling 93 per cent of the North American potash market

The market for manure has heated up as farmers hunt for alternatives to phosphate- and nitrogen-based fertilisers. Manure is primarily a local market, and truckloads don’t travel further than 80 kilometres. When fertiliser prices soared about a decade ago, farmers reintroduced hogs and cattle onto their land, in part for their manure. They may do it again.

Fortune Magazine has a piece on the feed-additive industry and its role in reducing methane emissions from cattle.

Following California’s record-breaking drought and heat this year, the state has said that it won’t give any water from the State Water Project to farmers next year unless conditions improve. An official from the California Farm Water Coalition said, “Farmers will either have to pump groundwater, if they can, or they’re going to be fallowing a lot of farmland.”

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARE) has forecast that Australia is heading to record gross agricultural production of $78 billion this year despite flood and rain damage in the eastern states. ABARE forecasts export value at an all-time high of $61 billion.

The FT writes that Silicon Valley continues in its efforts to ‘solve’ dinner. The NY Times argues that Sri Lanka’s countrywide move into organic farming has led to disastrous food shortages and higher prices.

The UN’s FAO has published a report criticising the ‘disastrous’ way farmers use plastic. The FAO recognises the benefits of plastic in producing and protecting food but said the use of plastics had become pervasive and that most were single-use and were buried, burned or lost after use.

The UK government may authorise the neonicotinoid Cruiser SB for sugar beet. The sector says it needs the pesticide to protect seeds from a disease called virus yellows.

Nature has published a report on research into sustainable rice production. The authors argue that global rice production could increase by 32 per cent, and excess nitrogen almost eliminated by focusing on a relatively small number of cropping systems.

Coffee leaf rust disease in Honduras, El Salvador, Guatemala, and Nicaragua is pushing coffee farmers to abandon their trees and migrate to the US. The fungal pathogen has been revived by the humidity from the hurricanes Eta and Iota, which hit Central America in late 2020.

The US EPA has retroactively reduced the 2020 biofuel blending obligation for refineries by nearly 15 per cent from 20.09 to 17.13 billion gallons. For 2021, it has reduced the obligation from 20.1 to 18.5 billion gallons, but for 2022, it has increased it to 20.77 billion gallons. The EPA has also proposed rejecting the 65 pending applications for small refinery exemptions – waivers requested by fuel producers.

Bayer has joined Amazon and Bushel to help ethanol producers track carbon emissions across their supply chains. Project Carbonview will enrol eligible farmers within 50 to 100 miles of selected ethanol plants in the Upper Midwest.

Bloomberg has a short video on the effect that renewable diesel will have on soybean demand and the interplay between the energy and agricultural markets.

The BBC writes about the environmental impacts of Indonesia’s biofuels policy. All diesel fuel in the country now contains at least 30 per cent biodiesel, which will rise to 50 per cent by 2025. It would require an increase in the palm area of 1.2 million hectares – to about a quarter of all palm oil cultivated in the country.  An Indonesian court has rejected a bid by two companies to reinstate permits for palm oil plantations in its easternmost region of Papua, which was seen as a test of the government’s pledge to contain deforestation.

Mounting employment costs and worker shortages in Malaysia’s palm oil sector could mean the country losing its edge and ceding market share to Indonesia. An analyst with LMC said that workers now have more options for urban employment and are less willing to do manual labour. “Soon, there will be no ‘cheap’ labour,” he added.

In company news, Nestlé is cutting its stake in the French cosmetics brand L’Oreal to about 20 per cent, selling shares worth 8.9 billion euros.

Margarita Louis-Dreyfus, the majority shareholder in Louis Dreyfus Company (LDC), has said that the company might not remain in family hands forever. She added that she does not rule out a company listing.

Cargill plans to eliminate trans fats from its edible oils over the next two years, in line with a WHO goal of phasing it out of global diets by the end of 2023. Cargill is among the top three edible oil producers worldwide and is the first to announce plans to comply with the WHO’s goal.

A cyberattack on the largest US cheese manufacturer has led to a shortage of cream cheese, wreaking havoc on the country’s bagel shops and bakeries. The attack occurred at the height of annual cream cheese demand. Perhaps worse, Australians may run out of beer this Christmas. A shortage of wooden pallets is disrupting factory shipments.

Finally, my latest book, Commodity Crops & The Merchants Who Trade Them is now available on Amazon in paperback and ebook. A hardback version will be available shortly.

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The FAO Index of world food prices rose 1.2 per cent in November and is close to the record highs seen in 2011. Grains and dairy prices led the rally, while vegetable oils and meat prices declined. Rabobank warns that food prices are likely to stay near record highs next year due to consumers stocking up, high energy and shipping prices, adverse weather, and a strong dollar.

India will pay record fertiliser subsidies of more than $20.64 billion in the 2021/22 fiscal year, almost double the amount budgeted. India caps the price of urea at 5360 rupees ($71.36) per tonne, while world prices have surged to around $990/tonne.

Reuters writes that the Indian government’s recent decision to abandon farm reform will mean that no political party will attempt similar reforms for at least a quarter-century. An economist warns that “inefficiencies in the system will continue to deliver wastage, and food will continue to rot.”

