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The world’s four largest food traders seem to have benefited from the change in trade flows amid the US-China trade war and the additional demand for Brazilian grains. In 2018, Bunge maintained its place as the country’s top soybean exporter with 17.7 million mt, a 9.2% increase from the previous year, followed by Cargill with 12.15 million mt, a 1.4% increase on year. The third and fourth place went to Louis Dreyfus and Cofco, respectively, while ADM and Olam also reported significant improvements in exports. The head of ADM is hopeful that the trade war will end this year. He argued that it had made trade flows rather complicated. For instance, Argentina, the world’s third-biggest soybean producer, imported the biggest quantity of US origin soybean.

ADM announced a plan to purchase one of the largest producers of citrus ingredients in the world, Florida Chemical Company, which could happen in early 2019, pending government approval. The company president said the move would help ADM achieve its goal of becoming the biggest nutrition company. The CEO said the group looked on average at 50 companies every year for potential acquisition. He admitted having analysed companies like Bunge, Louis Dreyfus and Cargill but said the time was not right for a ‘monster’ acquisition. He explained that joint ventures, like the one it has with Cargill in Egypt, would make more sense for the time being.

The Brazilian meat giant JBS is also expected to benefit from the trade war as the USDA announced that it will spend USD 5 million to buy 1.8 million lb of its pork, as part of the USD 12 billion aid package announced by the White House. Lobbyists are already complaining that the money is going to a foreign firm, but the USDA highlighted that the funds will be spent to purchase American-made products.

The US President’s farm support could start to waiver as farmers increasingly struggle because of the delay in the distribution of government grants and key USDA supply and demand reports caused by the shutdown. The USDA did, however, find a way to avoid a potential controversy by funding the food assistance program up to the end of February, while the FDA said that essential food inspections will continue, although it remains unclear how long inspectors will work without pay.

Dairy producers, meanwhile, are celebrating as the US government has started undoing efforts by the previous administration to make school lunches healthier. The National School Lunch Program accounted for up 7.6% of all liquid dairy sales in 2017 which helped compensate for a consistent drop in demand, as per capita milk consumption fell 40% since 1975. This marks the return of full-fat chocolate milk served at every school meal. Meanwhile, health advocates warn that one out of three American children is already overweight or obese.

In China, health advocates argued that food and drink manufacturers were successfully steering the obesity debate around the need for more exercise while downplaying the importance of food and drink in a healthy diet, as laid out by a paper published in the British Medical Journal. The International Life Sciences Institute, funded by Coca-Cola and other food makers, has enjoyed a good relation with health officials, the paper noted.

Danone confirmed that it was investing in Epigamia, a yoghurt maker in India, in order to improve its access to the value-added end of the market. Danone had left the Indian market last year after a failed foray but a spokesperson said Epigamia will be run independently. In Latin America, Danone is partnering with a specialised packaging company to develop yoghurt pots targeted to meet the growing health and environmental concerns of consumers.

In the UK, the interest in dairy alternatives and vegan foods has started to surge, as it does every January, as part of what some call Veganuary. But research by the University of Oxford notes that although all plant-based dairy drinks require a lot less land and emit less carbon dioxide, some alternatives have a larger impact than others. Rice and almond milk, for example, require much more water to make than soy or oat milk. The BBC has a useful calculator which will estimate the environmental footprints of certain food products, based on the Oxford study.

In any case, a group of scientists have come up with the “Planetary Health” diet, which would reportedly prevent millions of premature deaths as well as reduce greenhouse emissions significantly. The diet includes reducing by half the amount of meat and sugar consumed while increasing our nuts, fruits and vegetable intake. Beyond getting everyone on board, the scientists conceded that unequal access to food may be a challenge to implementing this diet.

This summary was produced by ECRUU

Cargill reported a 20% drop in net earnings in the quarter ending November 30 at USD 741 million in part because of the US-China trade tensions, which also affected its freight transport business. The firm’s starches and sweeteners segment struggled too amid the low ethanol price in the US and the high cost of raw materials in Europe. Looking forward, however, Cargill launched in Europe a brand of artisan chocolate called Veliche Gourmet which is entirely sourced from Rainforest Alliance Certified farms. Chocolate makers will be able to buy the products directly from Cargill’s new e-commerce platform.

Cargill is not the only trading house to struggle with the sugar segment: Olam announced this week it was closing its sugar trading desk. This comes only months after Bunge sold its sugar trading unit to Wilmar and Louis Dreyfus’ Biosev unit in Brazil sold some of its mills and has been looking at selling some more.

