Rabobank Food & Agri Research - All Sectors /far/far/en/rss/rss-all-sectors.html All sectors feed for Food & Agri Research en <![CDATA[The Future of CBD in Food & Beverage]]> /far/en/sectors/beverages/Future_CBD_Food_Beverage.html?utm_medium=RSS Consumer interest in cannabidiol (CBD) has exploded over the past two years. Despite warnings from regulators, CBD-infused products – anything from lotions and tinctures to gummies and seltzer water – are penetrating new markets at an astounding pace. Will CBD become a consumer staple, or will it become another has-been cure-all in the supplement aisle?

“In this report, we lay down a framework for what is driving demand for CBD and present alternative theories for how the market could develop over the next five to ten years,” says Bourcard Nesin, Beverages Analyst with Rabobank. “Finally, we break down what all this could mean for food & beverage companies and brand building in the CBD space.”

We are likely approaching peak hype around CBD. Once farmers, investors, brand owners, and consumers start to readjust expectations from their current stratospheric status, it will be much easier to size-up the long-term opportunity that CBD-infused products represent.

Beverages Consumer Foods Wed, 15 May 2019 12:01:55 GMT 261030
<![CDATA[Weekly Commodity Snapshot]]> /far/en/sectors/agri-commodity-markets/commodity_snapshot_weekly.html?utm_medium=RSS Our overview for wheat, corn, soybean, sugar, and coffee prices, published weekly.

Report highlights

- The S&P GS Ag Commodity Index fell -2.7% last week, to its lowest since 2008, bringing losses to -9% YTD, in the face of US-China trade war escalation and ASF-related demand losses. Non-Commercials have reached a new record net short in agri commodities, of -802,165 lots.

- Hopes were crushed for a Chinese demand-driven rally in CBOT Corn, as plantings continued to be well behind the five-year average.

- The CBOT Soy complex fell sharply, and soybeans drove below USD 8/bu, to near 11-year lows amid an escalation in trade wars and African swine fever killing export demand expectations. Meanwhile, US acreage prospects are rising due to ongoing wet US weather, and they could drive carry-out well above 1bn bu.

- ICE Cotton fell 11.5%, on larger-than-expected US output and as a trade war escalation limits Chinese demand.

Agri Commodity Markets Tue, 14 May 2019 14:56:18 GMT 259541
<![CDATA[Craft Consolidation: Endgame]]> /far/en/sectors/beverages/craft_consolidation.html?utm_medium=RSS Powerful competitive and financial forces are driving large and small craft brewers to seek new solutions. We see the Boston Beer/Dogfish Head deal as a catalyst that kicks craft consolidation into high gear and presents an entry point for international brewers.

Take-aways from the Beverage Forum 2019

On May 9, the Boston Beer Company announced plans to acquire Dogfish Head Craft Brewery for USD 300m – bringing together the #2 and #13 craft brewers by volume, respectively (per Brewers Association). The deal price represents a 2.5x to 2.7x multiple of Dogfish Head’s 2019 projected sales (~USD 1,000/barrel). The price is well below the >USD 2,500/barrel that Constellation paid for Ballast Point in 2015 (which marked the peak of the craft beer M&A market), but is in line with Asahi’s recent purchase of Fuller’s in the UK (on EV/sales).

This deal reflects Boston Beer’s desire to improve its top-line growth trajectory. Jim Koch, the company's founder and chairman, was clear: “We’re not going to be leading a cost-cutting roll-up of craft brewers.”

Boston Beer already has strong distribution in places like airports and stadiums that escape the reach of most craft brewers. Their amber, seasonal, and non-beer portfolio meshes well with Dogfish Head’s IPAs, and new innovations like SeaQuench Ale and Slightly Mighty. The geographic fit is reasonable, and both companies lean towards the MillerCoors network for distribution – a key overlap.

We see increasing pressure for roll ups among craft brewers, but this acquisition reduces the number of large craft brewers that could provide the significant production and sales capabilities needed to serve as a backbone for the next craft beer roll-up.

As the number of partners with real scale decreases, the pressure to pair up increases. This becomes a game of musical chairs, with top craft brewers fighting not to be left behind. The relatively reasonable valuation for Dogfish Head may even invite new suitors to the table.

Having fewer targets and more suitors is especially relevant, given our belief that craft roll-ups are the natural progression of the industry – as we wrote in our 2018 report, The Great Fragmentation of Beer. In fact, the largest craft brewers already include multiple roll-up platforms like CANarchy, Artisanal Brewing Ventures, and Duvel.