The UK government has published its Sustainable Farming Initiative to replace EU farm subsidies. Environmental campaigners say the plans display a ‘shocking lack of ambition’.

Farmers in eastern Australia are bracing themselves for further downpours after the country’s wettest November in 122 years. It is too early to evaluate the extent of crop losses or the quality of wheat that farmers will succeed in harvesting. On the other side of the Pacific, Californian farmers are concerned that drought could be a recurring problem and may lead them to rethink which crops they can grow.

The queue of container ships waiting to unload at the adjacent ports of Los Angeles and Long Beach, California, has risen to 96, a new record. The average wait for ships to unload is 20.8 days, almost a week longer than a month ago. Cargo ships are bypassing the Port of Oakland, the third busiest in California, and heading directly back to Asia. The port’s volume declined by 20 per cent in October compared to last year, while the number of vessels visiting the port fell 43 per cent.

Pre-tax profits for the container shipping industry could be more than $300 billion for the two years 2021 and 2022. The sector is forecast to make $150 billion in 2021, up from $25.4 billion in 2020, and could make even more in 2022.

Maersk will give its roughly 80,000 employees a $1,000 end-of-year bonus out of an expected 2021 income of more than $17 billion. The company awarded its workers a similar bonus in 2020 when it made $2.9 billion.

MSC’s recent buying and building spree mean it has overtaken Maersk as the world’s largest container-shipping company.  MSC has a net tonnage of approximately 4,239,668 TEU, 5,366 TEU more than Maersk’s 4,234,302 TEU.

Meanwhile, A.P. Moller Holding, the owner of Maersk, is diversifying outside the sector. It has bought Unilabs, a provider of medical diagnostic services, including COVID-19 tests.

Biofuel producers in the US are waiting for the administration to announce the quantity of biofuels refiners must blend into their fuel mix this year and next. The US administration is also expected to propose expanding the kinds of renewable fuel eligible for credits under the US Renewable Fuel Standard programme.

The business journal Barrons is bullish on biofuels, particularly renewable diesel, and recommends three stocks that could profit from the anticipated boom.

BASF will launch its Global Carbon Farming Program next year to help farmers reduce their CO2 emissions. BASF has committed to reducing CO2 crop emissions by 30 per cent per tonne by 2030. And if you have been wondering what people mean by regenerative agriculture, this article looks at four different ways of approaching it.

The anti-meat media campaign continues with Time Magazine declaring that Cows Are the New Coal. The magazine argues that “if the global livestock industry were its own country, it would be the world’s third-biggest greenhouse gas emitter, falling between US and India when it comes to total greenhouse gas emissions.”

The New Statesman says that ‘we are committing ecocide on a biblical scale’ due to deforestation for cattle and soy in the Amazon. In a separate article, the magazine writes that methane is much worse than CO2 for the planet – but comes up with suggestions for what we should do about it.

A Norwegian technology company thinks it has already found a solution to stop slurry (the fertilising mixture of manure, hay and water) from emitting so much methane. The new technology uses a plasma torch to add nitrogen from air to the slurry to stop methanogenesis – the breakdown of methane microbes that release the gas. The company says their technology reduces methane emissions from slurry by 99 per cent and cuts ammonia emissions by 95 per cent.

Impact NRS, an American Israeli innovation company, has established a joint venture with Ben-Gurion University and the Volcani Center to develop cattle feed that reduces methane emissions from cows.

Another Israeli company, Israel Chemicals Ltd (ICL), has opened an $18 million production facility in St Louis to produce plant-based alt-meat. The plant can make more than 15 million pounds of alt-meat each year. Meanwhile, the alt-meat company Impossible Foods want to persuade UK farmers to give up cattle farming and plant trees instead.

Workers have accepted a new labour contract at Cargill’s Canadian beef processing plant in Alberta, averting a strike. The plant accounts for about 40 per cent of Canada’s beef supply.

Lastly, palm oil producers in Malaysia are worried that the omicron outbreak could lead countries such as Bangladesh and India to close their borders, exacerbating the acute labour shortages in the palm sector. Malaysian-listed FGV Holdings told Bloomberg that it currently has only 70 per cent of its required labour and hopes that 7,000 foreign workers will arrive by the end of the first quarter.

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Fertiliser has become political. The FT warns that governments are worried that rising fertiliser prices, because of the increase in the cost of natural gas, will boost food inflation, and food shortages may result in social unrest. As the newspaper argues, “freezing in the dark while hungry does not make happy voters.”  The BBC believes that poorer countries are most at risk.

A lack of trucks and railcars may lead to localised ethanol shortages in the US. Unlike crude oil and other refined products, which can be transported by pipeline, ethanol is shipped primarily by train. Ethanol prices are up more than 50 per cent in the year to date and are contributing to the rise in gasoline prices. The WSJ wonders whether this will reignite the food versus fuel debate.

The EU Parliament has approved the EU Commission’s proposed reform of the Common Agricultural Policy (CAP), which at 387 billion euros ($436 billion) accounts for around a third of the EU’s 2021-2027 budget. The reform will require that farmers spend 20 per cent of their subsidy payments on “eco-schemes” from 2023-2024, rising to 25 per cent in 2025-2027. In addition, at least 10 per cent of CAP funds will go to smaller farms, and all farmers’ payments would be tied to complying with environmental rules.