In the US, McCain had to recall an estimated 99 million pounds of frozen vegetables in Oct-Nov last year, a record high recall. The company found that all the ingredients that went through its Colton, California, plant since January 2016 were at risk of being contaminated by Salmonella and Listeria monocytogenes. The New Food Economy pointed out that unlike other food recalls in 2018, this one received very little media coverage because it concerned ingredients – a small part in a bigger food system

Meanwhile, Amazon is planning to build more Whole Foods stores in US suburbs in a bid to boost its online pickup services as it aims to expand the reach of its two-hour grocery delivery offered to Prime Now subscribers. This would help boost online sales too, as the stores could also be used as distribution centres.  

Going forward, the line between supermarkets and restaurants should become increasingly blurred. A professor at NY University said this was already happening, with supermarkets offering food courts, salad kiosks and cafes. The assumption is that people still want to get involved in the production of the food they consume, notably in the choice of ingredients. That is – if they can afford to. As one expert put it “If you have the time and financial means, you will keep cooking” but with income inequality poised to grow, the number of food deserts and swamps should continue to increase too.

A study in the UK showed that although the majority of consumers are aware that palm oil causes deforestation and greenhouse gas emissions, most of them do not know about the Roundtable on Sustainable Palm Oil (RSPO) certification. The study also found that labels, even the widely recognised ones like Fairtrade, were not enough to push consumers to change habits. The study concluded that the government needed to make food companies take on the responsibility of sourcing sustainably.  

One country where the government is taking a significant step in trying to change consumer habits is Canada. The new Canada Food Guide, which is due for release early this year, will encourage the consumption of plant-based proteins, which has the dairy and meat industry up in arms.

We covered earlier news on the boycott against Danone products in Morocco which started in April last year and cost the group millions in lost revenues. While the boycott was reportedly against high prices, an investigation carried out by the French government suggests Danone was the victim of a troll operation organised by a local company that specialises in digital influence. According to a source, Danone was a “diversion” in a local affair. Another study carried out by a communication agency found that the boycott campaign was mainly political and aimed at the agriculture minister.

Regardless, Danone lost its number one ranking in the milk business to a local competitor as a result. The group has had to make drastic changes to gain consumer trust again, such as clearly communicating the price it pays for milk. Danone also launched a new milk pack which it sells at cost – i.e. with not profit margins. An expert on company communication argued, “The link between a brand and its buyers is very easy to break, much more difficult and time-consuming to rebuild.”

Nestle is facing a similar predicament in India where it is trying to re-establish consumer trust in its Maggi noodle, three years after the government banned the sale of the highly popular instant noodles. The company was cleared less than 6 months later, taking back most of its lost market share, but the Supreme Court has just revived a class action lawsuit for unfair trade practices, false labelling and misleading advertisements. To avoid losing consumer trust again, it launched an ad campaign across all media.

This summary was produced by ECRUU

Soybean and corn farmers in the US could be looking at a difficult year ahead. A recent study showed that average 2018 returns should turn out higher than the previous year, as excellent yields and early hedging mitigated the effects of the escalating trade war with China. However, farmers will likely bear the brunt of the trade war in 2019 with a forecast for negative margins if prices stay where they are. Brazil has benefitted, on the other hand, with soybean exports surging 23% in 2018, mainly due to demand from China. But corn exports dropped 18% because of the higher logistics costs as a result of the minimum truck rates implemented last year.

These high trucking rates are pushing Cargill, Bunge and ADM to look into buying their own trucks although they said they will wait until a decision from the Supreme Court in the hope the minimum rates are overturned. If the decision takes too long, Cargill said it would go ahead and get its own fleet, while other Brazilian giants, such as Amaggi, Coamo and meat producer JBS have already bought trucks. However, there could be a limit in terms of the production of trucks, and logistics experts pointed out that these fleets were mainly intended for emergencies and not to replace outsourcing. Truck logistics is a completely different business with significant operational and labour costs, an expert warned.

Another conflict taking a toll is that with Iran. Even though the sanctions don’t apply to food, Cargill, as well as Bunge, are among the trade houses that have halted exports to Iran amid payment difficulties. The trading groups used to be able to avoid US sanctions by using smaller banks – mostly based in the EU – but an Iranian official explained that these banks have closed down or have stopped dealing with the country under pressure from the US. Some 16 vessels are reportedly stuck at port unable to offload because of payment issues.

Separately, Cargill announced it would sell its global malt business to the French cooperative Axereal. The unit is composed of 15 factories in four continents. And COFCO has joined a venture announced in October by ADM, Bunge, Cargill and Louis Dreyfus which aims to boost transparency and efficiency through the digitisation of agricultural transactions. The head of COFCO said that one of the goals was to automate execution to reduce costs.