Even the largest craft brewers are vastly under-resourced, compared to global market leaders. Partnering can increase production efficiency, strengthen key geographies, and round out a product portfolio.

Not every deal is about improving the top-line – sometimes repaying debt is the key. As recent craft growth has been dominated by the smallest brewers, results among top craft brewers have varied widely – leading to some large brewers with big names experiencing difficult sales trends and seeking outside investment, like Anchor selling to Sapporo.

In 2015, Dogfish Head sold a 15% stake to PE firm LNK Partners to finance expansion plans, with payment due in 2020. We believe the need to pay back PE is at least partially driving the deal – given the fact that roughly half of Boston Beer’s USD 300m payment is going to “financial investors,” including LNK.

This deal follows Avery Brewing selling an additional 40% stake of its business to Mahou San Miguel and Founders in April – after an expensive build-out in 2015 and declining sales in 2018, and may suggest the start of a trend.

Dogfish Head felt it necessary to invest USD 145m in its business over the last five years in order to battle increasing competition. As other large brewers contemplate their own future spend, it’s clear that outside investment from an international brewer may now be needed more than ever.

International brewers can try their own roll-up (as Lion is attempting), but the work is complicated, as most craft breweries are privately owned, with heavily involved founders – Dogfish Head’s sale was likely helped by the personal connection between the two founders. Interestingly, some global brewers may be waiting for someone else to do the dirty work – and be willing to spend more in acquiring a proven, established craft platform.

Potential catalysts for the next craft beer deal are abundant: AB InBev has a locked-in price at which it can buy Craft Brew Alliance through August 2019, more PE investments need to be repaid over the coming years, and more brewers who over-invested during the peak of craft growth will need to re-finance.

There will only be a limited number of opportunities to enter the US with scale – and the time to be looking is right now.

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Beverages Tue, 14 May 2019 12:08:35 GMT 261164
<![CDATA[Unseating Category Giants (Thoughts From the Beverage Forum)]]> /far/en/sectors/beverages/unseating_category_giants.html?utm_medium=RSS Presentations at the Beverage Forum painted a clear picture of the rapid disruption taking place across beverages. New brands that are powered by company-wide passion, a founder’s vision/intuition, and ingredients aligned with consumer preference are winning against previously ‘unassailable’ incumbents.

Take-aways from the Beverage Forum 2019

We recently attended the Beverage Forum in Chicago, IL (April 29-May 30). This annual conference brings together a wide range of speakers who shared their views on trends affecting the beverage market today. Executives from Mark Anthony Group (Mike’s Hard Lemonade), Coca-Cola, Diageo, Body Armor, Wal-Mart, PepsiCo, Craft Brew Alliance, and others, presented their views.

The different presentations provided some valuable insights and unique perspectives, which we’ve distilled into six common themes that reflect the major trends facing the beverage industry today:

The presentations from Body Armor, C4, Mark Anthony Group (think Mike’s Hard and White Claw), and others, as well as ongoing references to the rapid rise of Bang!, drive home the point that disruption in the beverage market is alive and well. The revolution is here – established mainstream brands, and even entire categories, are being challenged (and upended) by new brands that bring new passion and better meet evolving consumer needs. We first wrote about this trend in 2015, and the trend shows no sign of slowing.

What is more, presentations from Wal-Mart and Bristol Farms make it clear that retailers are on the front-line of recognizing growing consumer demand for innovative new brands, and are actively driving this demand through increased shelf space, rapid roll-outs for new brands, and increasingly targeted plans to develop smaller brands. As retailers formalize support for new, small and growing brands, the disruptive effect of these emerging brands is likely to gain momentum.

Given the impact that disruptors are having on established brands, it is obvious why beverage companies are actively trying to acquire them. Nearly every major beverage company now has a venture capital fund whose purpose is to bring innovative new brands into their portfolio at an early stage.

Coke’s investment in Body Armor is a good example of this, given Body Armor‘s disruption of the sports hydration category. And, as one Wall Street analyst noted, “Coke gets a system that is full of passion… Gatorade doesn’t have anyone with passion anymore.”

But Bill Hackett’s discussion on the challenges Constellation has had with Ballast Point really underscored the challenges that can sometimes arise from trying to incorporate these emerging brands into an established portfolio – especially if the founders do not stay on board.

Both Andy Thomas of CBA and Jason Cohen of Owyn Brands talked about the importance of building brands by going deep into a market, rather than by trying to rapidly expand distribution. Going deep, rather than wide, allows a brand builder to really understand what drives velocity. Interestingly, going deep meant different things for these brands, with CBA focused on geographic strength and Owyn going ultra-narrow to really develop specific key chain accounts.