The FT reports that Brazil’s foreign minister has attacked the EU for “trade protectionism” over a proposed ban on agricultural imports from deforested areas. Bloomberg argues that the way the Brazilian government is rebooting the Bolsa Familia may weaken the country’s currency and further boost commodity exports.

The Indian government’s decision to abandon farm reform will have a broader negative effect on the country’s economy. Bloomberg argues that with 43 per cent of the workforce stuck in agriculture – and the average farmer earning 27 rupees ($0.36) a day – the country lacks the labour and capital to industrialise.

The UN FAO has published its report on the State of Food and Agriculture 2021, in which they ask whether our food supply is at risk.

NASA reports on how their research to growing food in space has led to vertical farming, a global market now worth $2.9 billion and predicted to reach $7.3 billion by 2025.

Wired writes on the future of food tech, arguing that it is better to phase out meat production than find technical solutions that reduce the sector’s greenhouse gas (GHG) emissions. However, the FT reports that US alt-meat sales are losing their sizzle, with sales down year on year. Alt-meat companies say it is because consumers are eating less at home than during the Covid lockdowns, but the bigger problem may be alt-meat’s 30-40 per cent price premium over meat.

Even so, Impossible Foods has raised nearly $500 million in a funding round, making it the most well-funded and richly valued plant-based meat startup in the United States, with more than $2 billion raised since its founding in 2011. Impossible Foods, valued at about $4 billion in its last fundraise in 2020, has said it hopes to eventually IPO at $10 billion.

In a fascinating video, Bloomberg takes us inside the world’s first vat-grown meat factory, belonging to Upside Foods—formerly Memphis Meats—backed by Bill Gates and Richard Branson. The company is betting that consumers will go for vat-grown meat and that factories such as theirs will eventually replace abattoirs.

Bloomberg also has an interesting piece on the Indonesian government’s attempts to persuade millenniums to take up farming and reverse the exodus from the countryside to towns. The project appears to be working. The news agency also looks at the way China’s agriculture ministry is laying the groundwork to allow the country’s farmers to grow genetically modified (GM) soybeans, rice, and corn for the first time.

In this piece, Bloomberg discusses the meaning of ‘regenerative’, the new buzzword in the sustainability space, and how people are now applying it to sectors other than agriculture. The term was first used in the 15^th century to describe a spiritual rebirth.

Supply chain chaos has allowed shipping lines to charge their customers 20 times more per container than they did before the pandemic. But their underlying expenses haven’t changed much, allowing cargo carriers to keep almost all the price increase as profit. Quartz looks at how the shipping companies are spending those profits. Some invest in the supply chain while others expand their fleets, buy cruise ships, airlines, ports, or simply repurchase their shares.

Under recently introduced new data laws to enhance their national security, China’s shipowners are turning off their ships’ AIS tracking systems. The move is making it harder for analysts to monitor commodity trade flows and port congestion.

In company news, US antitrust officials have sued to block Louis Dreyfus Co.’s deal to sell its Imperial Sugar unit to US Sugar. They argue that it would leave just two producers supplying 75 per cent of refined sugar sales across the country’s southeast. The lawsuit is part of a push by the Biden administration to toughen antitrust enforcement.

The FT looks at two startups offering crop insurance to smallholder farmers. Pula bundles insurance into sales of other products such as seed, fertiliser, and loans to farmers in Africa. At the same time, Stable operates a platform that allows smallholders to insure their production.

After slipping to number two last year in the annual ranking by Forbes, Cargill is once again the largest private company in the US. The company’s revenue grew by 17 per cent through May to $134.4 billion. Koch Industries, which displaced Cargill last year, fell back to second with estimated revenue of $115 million.

Bunge is paying premium prices to growers who avoid deforestation even if they have a legal right to do so. Bunge aims to cut carbon emissions directly tied to its operations by 25 per cent by 2030 from 2020 levels.

Brazilian orange juice producer Cutrale has suspended exports of orange juice concentrate to the US, arguing that a new export tax has made them unprofitable. Cutrale will instead supply customers from Mexico.

Finally, there is some good news for us coffee addicts. A study of 200 Australians over one decade has found that drinking coffee may make you less likely to develop Alzheimer’s disease. “Flat white, anyone?”

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The Indian government has announced it will repeal three contentious farm laws that prompted a year of protests and unrest in India. The government passed the three farm laws in 2020 to overhaul India’s agriculture sector by rolling back farm subsidies and price regulations on crops. The country’s PM said he was adamant that the laws were necessary reforms but acknowledged that they were unfeasible given the fierce opposition from farmers.

Cargill’s CEO has warned that disruptions to the global supply chain may persist, keeping food prices high through 2022. He said, “I thought inflation in ags and food was transitory. I feel less so now because of continued shortages in labour markets.”

Bloomberg, however, argues that shipping costs are beginning to trend lower and wonders whether the worst supply chain problems may now be over.

Arabica coffee prices have hit ten-year highs and are nearly double a year ago. With a La Nina pattern forecast for early 2022, some analysts worry it could take years for the market to recover. Coffee connoisseurs are worried that roasters will downgrade quality by using more of the cheaper robusta beans.

Prices are also rising in Italy for food staples like tomatoes, pasta, and olive oil. The cost for tomatoes increased 12 per cent last month compared to a year ago, while pasta saw an almost 5 per cent rise.

