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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”.

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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

Cargill is consolidating its position in the Colombian protein business by taking over Campollo, one of the largest producers of chicken and protein products in the country. This should help Cargill expand in Latin America. The company is investing an additional USD 4.44 million in the Philippines to increase its sales of chicken and pork, among other segments. The money will also be used to strengthen Cargill Joy Poultry Meats Production, a joint venture with Jollibee Foods. In India, Cargill is testing a digital data collection programme that calculates livestock as well as agricultural input to analyse performance.

ADM is preparing for the launch of its processing pea plant in North Dakota, US, due to start operating in the first quarter of 2019. In a recent interview, a company official explained they hoped to attract people who are opting out of consuming soy. ADM’s chief brand officer added that sales of soymilk have declined while demand for other plant-based dairy products is picking up.

Danone is struggling to find buyers for its Earthbound Farm, an organic salads company which it bought in 2016 when it acquired WhiteWave. There are also reports that Campbell is struggling to sell its smoothie company Bolthouse Farms. Both segments are reporting losses and analysts argue that managing fresh food businesses might not make sense for big publicly listed companies. The profitability of fresh food is closely linked to agriculture, something which these groups are less equipped to handle and lack the predictability which investors like.

The Organic Trade Association estimates that the sale of organic foods in the US has doubled in the last 10 years. However, US organic land has only increased by 20% since 2011, representing less than 1% of the country’s farms. As a result, a huge chunk of organic food is imported, especially organic corn for organic meat and dairy. Part of the reason that US farmers are slow to shift is the cost – farms have to go through a 3-year period without chemicals before they can be certified organic. However, companies that sell organic products are stepping in to help farmers during this transitional period. Initiatives include the “certified transitional” label by General Mills for which farmers can get a small premium.

The world’s agriculture system is “broken” and our “food systems are failing us,” according to a study carried out by 130 institutions around the world. The report argues that while agriculture is the world’s biggest source of greenhouse gases, it is also its greatest victim. They forecast that food shortages will become increasingly common as a result of weather disruptions from climate change. Not only that, but our agriculture, while resulting in 1 billion mt of food wasted every year, leaves 820 million people hungry and 2 billion people overweight, according to recent FAO data.

Scientists have noted that food allergies, especially among children, have increased considerably in the last few decades, with an estimated 9% of Australian and 7% of English children affected. While researchers aren’t sure what causes the allergies, these seemed to be linked to the environment as they tend to be more prevalent in cities and in rich countries. They also think that improved hygiene, which results in reduced infections, as well as the lack of vitamin D from insufficient sun exposure, are to blame.

The good news this week came from bee research, as the food industry and scientists join hands to protect our pollinator friends, who are directly responsible for 30% of our food supply. An important breakthrough was reported this week as researchers in Finland developed the first bee vaccine against microbial infections which can be consumed by the queen and passed on to her offsprings. Nonetheless, the most important challenge remains to identify the root cause of the mysterious but prevalent collapse of bee hives, through the development of new laboratory techniques or through the clever use of high tech solutions. Our favourite proposal comes from an entomologist in Tasmania who is equipping bees with tiny RFID backpacks.

This summary was produced by ECRUU

Civil society’s attacks on agriculture have increased significantly in the last few years, something which has come to be known as “agribashing,” according to a report published on the topic by a French institute. Researchers point out that, in the past, those who attacked the agriculture sector used to be a minority, focused on fighting GMOs. However, the focus has moved from agriculture’s negative impact on the environment to its effect on health – something which seems to stir people much more. The problem has been exacerbated by the fact that the agriculture sector, including farmers as well as the trade, has not been very good at talking with consumers whereas NGOs have. “[Consumers] have a false image of a nourishing and ideal nature that works alone, without human intervention,” one analyst said.

Farmers in France have been particularly vocal in their complaints against attacks on the agriculture sector. This is all the more ironic given that the country is considered to be the most sustainable food-wise in the world. This the second year in a row that France tops the index put together by the Economist Intelligence Unit.

Cargill has gone some way into addressing the issue with its US-based blockchain turkeys project which was successful enough for the company to more than double it in just a year. However, an article in New Food Economy argued that it had limitations in terms of providing consumers with a transparent access to supply chain information. It argued that the company could decide which information to show and not to show, adding that its role in getting the turkey from the farmer to the consumer was not clear. Similarly, the Animal Welfare Institute is suing the USDA on the basis that its “humane” and “sustainable” food label claims should require third-party audits – which is currently not the case. It wants the agency to strengthen the label approval process.

ADM could be on the verge of revolutionising the dairy industry. The group tied up with San Francisco-based startup Perfect Day to commercially sell milk which is not produced from cows but fermented from microorganisms like yeast. It is then manufactured, using a 3D printer, to create proteins. The product is looking to attract consumers of dairy-free products. A study by Mintel shows that that market has increased by 61% since 2013.

In Canada, Cargill sold its grain and crop input assets in Ontario – including the 50% of shares it owned in South West Ag Partners – to the agri-food cooperative La Coop fédérée. Cargill, which still owns an export terminal in Sarnia among other grain assets in the country, will now act as the marketing entity of La Coop fédérée. In Thailand, meanwhile, Cargill invested USD 70 million to upgrade one of its poultry supply chains as well as its aqua feed production plant in the Phetchaburi province.

In the UK, Tesco and the WWF have joined hands for a four-year project in which they aim to cut by half the effect of food items on the environment while ensuring that prices stay affordable. The WWF will help Tesco get rid of products that cause deforestation and help it sell 100% certified responsible seafood. Also in the UK, a number of businesses including Coca-Cola European Partners, Unilever and Danone, have committed to have “net zero emissions” by 2050. This comes at a time when a report by the World Meteorological Organisation showed that the global emission of the three main greenhouse gases, carbon dioxide, methane and nitrous oxide, have all hit a historic high in 2017 and that they show no signs of decreasing.

The UN Food and Agriculture Organization (FAO) renewed its call for governments to work on ending world hunger. Data suggests that in 2017, an estimated 821 million people went hungry, a regression to levels last seen a decade ago. The organisation pointed out that countries with high levels of hunger were also struggling with rising obesity rates. An estimated 2.1 billion people are considered overweight globally.

On a more positive note, a new study found that people have a healthier diet when they eat with their families. This is a good reason to take the time to sit down at dinner, even with a moody teenager!

This summary was produced by ECRUU