{"id":4674,"date":"2020-12-17T04:10:42","date_gmt":"2020-12-17T04:10:42","guid":{"rendered":"http:\/\/commodityconversations.com\/wordpress2\/?p=4674"},"modified":"2020-12-17T04:10:42","modified_gmt":"2020-12-17T04:10:42","slug":"commodity-conversations-weekly-press-summary-147","status":"publish","type":"post","link":"https:\/\/commodityconversations.com\/wordpress2\/2020\/12\/17\/commodity-conversations-weekly-press-summary-147\/","title":{"rendered":"Commodity Conversations Weekly Press Summary"},"content":{"rendered":"

The Chinese government continues to push its \u201c<\/span>Operation empty plates<\/span><\/a>\u201d to reduce food waste amid growing concerns of possible food shortages. <\/span>Officials<\/span><\/a> denied any possibility of shortages, however, and the country\u2019s <\/span>consumer price index<\/span><\/a> saw a 0.5% drop in November, the first annual drop in over a decade. An economist <\/span>explained<\/span><\/a> that the fall was led by declining pork prices, which dropped by 12.5% in November, following an increase in the domestic hog population. This could be short lived, however, as pork prices have been <\/span>rising again<\/span><\/a> in December due to seasonal demand for meat in preparation for the Lunar New Year. The crackdown on imports has also contributed to lower meat availability, with the government\u2019s coronavirus testing measures slowing import clearance, while consumers prefer to buy domestic pork.\u00a0<\/span><\/p>\n

Rising food prices are also an issue in <\/span>Russia<\/span><\/a>, where the government announced measures to cap the price of several essential commodities, including a temporary quota for grain exports and a temporary export tax on wheat. Sugar and sunflower oil producers <\/span>agreed to cap prices themselves<\/span><\/a>, failing which the government threatened to lower the sugar import duty and tax sunflower oil exports.\u00a0\u00a0<\/span><\/p>\n

A big winner in all of this is Brazil, which expects to see <\/span>USD 100 billion in agribusiness exports<\/span><\/a> in 2020, up 3.5% from 2019 and the second highest after 2018. The projection made by Insper Agro Global notes that a third of exports are destined to China, Brazil\u2019s biggest agricultural trade partner since 2013. Soybean exports by themselves should generate USD 36 billion, driven in large part by the recovery in China\u2019s hog population.\u00a0<\/span><\/p>\n

Within this context, it is little surprise that more and more <\/span>Brazilian agribusinesses are choosing to go public<\/span><\/a> on the domestic stock exchange. A mergers and acquisitions consultant said there was strong investor demand for these companies thanks to the weaker Real and interest rates at historically low levels. However, a banker involved in one of the IPOs said that sustainability and good environmental practices were key.\u00a0<\/span><\/p>\n

In the UK, the Prime Minister said this week that a <\/span>UK-EU trade deal looked unlikely<\/span><\/a>, which prompted retailers to reiterate their warning that a no-deal Brexit would lead to higher food prices. The British Retail Consortium warned that 80% of the country\u2019s food is currently imported from the EU duty-free and the absence of a trade deal would lead to average tariffs of 20%. Brexit could also lead to sub-standard food imports, the Future British Standards Coalition (FBSC) said, explaining that the government had <\/span>refused to sign food safeguards into law<\/span><\/a>. Despite agreeing to ban the import of chlorinated chicken and hormone-treated beef, the current system allows the government to make changes on food import rules without a vote in parliament, the FBSC said.\u00a0<\/span><\/p>\n

Soybean from Brazil is facing a backlash in Europe amid the rapid rate of deforestation in the Cerrado which supplies two thirds of the country\u2019s soybeans. Some <\/span>160 food groups and investors have asked the major trading houses<\/span><\/a> to stop procuring soybean linked to deforestation in the Cerrado region by the end of the year. <\/span>Nestle<\/span><\/a> already stopped buying Brazilian soy from Cargill back in May 2019, and <\/span>two European fish feed companies<\/span><\/a> announced they would stop using Brazilian soybean in their feed, one of which said it would be using <\/span>European grains<\/span><\/a> instead. The Financial Times explained that part of the issue is because, by law, farmers in the Cerrado only have to protect 20-35% of the native forest, against 80% for farmers in the Amazon.\u00a0<\/span><\/p>\n

Brazil overtook the US as the number one producer of <\/span>genetically modified (GM) soybean<\/span><\/a> in the world in 2019, according to a report by ISAAA. Overall, however, the area under GM crops dropped globally by 0.7%. The area dropped by 4.7% in the US, the country with the largest area under GMO crops, but increased by 3% in Brazil, the number two in the world. The report suggested that GM crop area seemed to have reached a peak, having remained stagnant for a few years now.\u00a0<\/span><\/p>\n

In the US, the Food and Drug Administration (FDA) gave the <\/span>green light to the first GM pig<\/span><\/a> safe for people who are allergic to red meat. The Center for Food Safety complained that the FDA didn\u2019t do enough tests and flagged the risks of a pig escape and contamination with wildlife. But the company that engineered the pig, United Therapeutics Corporation, isn\u2019t working on meat for consumption. Rather its goal is to <\/span>develop pig-based organs that can be transplanted<\/span><\/a> into humans. \u201c[This] is one step on our journey to address the shortage of transplantable organs in the US,\u201d a company official said<\/span><\/p>\n

Also in the US, some 12,000 peanut farmers filed a class action lawsuit against three shelling companies, including Olam and ADM, accusing them of depressing prices by close to 20% between 2014 and 2019. The three companies, dubbed <\/span>Big Peanut<\/span><\/a> by The Counter, have an 80% market share of the industry. Two of the Big Peanuts are reportedly about to settle with the farmers.\u00a0<\/span><\/p>\n

Dear readers, we would like to wish you a Merry Christmas and Happy New Year. The Commodity ConversationsxECRUU report will resume on 7 January 2021.\u00a0<\/b><\/p>\n

This summary was produced by<\/span> ECRUU<\/span><\/a><\/p>\n

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