The ports of Los Angeles and Long Beach delayed to 22^nd November their plan to fine shipping companies that let cargo containers stack up at terminals. Both ports have seen a “significant improvement” in clearing the containers out of the shipping terminals since they announced the $100 per day fines for leftover cargo on 25^th October. “Sweeper ships” have taken away many of the empty containers.

The ‘storm of the century’ in British Columbia has left the Port of Vancouver, Canada’s largest port, stranded without access to trucks and rail cars. Water and landslides have blocked the tracks of the nation’s two major railways and washed away parts of the main east-west road artery, the Trans-Canada Highway.

Satellite data from Brazil’s national space research agency INPE showed about 877 square kilometres of Amazon rainforest forest were cleared last month, up 5 per cent from October 2020 and the worst October deforestation since the current monitoring system began in 2015.

The EU has unveiled new regulations to curb deforestation that cover imports of soy, beef, palm oil, wood, cocoa, and coffee and some derived products such as chocolate, leather, and furniture. The plan will require backing from member states and the European Parliament to enter into force.

China bought at least 30 soybean cargoes from the US and Brazil last week, with more than half from Brazil. If Brazil continues to steal market share from the US, it could further weaken Chicago soybean futures prices. Soybean futures in Chicago are already down about 25 per cent from a high reached in May.

A US Senator has introduced legislation to halt the import of Brazilian beef into the US after media reports that Brazil delayed reporting two cases of mad cow disease. The US imported $62.3 million of beef and beef products from Brazil in the first nine months of this year, up 36 per cent over the same period a year earlier.

Dutch speciality chemicals company DSM may soon bring their cattle feed ingredient Bovaer to market following a positive assessment by the European Food Safety Authority (EFSA). DSM says the ingredient cuts cattle’s methane emissions by between 20 and 35 per cent without affecting production.

Bayer and Microsoft have announced plans to collaborate on developing digital tools and data science capabilities for agricultural businesses and associated industries. Plans include helping companies better process satellite imagery, tracking farm inputs and practices to follow environmental regulations.

ADM has invested in Farmers Business Network (FBN). FBN’s platform has been dubbed a “Google for farmers”, providing its 33,000 members new distribution outlets for their crops and alternative options to purchase seeds and chemicals. The investment comes five weeks after ADM and its rival Cargill sold their farmer facing digital joint venture GrainBridge to software company Bushel.

CME Group Inc.’s plan to move core trading systems to Google Cloud could impact high-frequency traders (HFTs) who have installed their computers as close as possible to the CME’s computers. HFCs may need to restructure and rethink their systems if CME moves their trading infrastructure to the cloud.

The US Environmental Protection Agency (EPA) has proposed giving oil refiners more time to prove compliance with the nation’s 2020 and 2021 biofuel blending mandates. Several oil refiners have slowed or stopped buying compliance credits in a bet the EPA would ease the requirements.

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A new week and a new record number: 111 container ships are currently waiting to offload at Long Beach and Los Angeles. Starting on 15^th November, the two ports will begin fining shipping companies $100 a day for containers left on the docks, but the logistic companies say they have nowhere to move the containers and will pass on the fines to their customers.

The New York Times reports on a recent survey that found that 22 per cent of the US’s foreign agriculture sales are being lost because of transportation challenges. Port delays have particularly affected container shipments of cheese, butter, meat, walnuts, and cotton.

Germany’s Hapag-Lloyd, the world’s fifth-largest ocean shipping line, posted a record quarterly profit of $3.92 billion in Q3 2021, up from $756 million in Q3 2020. The company earned an average of $4,468 per forty-foot equivalent unit in the third quarter, up 106 per cent, year on year. Rates in the trans-Pacific averaged $6,244 per FEU, up 112 per cent year on year.

These record profits are leading to accusations of profiteering. British trade groups have called on the country’s Competition and Markets Authority to investigate “cartel-like” pricing in the shipping industry.

There is some relief for importers, with spot container rates falling nearly 5 per cent in the first week of November. Some analysts predict that average spot rates are past their peak. Dry bulk rates have also fallen sharply, but this analyst believes the fall to be temporary and expects rates to move higher again in 2022.

The Guardian reports that merchant ships account for around 3 per cent of man-made GHG emissions. The International Maritime Organization (IMO) predicts that, on current trends, the industry’s emissions could be 30 per cent higher in 2050 than in 2008.

But will current trends continue? Some argue that decarbonising the global economy will indirectly solve the issue for the shipping sector. They predict that a sharp reduction in the demand for coal, iron ore, bauxite, and other ingredients for heavy industry, along with reduced tanker demand, will result in a dramatic reduction in tanker and bulker fleets.

DTN reports that fertiliser prices continue to shatter records. The average US retail price of a ton of anhydrous fertiliser rose 38 per cent from the previous month to a record $1,113. The seven other fertilisers tracked by DTN saw increases ranging from 9 to 36 per cent.

This brief video looks at the impact of high fertiliser prices on US farmers and their planting decisions.  In Brazil, farmers are worried that the fertiliser they have bought may not be delivered, potentially reducing next year’s corn and soybean production. In India, a shortage of fertilisers is disrupting winter planting and fuelling civil unrest. Farmers have clashed with police, and, in some states, the police are distributing bags of fertilisers at police stations to keep law and order.