The issue of the need for improved agility and speed was mentioned several times. The CEO of CCNA noted, “The pace of change has never been this fast… and will never be this slow again”.

But while the need for quick decision making is indisputable, the number of ‘overnight successes’ that took decades to build (Mike’s Hard, Corona, etc.) also speaks to the need for patience. We believe that large beverage companies struggle with in-house innovation both because they lack speed in tactical decision making, and they lack patience in their long-term strategy. Worth noting is that most large corporates (ABI, Coke, Pepsi) highlighted specific (and already implemented) programs to greatly reduce time to market for innovation.

Plastic packing is quickly coming under increasing scrutiny from both consumers and retailers, and beverage companies need to find a solution. The panel of Wall Street analysts identified this as one of the greatest risks facing the industry today. Corporate presenters touched on the issue, but it was clear the industry remains at the stage of identifying the problem, as opposed to implementing solutions.

The issue of ABI’s ad campaign mocking Coors Light and Miller Lite for using corn syrup (‘corn-gate’) was raised several times during the conference, and it is generally seen as counter-productive for the beer category as a whole. Most notable was Bill Hackett (formerly of Constellation Brands) who referred to it as “unconscionable” and “BS”… We would strongly concur. The issue wonderfully illustrates the difference in approach between a passionate start-up disrupting (but elevating) a segment and the incumbents holding on for dear life…

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]]> Beverages Mon, 13 May 2019 16:59:06 GMT 261148 <![CDATA[USDA WASDE: US Farmers Carry a Heavy Burden]]> /far/en/sectors/agri-commodity-markets/USDA-WASDE-monthly.html?utm_medium=RSS Rabobank’s take on the USDA’s May WASDE is that it considers WASDE’s initial forecast highly speculative given fast-moving geopolitical, price and planting developments. The focus remains on the US-Chinese trade war, ASF’s bearish impact on demand, and the growing supply prospects from South America, Europe & FSU.

Download previous editions

April 2019 - US Demand Down as Stocks Rise

March 2019 - Farmers Discount as Supplies Mount 

February 2019 - Taking Stock Amid Trade Talk 

December 2018: Wait and Xi

November 2018: China Rains on US Yield Parade

]]> Agri Commodity Markets Mon, 13 May 2019 15:02:27 GMT 250821 <![CDATA[Commitment of Traders Weekly Update]]> /far/en/sectors/agri-commodity-markets/cftc-cot.html?utm_medium=RSS Every Monday, we publish a view using data from the Commitment of Traders report published by the U.S. Commodity Futures Trading Commission.

Agri Commodity Markets Mon, 13 May 2019 13:10:54 GMT 260296
<![CDATA[Australian 2019 Beef Cattle Seasonal Outlook: Swinging in the Rain]]> /far/en/sectors/animal-protein/Swinging-in-the-Rain.html?utm_medium=RSS Rabobank-modelled cattle prices for 2019 are lower than 2018 prices, but rain will drive much bigger price swings than we have seen in the past.

Listen to the podcastAustralian 2019 Beef Cattle Seasonal Outlook: Swinging in the Rain

The level of destocking that has occurred over the last five years means that Australia’s cattle herd is at its lowest point in 20 years. This limited inventory will make the market very sensitive to any changes in demand and exaggerate any price upside as a result of increased rain and better conditions across the country. Producers, along with feedlots and processors, will be forced to compete for a very limited pool of cattle, and we expect prices to move substantially as producers – motivated by rain – enter and leave the market.

Rabobank expects slaughter numbers to contract slightly in 2019, a result of limited inventory and also a slight improvement in the season that will mean fewer forced sales. Assuming rainfall is still below average, females will still make up a large component of the total and, together with lighter cattle generally, this will keep slaughter weights down. We therefore expect production to drop by 6%. 

With assumed drier-than-normal conditions across the year, demand from producers to restock is expected to remain subdued and, therefore, average prices across the year will decline. Inventory limitations will mean prices swing, with upside generated by any improvements in the season.  

Animal Protein Animal Protein Mon, 13 May 2019 11:24:59 GMT 260686
<![CDATA[Podcast: Trade Optimism Shaken by US Tariff Escalation]]> /far/en/sectors/agri-commodity-markets/Trade_Optimism_Shaken.html?utm_medium=RSS From early November until last week, CBOT markets enjoyed a US-China trade war hiatus as China initiated goodwill purchases of US agricultural goods, the US withheld tariff hikes, and both sides sought a negotiated settlement. ACMR analyst Michael Magdovitz and G&O analyst Lief Chiang discuss how that calm was shattered by Sunday's statement from President Trump to raise tariffs on Chinese goods. Join Michael and Lief to hear about the near-term impacts and price risks from this latest trade war escalation.

