{"id":369,"date":"2018-02-07T16:06:46","date_gmt":"2018-02-07T16:06:46","guid":{"rendered":"http:\/\/commodityconversations.com\/wordpress2\/?p=369"},"modified":"2018-10-31T09:51:15","modified_gmt":"2018-10-31T09:51:15","slug":"commodity-conversations-weekly-press-summary-6","status":"publish","type":"post","link":"https:\/\/commodityconversations.com\/wordpress2\/2018\/02\/07\/commodity-conversations-weekly-press-summary-6\/","title":{"rendered":"Commodity Conversations Weekly Press Summary"},"content":{"rendered":"

Sources<\/a> say that ADM and Bunge could announce a merger by the end of this week. They warned, however, that the agreement could still be derailed – especially if other parties are interested in bidding for the group. Bloomberg<\/a> writes the move could be the \u201cbiggest shake-up in a generation\u201d and many analysts forecast this is likely to be only the beginning of a \u201creshuffling\u201d of the ABCDs.<\/p>\n

Fitch Ratings argues<\/a>\u00a0Cargill\u2019s lower leverage and higher cash flow put it in a strong position compared to its competitors, especially in terms of M&A. It suggests that Cargill could pick up some of the more niche and higher margins assets that Bunge might have to sell in the case of a takeover by ADM.<\/p>\n

COFCO<\/a> is looking at buying logistic facilities – including warehouses – inside Brazil\u2019s Mato Grosso. The head of the South American operations said they want to buy directly from the farmer instead of going through other groups. COFCO exported 7 million mt of soybean from Brazil in 2017, up from 2.4 million mt the previous year, making it the third biggest exporter behind Bunge and Marubeni. Over 50% of China\u2019s soybean imports now come from Brazil, a demand which is expected to continue growing. In January<\/a> alone, Brazil\u2019s soybean exports jumped 70% on year.<\/p>\n

After prolonged regulatory delays, the EU has approved imports of DuPont Pioneer’s Plenish soybeans<\/a>. With Monsanto’s Vistive Gold soybeans also expected to be completely commercialised this year, farmers in the US are planning to scale up the planting of these GM varieties of high oleic soybeans. These beans produce oil with lower saturated fat and trans-fats and capture a premium of USD 40-50c\/bushel. A market expert forecast<\/a> that high oleic soybeans will become the fourth-largest grain and oilseed crop in the US within the next 10 years.<\/p>\n

In other trade news, the Chinese commerce ministry announced<\/a> last week that it will investigate US sorghum imports under its anti-subsidy rules. Sorghum is used as a feedstock for ethanol and animal feed, and sources<\/a> mentioned that producers might switch to corn to limit the risk of an unstable sorghum supply. The US is expected to export about 260 million bushels of sorghum to China in 2017\/18.<\/p>\n

The UAE\u2019s Al Khaleej<\/a> Sugar Refinery has signed a deal with the Egyptian government to build a USD 1 billion beet factory which could be fully operational by February 2021. The 77,000ha complex will eventually have the capacity to produce up to 900,000mt of sugar from locally grown beet, as well as to grow wheat and corn and refine 900,000mt of raw sugar in the off-season. The aim is to supply the deficit domestic market and to export to other African countries.<\/p>\n

Olam<\/a> is building a cocoa powder manufacturing plant near Chicago which should be operational by the middle of the year. The cocoa for the plant will be sourced from Africa, Asia and South America, although\u00a0Cargill<\/a> pointed out West Africa is becoming\u00a0 an increasingly big supplier to the cocoa world market, mainly because farmers elsewhere are switching to other crops.<\/p>\n

However, a representative of the Ghana Cocoa Board<\/a> complained that global cocoa prices had collapsed from USD 3,100\/mt to USD 1,800\/mt in less than a year, and that this was hurting producers. To try and boost the domestic industry, Ghana\u2019s Cocoa Processing Company<\/a> is looking at setting up a cocoa manufacturing group in the country so that it can process the local raw cocoa beans for the domestic market.<\/p>\n

The pace at which cocoa plantations have spread in the region has attracted the attention of environmentalists, especially in Ivory Coast where plantations are causing deforestation. Cargill was one of the global buyers which, last November, committed to sourcing zero cocoa from newly deforested land by 2030.<\/p>\n

Following the likes of Cargill and Wilmar, and amid a consumer backlash<\/a>, Nestle<\/a>\u00a0has decided to stop sourcing palm oil from Guatemalan producer REPSA. Nestle said the producer has failed to implement its action plan to deal with allegations that it was violating workers\u2019 rights and hurting the environment. Nestle has also stopped buying palm oil from the IOI Group following it’s suspension from the Roundtable on Sustainable Palm Oil (RSPO).<\/p>\n

Meanwhile, Cargill<\/a> is working on reducing maritime pollution. The company has tied up with four NGOs to help improve sustainability and accountability in the shipping industry.<\/p>\n

Mars<\/a> wants to increase its scientific transparency by publishing research standards and disclosing sponsorships. Its public affairs vice-president said the goal is to avoid linking research funds to defined outcomes, and to attempt to regain consumers’ trust.<\/p>\n

New research<\/a> found that 50% of the UK\u2019s food consumption is now \u201cultra-processed,\u201d making the country the biggest processed food consumer in Europe. Germany followed closely with over 46% while France has just 14% of processed food consumption.<\/p>\n

Finally, shoppers in the UK spent GBP 8.6 billion (USD 12.1 billion) to buy their groceries online last year, up from GBP 8.1 billion (USD 11.4 billion) the previous year. They expect their food to be delivered faster and faster. An article written by the BBC<\/a> argues that “Time wars really are the new price wars.” More outlets, including Amazon, offer to deliver groceries within the same day, and in some cases within an hour. However, this is coming at a high cost, both financial and environmental, due to the additional packaging required.<\/p>\n

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Sources say that ADM and Bunge could announce a merger by the end of this week. They warned, however, that the agreement could still be derailed – especially if other parties are interested in bidding for the group. Bloomberg writes the move could be the \u201cbiggest shake-up in a generation\u201d and many analysts forecast this … <\/p>\n

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