Plant-based meat continues to attract the interest of the world’s largest food makers and distributors as it addresses two key consumer demands: the focus on health and lowering carbon emissions. A senior MacDonald’s executive recognised the value of meat alternatives and revealed that the food-chain – the world’s biggest beef consumer – might look into opportunities in the sector.

Cargill, Tyson Foods and Unilever all recently purchased firms involved in producing plant-based meat. Nestle joined the club this week and announced that it will launch of the Incredible Burger next spring, which is made from soy and wheat protein. The firm hopes to grow its vegan business to USD 1 billion within 10 years.

Meanwhile, the Impossible Burger, made by Impossible Foods, is already sold at 5,000 restaurants in the US. But the firm now faces another hurdle: the FDA said that in its uncooked state, the soy leghemoglobin used to give the burger a meat-like colour and texture would count as a food colouring. Under US law,  additives used for colour fall under much stricter norms, mostly because food makers have previously been found to use unsafe products to change colours. Nonetheless, Impossible Foods is still optimistic it will start selling the burger in stores in 2019.

Dairy products represent the next opportunity to switch to plant-based ingredients, and Nestle also announced plans to release a spirulina algae latte and a drink made from walnuts and blueberries. Nonetheless, recent studies reveal that not all plants are equal in the consumer’s eye, as sales of soy-based drinks have been dropping, while oat-based drinks have seen significant increases. Firms are also responding to this change, with Pepsi announcing the release of a Quaker Oat Beverage and Danone announcing three Oat Yeah drinks.

Producers are also responding to another growing consumer demand: cruelty-free products.  No-kill eggs, for instance, were recently introduced in Germany. Under a newly developed process, eggs are scanned just a few days after being fertilised to determine the chick’s sex so that males can be discarded before they hatch. And the team behind the eggs seem to enjoy a good pun – they called the scanning method “Seleggt” and labeled the no-kill eggs “Respeggt”.

This summary was produced by ECRUU

A former executive from Blackstone has joined Louis Dreyfus as the head of food innovation and downstream strategy, a new role that was created as part of the group’s strategy to reduce its dependence on sourcing and logistics and expand towards food processing and ingredients. The CEO said that Louis Dreyfus will be focusing on the fast-growing region of Asia, especially when it comes to investing into processing, and that they would also be investing in startups to find the next generation of protein. In a rare interview, the group’s chairperson said the plan was for the company to become a diversified food and nutrition company, in addition to trading, and that she would consider taking on partners or even doing an IPO if it made sense.

A Bermuda Court last week approved Noble’s restructuring through a local insolvency process which will allow the group to avoid liquidation. During the hearing, company officials said there were no plans to list the new company on an exchange.

Cargill announced the launch of “Protect our Planet”, a new sustainability program which aims to rid all of its cocoa supply chain of deforestation by 2030. The sustainability project will include Brazil, Indonesia, Cameroon, Ivory Coast and Ghana, Cargill said, adding that its indirect supply chain would also come under the scope of its Cocoa Promise programme. In Ghana, where the company works closely with the government to improve sustainability in the cocoa sector, Cargill achieved 100% traceability. And in the Ivory Coast, Cargill has managed to map 80,000 of the 120,000 farms involved in its direct supply chain. Similarly, the Swiss chocolate producer Barry Callebaut this year bought 44% of its cocoa beans and 44% of its non-cocoa agricultural raw materials through sustainability programmes, an increase from 36% last year and close to its 50% target for next year. In addition, 12% of its direct suppliers have a system to monitor child labour.

Nestle Waters North America is planning to use at least 50% recycled plastic in its US water bottles by 2025. The company invested USD 6 million in the Closed Loop Fund to improve recycling programs, including a USD 1.5 million investment in an integrated manufacturer of post-consumer recycled PET. Similarly, Coca-Cola announced it would be financing Dutch recycling company Ioniqa Technologies to help recycle PET plastics. Coca-Cola is hoping that this will help achieve its goal of recycling half of its packaging materials by 2030. Coca-Cola is the world’s worst plastic polluter, according to research by the “Break Free From Plastic” movement which looked at almost 190,000 pieces of plastics trash collected in 42 countries between August and September.

Several EU countries have been issuing waivers to the cover ban on the use of neonicotinoids (a class of insecticide) following pressure from farmers, especially sugar beet farmers, who are saying there is currently no alternative. The ban was passed in April this year in a bid to protect wild and domestic bees. A new study in the US, however, suggests that research and policy are too focused on protecting the honey bee at the detriment of other local wild bees. The paper argued that scientists know very little about wild bees in the US – of which there are an estimated 4,000 species – and therefore do not know how to protect them. The study points out the inherent risks of relying on a single type of bee.