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Agri Commodity Markets Tue, 07 May 2019 16:50:37 GMT 261036
<![CDATA[Food, Personalized – Is the End of Mass-Produced Food Upon Us?]]> /far/en/sectors/consumer-foods/Food_Personalized.html?utm_medium=RSS The latest craze in food is personalized nutrition – individual, personalized nutrition plans based on your physical characteristics, with the aim of an overall healthier diet. Although personalized nutrition can be characterized as emerging technology, it is part of a broader trend, based on several strong drivers, and it will become a game-changer in the food industry.

Listen to the podcastDownload the full report>Click here to download the full report<

According to Maartje van den Berg, Senior Analyst – Consumer Foods: :"The currently developing personalized nutrition solutions mainly benefit fresh-food consumption and ingredients players. For already pressured processed-food companies, personalized nutrition adds to their struggle and means they need to investigate their strategic options."

Personalized nutrition – or perhaps, in a broader sense, ‘nutrition as a service,’ or even ‘nutrition as a solution’ – will prove to be a game-changer in the food industry. Branded processed-food companies must find ways to join the fray – for instance, by adapting their branding, becoming more successful when it comes to their selections, investing in personalized nutrition, cooperating with personalized-food players along the value chain, or making their production setup more flexible. There may be other suitable strategies – but there is no alternative to taking action.

Consumer Foods Tue, 07 May 2019 15:03:40 GMT 260990
<![CDATA[African Swine Fever Losses to Complicate the Global Dairy Complex]]> /far/en/sectors/dairy/ASF_Losses_Complicate_Global_Dairy_Complex.html?utm_medium=RSS An unprecedented contraction in the supply of pork from China will have a spill-over impact on the dairy sector – as African swine fever looms.

“The current African swine fever epidemic is expected to reduce China’s pork production by up to 35%, resulting in increased demand for other animal proteins. Rising demand for beef could constrain China’s milk production if dairy cow-culling accelerates to fill some of the gap in animal protein,” according to Rabobank’s senior dairy analyst Sandy Chen.

“The forecast 150mmt to 200mmt reduction in pigs represents an estimated 54,500mt to 72,500mt decrease in lactose demand in piglet feed, “according to Rabobank’s global dairy strategist Mary Ledman.

“The ASF situation in China has had a double impact on US whey, permeate, and lactose exporters as the world’s largest market for dairy-derived animal feed shrinks and US competitiveness erodes due to the trade war-induced tariff," says Ledman.

Dairy Mon, 06 May 2019 18:29:27 GMT 261017
<![CDATA[Podcast: Peste Suína Africana e os impactos no mercado de proteína animal]]> /far/en/sectors/animal-protein/Peste_Suina_Africana_impactos_proteina_animal.html?utm_medium=RSS Adolfo Fontes e Fernando Gomes conversam sobre a Peste suína africana na China e os impactos no mercado global de proteína animal. E como os acontecimentos no cenário internacional podem afetar as exportações do Brasil.

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Animal Protein Mon, 06 May 2019 15:03:59 GMT 261014
<![CDATA[Weekly Commodity Forward Curves Overview]]> /far/en/sectors/regional-food-agri/weekly-commodity-forward-curves-overview.html?utm_medium=RSS Our weekly overview of forward curves for wheat, corn, oats, soybean, rapeseed, canola, palm oil, sugar, coffee, hogs, cattle, oil, gas, and ethanol.

Grains & Oilseeds Sugar Agri Commodity Markets Thu, 02 May 2019 12:43:26 GMT 248031
<![CDATA[Pork Quarterly Q2 2019: Chinese Pork Production Shortfall Will Require Global Production Response]]> /far/en/sectors/animal-protein/pork-quarterly-q2-2019.html?utm_medium=RSS The spread of African Swine Fever (ASF) into every province in China and throughout Southeast Asia in the last quarter has generated new concerns over the industry's ability to respond to world demand. Structural constraints on production growth in some regions, along with infrastructure and logistics capacity constraints, may leave the world with limited supply and mounting competition for potential trading partners.

Download the latest quarterlyReport summary

“Mounting losses in the Chinese pig herd due to African Swine Fever are expected to drive a 16m metric ton deficit in pork supplies by year-end 2019,” according to Christine McCracken, Senior Analyst – Animal Protein. Until China gains control of the disease and is able to rebuild, however, it will need to look to other protein sources to meet consumers’ needs. China will need to expand its production of other proteins and ratchet up imports in an effort to fill the gap. Ongoing trade disputes and infrastructure limitations, however, may limit China's options.