Sri Lanka faces a different problem.  The government imposed a ban last May on chemical fertiliser imports to promote organic agriculture. The government also banned chemical pesticides and herbicides. As a result, paddy rice production could fall by 40 per cent this year.

But it’s not just fertiliser prices that are rising; cotton prices have hit ten-year highs, up over 50 per cent since the start of the year.

The UN’s FAO reports that GHG emissions from agriculture and food production have risen by 17 per cent over the past 30 years, accounting for 31 per cent of greenhouse gas emissions in 2019. Deforestation accounted for about 6 per cent, while transport, storage, and food preparation accounted for more than 50 per cent.

Twenty-seven firms, including Sainsbury, Nestle and Danone – accounting for 60 per cent of the UK’s soy imports – have signed the UK Soy Manifesto. It ensures physical soy imports aren’t grown in areas where forests were cut down, or native vegetation was converted into farmland after January 2020.

While agriculture may be one of the drivers of climate change, it is also a victim. Bloomberg Green warns of an apocalyptic future where climate change could result in food shortages and push almost 2 billion more people into hunger.

Perhaps the future is already here. The UN’s FAO reports that weather disasters linked to climate change cost the farming sectors in developing countries over $108 billion between 2008 and 2018.

A study published in Nature asks whether Brazil is reaching a climatic limit to rainfed production of soybeans and corn. The study argues that regional warming and drying have pushed 28 per cent of current agricultural acreage out of their optimum climate space. It projects that 51 per cent of the region’s agriculture will move out of that climate space by 2030 and 74 per cent by 2060.

India has approved a proposal to achieve 20 per cent ethanol-blending with gasoline by 2025, five years ahead of its previous target. The government also hiked the price of sugarcane ethanol for blending in petrol.

However, in the EU, there are concerns that the bloc’s strict rules will cause a shortage of biofuels. Brussels has set a 7 per cent limit on the quantity of crop-based biofuels used in the transport sector while giving biofuels feedstocks a percentage score based on their contribution to indirect land-use change (ILUC). It effectively bans palm oil as a transport fuel in the EU.

Meanwhile, Indonesia’s palm oil industry is training farmers and teachers and running social media campaigns to highlight the positive aspects of the crop.

Several countries, including Japan, the UK, and the US, have written a joint letter to the Chinese Customs Minister asking him to delay the introduction of new regulations that require food importers to meet new registration, inspection, and labelling requirements by 1^st January 2022.

Brazil has become the first country to allow imports of flour made with genetically modified wheat. However, shipments of the new variety developed in Argentina are unlikely anytime soon due to opposition from Brazilian millers and consumers.

A new study found that palmitic acid may encourage the spread of mouth and skin cancers in mice. Other fatty acids did not show the same effect. Neither of the fatty acids tested increased the risk of developing cancer in the first place. The study was widely reported in the popular press.

In company news, Reuters looks at Beyond Meat’s disappointing third-quarter results and the relatively slow rollout of the company’s products. Remaining on the subject of meat, Royal DSM has announced that it will build a £100 million factory in Scotland to manufacture its new feed additive Bovaer. The company says the additive can reduce methane emissions from livestock by approximately 30 per cent.

My recommended long read this week is from The New Yorker Magazine on the great organic food fraud. But, if podcasts are more your thing, try this one from Bloomberg on the vagaries of the lumber market.

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Global food prices continued to rise in October, hitting a new decade high. The FAO Food Price Index jumped 3 per cent in the month, with vegetable oil prices up 9.6 per cent and cereal prices up 3.2 per cent. Cereal prices are up 22.4 per cent from a year ago.

Last week, Chinese shoppers rushed to stock up on food staples after the commerce ministry warned of possible shortages. Agriculture officials later reassured consumers that there is no need to worry as the country is facing surpluses in grain and pork and has abundant state reserves. Chinese pork prices have fallen below the cost of production recently as the country recovers from African Swine Fever and more farmers take to pigs.

Elon Musk, the world’s richest man, has challenged a claim by an official from the UN World Food Programme (WFP) that $6 billion of Musk’s wealth of $311 billion could keep 42 million people from dying of hunger. Musk said that if the WFP could describe how the money would solve world hunger, he would “sell Tesla stock right now and do it.”

Commodities traders are pursuing legal action against Brazilian coffee farmers who are defaulting on sales after arabica coffee prices rallied some 60 per cent this year. Defaults have also spiked in other commodities like soybeans.

It’s not just food prices that are rising; the cost of the herbicide glyphosate has increased as much as 300 per cent in some regions of the US. Meanwhile, fertilizer prices continue to soar, suggesting that food prices will increase further.

From December, Russia will impose a six-month quota on some fertilizer exports, limiting nitrogen fertilizer exports to 5.9 million tonnes and complex fertilizers containing nitrogen to 5.35 million tonnes. An analyst said that the quotas would have little impact because they are in line with predicted exports.

Bloomberg takes an in-depth look at the effects that high fertilizer prices and shortages will have on crops around the globe, with a particular focus on coffee, corn, wheat, and rice. The impact could be particularly severe in the US, which imports 20 per cent of its urea and 40 per cent of ammonium nitrate from Russia alone.