Another study, meanwhile, argued that the negative image around GMO technology is slowing down efforts to improve food security in Africa. The study looked at one type of GM corn and found that it could help farmers in African countries which face pests, especially the fall armyworm that is devastating crops across the continent. Similarly, a scientist in Europe who is trying to edit the genes of wheat so that it doesn’t produce carcinogenic chemicals when it is cooked said that policy in the European Union is holding back his progress. He explained that gene editing was subject to the same rules as gene modification which made it almost impossible to commercialise.

After years of trial and error, the company JUST has launched Just Egg, an egg substitute made from mung beans that is said to taste exactly like eggs, along with all the properties – such as foaming, gelation etc – of its animal counterpart. According to an analysis by the New Food Economy, this revolutionary substitute, combined with California’s recently introduced ‘Proposition 12’ which bans the sale of eggs from chicken in cages from 2021, could mark the beginning of the end of the industrial egg market in the US. Just Egg is also expected to disrupt the 430 billion egg per year market in China, where it will launch in early 2019. And to take the technology one step further, JUST announced it will be making cell-based Wagyu beef. Bon appetit!

Commodity Conversations would like to wish our readers a very Merry Christmas and Happy New Year. Our weekly press summary will resume on January 3.

This summary was produced by ECRUU

Bunge announced that the CEO will step down and that the board will start the process of finding a new one. The news comes a few weeks after two shareholders, Continental Grain and DE Shaw & Co, successfully lobbied to add four new members to the board, while another shareholder, Capital Innovations, said that the CEO had been “too comfortable” with the current situation at Bunge. A source also told Bloomberg that Bunge would now be open to revisiting takeover bids by Glencore and ADM.

Authorities in Singapore have blocked Noble’s restructuring attempt by not allowing it to relist as New Noble amid an ongoing probe. In response, the group decided to restructure through a Bermudan court and has applied for a hearing on December 14. Noble said that the only other option would be to file for insolvency. Singapore granted the group a second deadline extension and it will now have until December 31 to complete the process.

Norway’s government approved a new comprehensive policy to exclude feedstocks with a high deforestation risk from its biofuel supply by 2020. The country’s palm oil consumption reached a record level last year, while a Norwegian report estimated that current biofuels policies would increase the world palm oil demand six-fold over the next ten years.

A few days after the news, Wilmar published a joint-statement outlining a new effort to completely remove deforestation from its supply chain by monitoring suppliers with satellites and immediately excluding any source found to be causing deforestation. In response, Greenpeace said it would suspend its campaign against the firm, adding that satellite imaging could prove a breakthrough in solving the problem.

The head of the WTO said that world trade was going through its worst crisis since 1947 mainly as a result of the US-China trade war. The impact of the crisis is being felt very differently across the supply chain, with Brazilian soybean producers reaping significant benefits, with exports to China up 137% in the year up to November, while Brazilian meat producers have had to pay more for feed. But now, South American grain producers are concerned that they might lose their new markets amid talks of a truce between the US and China. Although flows won’t immediately change as contracts have been signed for the next few months, experts say that the region will have to implement long-term reforms to make its agriculture industry more efficient and diversified. In Brazil, for example, addressing tensions with truckers will be one of the first challenges faced by the new government.

While this is going on, China is trialling new insurance policies to help shield farmers from fluctuating crop prices. The Dalian and Zhengzhou exchanges are piloting an insurance-plus-future insurance program for corn, soybeans, cotton and white sugar contracts. Insurance companies guarantee farmers an income if prices fall below a certain threshold by reinsuring the crop through over-the-counter options.

Talking of grains, in the US a judge this week approved a USD 1.5 billion settlement plan proposed by Syngenta to compensate US growers and ethanol plants for the losses incurred when their corn was rejected by Chinese customs. This puts an end to a long-standing dispute in which Syngenta was accused of distributing a corn variety, Agrisure Viptera, before the Chinese government had approved it.

A new report by World Resources Institute said that the food industry’s ultimate challenge in the coming decades will be to produce the additional crops needed to feed a growing population while limiting the amount of land cleared to a minimum in order to not jeopardise the goal of keeping global warming below 2 degrees. Increasing productivity through a significant boost in research funding is the most pressing goal, the report suggests, while also highlighting the need for strong environmental policies and changing consumer habits, such as switching from eating beef to chicken.

Have you ever heard that carrots improve your vision? Or that you should wait a few hours if you want to swim after a meal? Or that chewing-gum will stay in your stomach for seven years if you swallow it? Some curious food myths seem to have spread throughout the world, as this list of common or weird food legends compiled by Atlas Obscura revealed.

This summary was produced by ECRUU