Other highlights from the Pork Quarterly Q2 2019 include:

As the industry surveys the full extent of ASF losses, the challenges of rebuilding its herd, and the potential for reinfection, markets are growing increasingly concerned with projected production shortfalls. Estimated production losses of 25%-35% are expected to create a supply gap that will be impossible to fill in the short run.

After several months of disappointing returns, US hog producers are realizing a nearly USD 50 per head rebound in profitability. This reversal of fortunes is leading some top producers to reconsider expansion plans. While profitable, the industry remains exposed to potential disruption should ASF enter its borders, or should future access to China not be forthcoming.

European hog producers remain on high alert, as the risks of ASF threatens the ability to meet rising global trade demand. Rising pork prices and the promise of stronger returns may lead to slightly faster growth in some advantaged regions, but the overall production response is likely to be muted by other structural limitations.

A rebound in global pork is likely to benefit few countries more than export-dependent Brazil. Well-positioned to export to Asia, as well as re-established markets in Russia, Brazilian pork producers should see some of the best returns in years. After many challenging export disruptions, we do not expect the Brazilian pork industry to respond as quickly as some others.

Download previous editions

Click here to download the Pork Quarterly Q1 2019

Click here to download the Pork Quarterly Q4 2018

Click here to download the Pork Quarterly Q3 2018

Animal Protein Animal Protein Wed, 01 May 2019 15:09:37 GMT 261046
<![CDATA[World Seafood Map 2019: Value Growth in the Global Seafood Trade Continues]]> /far/en/sectors/animal-protein/world-seafood-trade-map.html?utm_medium=RSS Seafood is one of the most traded food commodities in the world, and the trade keeps on growing. Global fish and shellfish trade reached a value of USD 153bn in 2017, increasing by a CAGR of 4% in the last five years (2012-2017). We expect global seafood demand and supply to continue to grow in the coming five years, although trade is likely to change. Current issues, such as global trade tensions and uncertainties, emerging aquaculture techniques, and biosecurity risks in animal protein production will increasingly shape global seafood trade flows in the future.

full20190105_SeafoodmapDownload the map

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Poster versions of the World Seafood Map are exclusively available to Rabobank clients. To receive one, please contact your relationship manager.

Global Seafood Trade Grows at 4% per Annum

Seafood trade has grown by a CAGR of 4% from 2012 to 2017 to reach an estimated USD 153bn. In general, we observe a value growth in global seafood trade rather than a volume growth – mainly driven by the high value of the salmon and crustacean trade. As our recently published World Seafood Map shows, the largest trade flow, in value terms, is still from Norway to the EU, mainly consisting of salmon and some whitefish. This is followed by trade flows of salmon and crustaceans from Canada and flows of whitefish and crustaceans from China to the US.

From 2013 to 2017, crustacean trade increased globally, with the US, the EU, and China increasing their crustacean imports. India, Indonesia, Vietnam, Mexico, and Ecuador have been the main suppliers due to higher and more efficient production in these regions.(For a detailed overview of the crustacean sector, please check Keeping up With the Crustaceans)

Likewise, salmon trade increased globally due to demand growth. (For a detailed overview of salmon demand, please check Keeping Salmon on the Top of the Menu) For example, Chile doubled its salmon exports to China in the last four years. In fact, all salmon producers, and particularly Norway, increased exports to all consumer regions.

Whitefish still has the largest traded volumes, which remain stable despite changes in trade flows. This category consists of farmed and wild-caught species. Also, a big portion of this trade flow includes China’s re-exports of processed whitefish from Russia. In comparison to 2013, China’s whitefish exports – mainly tilapia – to the US have dropped by 33%. However, Vietnam filled this gap by increasing its exports to the US, which is dominated by pangasius.

Due to improved supply conditions in Peru, the fishmeal and fish oil trade has increased in the last four years. Driven by its large aquaculture industry, China remains the largest consumer of fishmeal and fish oils, which are supplied mainly by Peru. Relatively higher prices of fishmeal and fish oils have also led to a value increase in trade flows.

China Is Still the Biggest Seafood Exporter

Both in volume and value terms, China is still by far the biggest exporter of seafood, followed by Norway (see Figure 1). Both countries have added more than USD 2bn to their seafood exports in the last five years (2012 to 2017). However, there was only a minor increase in the exported volumes.