High energy prices are not just impacting fertilizer costs. They are also propelling sugar prices higher on expectations that Brazilian mills will produce relatively more ethanol.

Adding to their woes, US farmers could also face a shortage of tractors and tractor parts as 10,000 workers continue their strike at John Deere’s plants.

Maersk has reported record third-quarter profits of $5.9 billion on sales of $16.6 billion. Profits were up nearly five times over the previous year. The company is spending more than $1 billion to expand its air freight operations, purchasing Senator International, a German freight forwarding company, and adding five new aircraft to the fifteen it already operates.

NASA has published a study that predicts corn yields will decline 24 per cent by 2030 because of climate change. Projected increases in temperature, shifts in rainfall patterns, and elevated surface carbon dioxide concentrations would make it more challenging to grow maize but could expand wheat’s growing range. Wheat yields could potentially increase by about 17 per cent by the same date.

US President Biden told COP26 that climate change is already fuelling crop failures in some world regions. At the same time, the US Agriculture Secretary warned that “the climate crisis threatens to disrupt food systems around the globe, exacerbate food insecurity and negatively impact farmers’ livelihoods.”

The Agriculture Secretary added that the time has come for American farmers to slash their GHG emissions by taking advantage of newly announced incentives, including loans and grants for building or improving manure digesters or transitioning to lower-emission manure management practices like composting.

In an interview, he said Americans could still eat meat while cutting global warming. “It’s not a question of eating more or less or producing more or less,” he said. “The question is making production more sustainable.”

The Belgian Prime Minister has said that third countries would need to meet the EU’s sustainable requirements to export their products to Europe. The EU is preparing a carbon border tax on goods from jurisdictions with lower environmental obligations.

Twelve of the world’s biggest global agricultural trading and processing companies have committed to improving their supply chains to be consistent with limiting the increase in global temperatures to 1.5°C.

The Guardian writes that cutting methane is the best opportunity to slow global warming between now and 2040. The newspaper adds that about a third of human-caused methane emissions come from livestock, mostly from beef and dairy cattle. Methane from their burps and manure is the most significant concern and the best opportunity to tackle global heating.

California-based Upside Foods has opened a facility to produce hundreds of thousands of pounds of cultured meat. The US government still hasn’t approved the sale of cultivated meat, but Upside Foods COO said, “It’s not a dream. It’s not science fiction. It’s a reality today.”

However, the debate continues whether lab-grown meat will ever become economically viable, whether the US government will approve it, and whether consumers will eat it. Despite the doubts, the sector has little difficulty in raising venture capital finance.

Belcampo, the northern Californian pasture-raised beef company, has closed its e-commerce site, restaurants, and retail shops, raising the question of whether pasture-raised premium beef is economically viable.

But it is not just cattle farmers who struggle to be sustainable; sustainable fish farming is also a challenge.

If you are a farmer interested in regenerative agriculture but don’t know where to start, Farmers Weekly will get you going and help you avoid some common mistakes. (Spoiler: soil health is the key.)

Bloomberg Green has a well-written feature on palm oil, arguing that the world is addicted to the stuff. However, the news agency admits that palm oil is up to ten times more productive than rapeseed, soybean, or sunflower oils and replacing palm oil with an alternative would require a lot more land.

Indonesia has pushed back against the UK’s statement that COP21 participants had pledged to “halt and reverse forest loss and land degradation by 2030.” Indonesia’s vice foreign minister said his country had only agreed to keep its forest cover steady over the period – meaning trees could still be cut down and replaced.

Indonesia will increase efforts to help smallholder farms — which cover 6.7 million hectares, or 75 per cent of total oil palm plantations in the country — to replace old trees with new, more productive ones. It could increase annual yields from smallholder plantations to 22 mt/ha from about 9.2 mt/ha.

A new web-based monitoring platform will help the palm oil industry trace its product back to its origin to ensure that it’s legally sourced and sustainably produced. The platform collects and analyses data on more than 2,000 palm mills, 480 refineries and crushers, and 400 high-risk plantations.

Google has invested $1 billion in CME Group and has struck a separate deal to move the futures exchange operator’s trading systems to the cloud. The deal gives Google a foothold in the financial services sector.

Lastly, Bloomberg interviews the author of “Seed Money: Monsanto’s Past and Our Food Future” and asks if cheap food is worth the risks.

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A tonne of fertilizer is now more expensive than a tonne of rice. With fertilizer accounting for as much as 70 per cent of rice’s production cost, there are concerns that rice prices will have to increase as a result.

However, India is currently harvesting a record summer-sown rice crop of 107 million tonnes, bringing combined summer and winter rice production to 125 million, or nearly 25 per cent of global rice output, its largest ever. It should allow India to repeat, or even surpass, last year’s record rice exports of 20 million tonnes.

Malaysia faces reduced palm oil production this year due to a shortage of workers. A lack of skilled harvesters has left fresh fruit bunches rotting on trees, preventing farmers from capitalizing on palm’s recent price rally. Palm oil, the world’s most consumed vegetable oil, has soared more than 30 per cent this year, while soybean oil is up almost 50 per cent.