Vietnam overtook Thailand in seafood exports, reaching the third rank in the top seafood exporters in value. The increase in Vietnam’s exports mainly resulted from whitefish and crustacean trade. India also made a big jump from the 8th place to the 4th place, with an increase of USD 3.7bn – also driven by increasing shrimp exports.

In the upcoming years, we expect China and Norway to keep their positions as the main seafood exporting nations. However, we expect a slower growth rate in Chinese seafood exports. Some shifts in the rankings of the main exporters could happen due to the biological challenges of fish and shellfish farming or to differences in production efficiency.

Top 10 Seafood Importers Led by the EU, the US, and Japan, but China Is Catching Up<p>Global seafood imports also show that value is increasing faster than volume. The top 5 ranking countries in global seafood imports, both in value and volume terms, have not changed since 2012 (see Figure 2).</p>worldseafoodmapfigure1and2

*Note: China import data includes Hong Kong import data for all seafood trade flows. For salmon and crustacean imports, Vietnam's imports are also included. Russia seafood trade flows also include Belarus trade data.

The EU is still the largest importer of fish and shellfish, and it increased its imports by USD 4bn from 2012 to 2017. The second largest seafood importer, the US, also imported more seafood in the last five years, with an increase amounting to USD 5bn. China also significantly increased its seafood imports by more than USD 3bn. This value increase in the EU, the US, and China is predominantly driven by increased salmon and crustacean imports.

In the near future, we expect the EU and the US to remain the leading seafood importers, due to the high demand for seafood in these regions. However, China could overtake Japan sometime soon. The current African swine fever situation in China's pork production is leading to increased seafood consumption. Meanwhile, there is demand growth for imported and, particularly, premium seafood due to increasing purchasing power and food safety concerns over local production in China.

Aquaculture Is Overtaking Wild-Catch

Wild-catch seafood production is flat, while aquaculture keeps growing (see Figure 3). We expect future growth in seafood to continue to come from aquaculture, which will be driven by improved genetics, new husbandry technologies, innovations in aquafeed, and the switch to more efficient and intensive farming technologies.

In 2020, the volumes from aquaculture production will surpass the volumes from wild-catch seafood, and aquaculture production is expected to exceed 90,000 metric tons. However, the growth of aquaculture is expected to slow down in comparison to the last decade.


All large seafood categories are expected to grow in the coming years. However, growth will be strongest with crustacean and freshwater fish farming in developing economies in Asia, South America, and, to a limited extent, Africa. Salmon production will continue to grow, mainly in value terms, in Europe, Canada, Australia, and Chile.

Localized Supply and Global Demand Will Continue to Fuel Trade Growth, but Routes Can Change

We expect seafood to keep its rank as one of the most traded food categories, due to its nature of localized production and global demand. Processing and re-exports are also common in the seafood industry – which adds to the traded volumes.

While we expect the demand for seafood to continue, we expect further growth of farmed seafood consumption at the expense of wild-catch seafood, which will support the seafood trade. The increase in seafood trade in recent years has been driven primarily by farmed species, consisting of high-value premium crustaceans and marine species and lower-value whitefish species traded from Southeast Asia to western countries. We expect this trend to continue. Also, large seafood consumers such as China, where supply can’t keep up with demand, will keep importing more seafood products.

However, trade is likely to change. Increasing protectionism, current uncertainties in trade relations among several trade partners (e.g. Brexit, US-China trade war), the growing aquaculture sector in different parts of the world with new technologies (e.g. land-based and offshore farms), and biological challenges in the animal protein sector (e.g. African swine fever) could change seafood trade dynamics and routes in the upcoming years.

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Animal Protein Wed, 01 May 2019 12:23:46 GMT 260975
<![CDATA[Crossing the Line – New Challenges for Sugar]]> /far/en/sectors/sugar/crossing-the-line-new-challenges-for-sugar.html?utm_medium=RSS For sugar industries that enjoy a degree of domestic market protection, becoming an exporter is a real challenge. Absorbing the decline in prices that the transition brings may upset domestic stakeholders – but avoiding this via additional support measures risks provoking the wrath of the world's major exporters.

Which sugar industries have exhibited the greatest growth in sugar production over the last ten years? The question touches on an array of strategically relevant issues for sugar industry players. It highlights where profits are being made and where investment is taking place; it points to where trade flows may shrink or grow in the future; and, in a sector renowned for government intervention, it reflects the successes and failures of national sugar policies.

We examined the growth of sugar production around the world, focusing on industries averaging over 1.0m metric tons output per year in the period 2016/17-2018/19. The top 5 were Iran, Russia, Thailand, Pakistan, and Egypt – not the usual suspects (with the exception of Thailand) in any list of top sugar players.

What spurred their growth? Improved technical performance surely contributed, fostered by protection of the domestic market, plus – with the exception of Thailand – a very high proportion of total industry sales being made in the domestic market (see Figure 1).

Sugar Crossing the Line_Chart

Source: F.O. Licht, Rabobank 2019

Russia and Pakistan moved from being regular importers a decade ago to becoming more than self-sufficient, generating surpluses to export. In the context of Figure 1, the ratio of their output to their domestic consumption is now more than 1.0 – they have crossed the line.

Crossing the line is a big event, and potentially disruptive. Exposure to the export market is a rude shock for industries in which margins are sustained more by high prices than by a highly competitive cost structure. Indeed, if crossing the line is anything more than temporary, it may ultimately force substantial changes in industry policy through the impact that the transition has both within the country and/or beyond its borders. Current examples are India and Mexico.

Policy intervention is extensive in India – most notably in the form of high, fixed prices for cane. Yields have structurally improved recently, via use of new cane varieties. India has long been a sporadic exporter, but the latest surge in output has saddled the country with an enormous exportable surplus at a time when world prices are nowhere near the level necessary to cover production costs. The result has been further interventions by the government to subsidize exports and to regulate domestic sales so as to control prices – prompting the opening of proceedings against India in the WTO by Brazil, Australia, and others.

Surplus production has highlighted vulnerabilities in Mexico's cane and sugar policies – the country has access to the US market for a portion of its exportable surplus, but it is nevertheless facing the prospect of large world-priced exports in 2019 which will inevitably bring average per-ton industry revenue down. This will translate into lower cane prices, and cane growers have already taken action to block warehouses in order to stop domestic prices from sagging under the weight of accumulating stocks. (For more details, see our recent publication Are Industry Divisions and Market Forces Crushing the Mexican Sugar Sector?)

These examples (and there are others) highlight the challenge of crossing the line. Absorb the decline in prices that the shift from importer to exporter implies, and risk upsetting domestic stakeholders – at least in industries dependent on small growers; but implementing additional policy measures to avoid this could provoke the wrath of the world's major exporters. It therefore seems very unlikely that future growth in Russia and Pakistan will match growth over the last decade. Iran and Egypt, however, still have space to grow before they risk crossing the line.

What about other players on either side of the line? Thailand's spectacular growth has been driven by inherent competitiveness plus a degree of domestic market protection, a top-up fund for cane payments, and the benefit of a price premium for export sales made in the Far East region as a result of that region's persistent sugar deficit. However, control of domestic sales prices was dropped in 2018, following the threat of WTO proceedings, and the top-up fund is no longer government-backed. Recent growth has left Thailand even more exposed to the world market than Brazil and Australia. Are future returns seen as sufficient for farmers to plant more cane and for investors to construct more mills?

Despite very high sugar prices (average USD 790/metric ton in 2018), and concomitant high cane and beet prices, China has seen total sugar production decline. Elsewhere, Indonesian production has stagnated while consumption has boomed, turning the country into a contender – together with China – for the position of world's leading importer of sugar. Both countries' industries, despite enjoying considerable levels of protection, are in no imminent danger of crossing the line – giving the world's exporters at least some reason to be cheerful.

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Sugar Tue, 30 Apr 2019 18:18:13 GMT 260950
<![CDATA[Podcast: Row Crop Review]]> /far/en/sectors/grains-oilseeds/podcast-row-crop-review.html?utm_medium=RSS Steve Nicholson and Andrew Tasker catch up on a busy period in row crops. Floods in the Midwest and the ever-present topic of trade are on the list of topics in this month’s rundown.

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]]> Grains & Oilseeds Tue, 30 Apr 2019 15:29:49 GMT 260961 <![CDATA[Podcast: What Lies Ahead in 2019/20 for Grains & Oilseeds?]]> /far/en/sectors/grains-oilseeds/podcast-what-lies-ahead-in-2019-2020-for-g-o.html?utm_medium=RSS ACMR Head and G&O Sector Strategist Stefan Vogel joins ACMR Analyst Michael Magdovitz to discuss the recent price breaks in wheat, corn, and soybeans, along with some thoughts ahead of the USDA’s first 2019/20 WASDE in early May. Stefan and Michael discuss bearish G&O catalysts, including fierce export competition, the African swine fever epidemic, generally positive global crop conditions, and a record non-commercial net short.