However, soybean prices ended October with their sixth straight monthly loss, the worst run since May 1998 when, like this year, US farmers were heading into a record harvest. Demand for this year’s bumper crop is in question as the sales pace to China lags expectations.

Durum wheat prices in western Canada have risen more than 60 per cent since August and are currently trading near their highest level since at least 2015.  Drought has impacted North American production. Output in Canada, a top exporter, shrunk by nearly half this year and the US harvest is the smallest in 60 years.

Bloomberg warns that European energy prices may increase to a point where it becomes too expensive for farmers to dry their corn crops. Gas suppliers have told French farmers to prepare for shortages, use less fuel and postpone harvesting. The increase in gas prices is also contributing to a slower corn harvest than last year in Ukraine.

North Africa is feeling the impact of higher food costs. The price hikes also come at a time when many North African economies are struggling. In Morocco, the government has suspended an import tax on durum and soft wheat, while Egypt, the world’s top wheat importer, is paying the most in at least five years for wheat and is reportedly talking with international banks over a plan to hedge their wheat purchases. However, Algeria’s agriculture minister said supplies are plentiful and blamed speculators for a spike in foodstuff prices.

Robusta coffee prices are up 60 per cent in London this year. They are at their highest level in more than four years as adverse weather hurt crops and logistics headaches, including a shortage of shipping containers, curbed exports from Vietnam.

Meanwhile, lumber prices are once again moving higher.

Freightwaves warns that we should not expect any relief from costly container shipping rates. It argues that the recent levelling off in rates was temporary and that we will have to wait until the Chinese New Year for rates to start to trend lower. The FT worries that supply chain logjams could last into 2023.

The backlogs are playing havoc on liner schedules. Two out of every three vessels were behind schedule in September, with an average arrival delay of seven days.

Several ports in the US are overrun with containers and anchored containerships. There are more than 70 containerships anchored in California’s San Pedro Bay and another 28 vessels awaiting berths at Georgia’s Port of Savannah. Los Angeles and Long Beach ports announced they would levy a surcharge on containers that overstay their welcome. The tax will start at $100 per container and increase in $100 increments each day.

Maersk has warned clients of further supply chain disruptions from China’s ongoing power shortages. Currently, 20 out of 31 provinces in China are subject to electricity rationing and power prices could rise 20 per cent from current levels.

In company news, Bunge reported solid earnings and sales in their third quarter, posting income of $653 million, up nearly 150 per cent from $262 million from the third quarter a year ago. Sales were $14.12 billion, up 39 per cent from $10.16 billion a year ago. Bunge has raised its adjusted earnings-per-share outlook to at least $11.50 per share, up from $8.50 previously.

ADM plans to cut more than half of its capacity for corn ethanol for cars and transition it to clean jet fuel production, working with renewable fuel maker Gevo Inc. The move comes as the popularity of electric vehicles raises questions about the future growth of ethanol for cars. At the same time, demand for sustainable jet fuel is expected to boom as the aviation industry tries to reduce carbon emissions.

Plant-based meat producer Impossible Foods is looking to raise about $500 million, which would push the company’s valuation to $7 billion, higher than its chief rival, Beyond Meat, at roughly $6.2 billion.

In partnership with Yum China Holdings, Lavazza plans to have 1,000 coffee outlets in China by 2025. Yum owns 65 per cent of the joint venture, and Lavazza holds the rest. The partners are injecting $200 million into the company.

The Guardian argues the world’s meat and dairy companies are failing to act on methane emissions. The newspaper writes that livestock generates about 32 per cent of anthropogenic methane. Changing Markets has published a new report on the issue. The European Parliament has asked the EU to impose binding targets on countries to cut methane emissions, setting the scene for legislation Brussels will propose later this year.

The FT wonders (again) whether adding seaweed to animal feed will help reduce methane emissions. Bloomberg reports that the US dairy herd shrank by 85,000 cows between June and September, the most significant four-month drop since 2009 as the cost of feeding the cows has risen to uneconomic levels.

Brazil’s Vice President has announced plans to bring forward the country’s 2030 goal of ending illegal deforestation by two or three years. He also said forest fires in the Amazon region had dropped by about 40 per cent this year.

Reuters has an interesting article on the race to persuade the world’s farmers to sequester carbon.

Finally, China has called for the removal of farm subsidies in some developed countries as part of Beijing’s push for the World Trade Organization reform.

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Food inflation looks like it will be with us for some time, and food processors are passing on the higher prices to consumers. Unilever has increased prices by 4.1 per cent in the third quarter, the fastest rate since the start of 2012, passing on extra costs for commodities such as palm oil and soybean oil, as well as shipping costs.

Danone has forecast that inflation in milk, packaging and transport costs could worsen next year, leading the company to shift price increases to consumers and seek more cost savings. The company says its cost inflation will accelerate to 9 per cent in the second half of their financial from 7 per cent in the first part of the year.

Procter & Gamble has also warned that rising commodity and freight costs are eroding profitability with $2.3 billion in after-tax expenses this fiscal year versus a prior expectation of $1.9 billion.

Nestle has raised its full-year sales target by raising prices on its products ranging from pet food to bottled water. The company expects input prices in 2022 to increase even more than the 4 per cent rise seen in 2021.

There seems little sign that food prices will cool anytime soon. Fertilizer prices are surging as numerous nitrogen fertilizer plants in Europe have shut as gas prices soared. Some suggest that European farmers might reduce plantings as a result. There are concerns that some European fertilizer plants may shut permanently, relocating production to countries where energy costs are lower.

High fertilizer prices could affect Brazilian corn production. Brazil spot prices for phosphate fertilizer more than doubled during the past year, while potash and urea tripled in the same period. The Brazilian President had previously said that the country faces the risk of fertilizer shortfalls next year. In the US, high fertilizer prices could lead US corn profits to drop by about a quarter – from $500 an acre to $430 an acre – next year, potentially motivating farmers to shift to soybeans which could earn $500 an acre. Earlier this month, The Green Market Index of North American fertilizer prices soared past their 2008 peak to set the highest level since the index started in 2002.

Fertilizer supplies could tighten further with Chinese authorities imposing new hurdles for fertilizer exporters. Some Chinese fertilizer cargoes ready to be shipped are being delayed by local authorities for additional checks or obtaining new export certificates. China is a crucial supplier of urea, sulphate and phosphate, accounting for about 30 per cent of world exports.

Not all food prices are rising. Australian avocado prices have halved this year on a record crop and reduced demand due to the country’s Covid lockdowns.

While avocado prices may be falling, the head of Europe’s largest meat processing company has warned that climate concerns could mean beef becoming a luxury product like champagne and only consumed on special occasions. He is more optimistic about pork consumption. (Bacon and avocado toast, anyone?)

But you could face difficulties if you plan on drinking Colombian coffee with your brunch. Reuters reports that coffee traders and roasters face significant losses as Colombian coffee producers take advantage of higher prices and default on sales contracted at lower levels. One solution might be lab-grown coffee. Fortunately for the world’s coffee growers, it currently tastes more like tea than coffee and could take many years of development before it reaches your coffee machine.

Bloomberg Green calls out the US National Cattlemen’s Beef Association (NCBA) for arguing that American cattle ‘may not be contributing much at all to global warming.’ A research scientist at Texas A&M University – paid by the NCBA – says the US beef industry may have had zero impact on climate change since 1986. There’s even a chance, he says, that American beef may have reduced the planet’s warming.

The Guardian is similarly unconvinced and calls on public development banks to stop financing factory farms. At the same time, the BBC questions the UK government’s reluctance to nudge consumers into eating less meat.

California’s pay-to-pollute climate-change policies have resulted in cow manure now worth more than milk. Farmers find that selling cow methane to local energy companies is so profitable that they are increasing their herds. Milk has become the by-product of manure production.

Meanwhile, the Brazilian government is increasingly concerned over meat exports to China. The country voluntarily suspended shipments to China six weeks ago after confirming two cases of mad cow disease in separate meat plants. Still, there is little sign that China is in a hurry to resume imports.

In company news, Bunge has agreed to sell its seven Mexico wheat mills to Grupo Trimex for an undisclosed sum. ADM is selling its ethanol production complex in Peoria, Illinois, to BioUrja Group as part of its strategic review of its dry mill ethanol assets. The plant has an annual capacity of 135 million gallons. Cargill is expanding its partnership with BASF to develop enzymes for animal nutrition, adding research and development capabilities to the partners’ existing feed distribution agreements.

Bumper production and a record corn demand from China mean 2021 is a good year for US farmers. The USDA estimates that US farm income from crops will jump 20 per cent to $230.1 billion in 2021, the second-highest ever after the record set in 2012.

The Counter writes that farming is a profession and that the future of agriculture does not lie with smallholdings. It notes, ‘stop trying to build a more resilient and equitable food system on a foundation of an unproven (or disproven) small family farm ideal, especially when a very real set of alternatives is available.’ The USDA estimates that off-farm income contributed an average of 82 per cent of total revenue for family farms in 2019.  In contrast, large farms earned only 7 per cent of their total income from off-farm sources. The FT is concerned that we might be approaching the end of family farms in the UK. The number of farms in the country declined by 35 per cent between 2005 and 2016 to just over 185,000.

Britain’s Shockingly Fresh is set to begin its first harvest at its naturally lit vertical farm and plans to build 40 more units. Unlike most vertical farms, which use fully enclosed systems with heating and artificial LED light, Shockingly Fresh uses only natural light.

Wired looks at African Swine Fever and the effect that it could have on US pork production. The disease has already arrived in Haiti and the Dominican Republic. The Guardian has a longer article on the subject and explains why US pig farmers are panicking at the prospect.

Bloomberg’s Port Congestion Tracker shows that the world’s ports are becoming even more gridlocked after a typhoon in Asia resulted in at least 107 container ships waiting off Hong Kong and Shenzhen. RBC Capital Markets reckons 77 per cent of ports around the world are experiencing abnormally long turnaround times.

Globally, there are 584 container ships stuck outside ports, nearly double the number at the start of the year, with the backlog the worst in Southern China. The delays have pushed the average global price of shipping a 40-foot container to close to $10,000, three times higher than at the start of 2021 and almost ten times pre-pandemic levels.

Maersk is diverting some ships from Felixstowe, the UK’s largest container port, because of a shortage of truck drivers both in the harbour and outside.  The backlog is preventing new loads from being landed.

Finally, if you have time, I recommend this long read from the BBC on regenerative farming.

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