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Grains & Oilseeds Agri Commodity Markets Tue, 30 Apr 2019 15:29:49 GMT 260958
<![CDATA[Podcast: Can CBD Live up to the Hype?]]> /far/en/sectors/beverages/podcast-can-cbd-live-up-to-the-hype.html?utm_medium=RSS CBD is the most exciting and perhaps controversial new ingredient in decades. Despite a government crackdown on illegal sales, consumers are clamoring for CBD-infused products. On this week’s episode, we explore what is driving demand for CBD, and we lay out the best- and worst-case scenarios for the development of the CBD market. This episode features a full house for the first time since December: Global Strategist Stephen Rannekleiv, Senior Analyst Jim Watson, and Labradoodle Analyst Bourcard Nesin.

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Beverages Mon, 29 Apr 2019 15:56:56 GMT 260852
<![CDATA[Are Industry Divisions and Market Forces Crushing the Mexican Sugar Sector?]]> /far/en/sectors/sugar/are-industry-divisions-and-market-forces-crushing-the-mexican-sugar-sector.html?utm_medium=RSS In the months to come, Mexico needs to export around 1.7m metric tons of sugar in order to reduce current stocks to sustainable levels. Otherwise, the market prospects for the following cycle will be quite challenging – if not devastating.

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According to Pablo Sherwell, Head of RaboResearch F&A North America: "External market conditions continue to be unfavorable – but what could derail the sector at this point is the internal political environment. The Mexican sugar sector needs to rethink its strategy. We believe that meaningful changes need to take place if the sector wants to avoid a crisis."

Sugar Mon, 29 Apr 2019 15:45:59 GMT 260719
<![CDATA[Podcast: Açúcar – cruzando a linha]]> /far/en/sectors/sugar/Acucar-cruzando-a-linha.html?utm_medium=RSS Andy Duff e Fernando Gomes conversam sobre países que mostraram altas taxas de crescimento da produção de açúcar ao longo da última década, e apontam como “cruzar a linha” – ou seja, chegar ao ponto de produzir mais do que consume – frequentemente traz novos desafios para a indústria.

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Sugar Fri, 26 Apr 2019 15:17:55 GMT 260909
<![CDATA[Brazilian Sugarcane Fortnightly Update ]]> /far/en/sectors/sugar/brazilian_sugarcane_fortnighly_update.html?utm_medium=RSS Latest update on the Centre/South 2018/19 cane harvest.

Sugar Fri, 26 Apr 2019 14:32:05 GMT 245958
<![CDATA[De aardbei is nog geen winterkoninkje: Risicomanagement met partners een must]]> /far/en/sectors/fresh-produce/De-aardbei-is-nog-geen-winterkoninkje.html?utm_medium=RSS Ketensamenwerking is een must om succesvol te kunnen innoveren in onder andere de winterteelt. Telers kunnen samen met hun ketenpartners verschillende strategieën volgen om risico’s te beheersen.

Door innovaties in teeltsystemen nemen de investeringen in de aardbeienteelt per vierkante meter toe. In Nederland is er een gestage opmars van teelt op stellingen en teelt van ‘glasaardbeien’, veelal ten koste van teelt in de vollegrond. In de toekomst zullen daar ook investeringen in oogstrobots bijkomen. Verdere modernisering in teeltsystemen is noodzakelijk vanwege uitdagingen op het gebied van duurzaamheid en beschikbaarheid van arbeid. Telers die onder glas telen met assimilatiebelichting lopen echter een relatief groot bedrijfsrisico door sterke prijsschommelingen. Daarnaast verwacht Rabobank dat de markt voor aardbeien in de komende jaren beperkt zal groeien. 

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Fresh Produce Fri, 26 Apr 2019 13:24:56 GMT 260900
<![CDATA[Podcast: Back in the Black Once More for New Zealand Dairy Farmers?]]> /far/en/sectors/dairy/Podcast-back-in-the-black.html?utm_medium=RSS Emma Higgins and Mick Harvey discuss the new season's forecast milk price and other considerations for New Zealand dairy farmers.

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Dairy Fri, 26 Apr 2019 11:07:53 GMT 260881
<![CDATA[Agri Commodity Markets Monthly April 2019: Broken Grains, Ground Coffee]]> /far/en/sectors/agri-commodity-markets/ACMR-Monthly-reports.html?utm_medium=RSS US farmers are entering their fields with difficult choices. Recent steep breaks in CBOT Corn and Minneapolis Spring Wheat prices, and, more recently, African swine fever.

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Click here to download the Agri Commodities Monthly March 2019

Click here to download the Agri Commodities Monthly February 2019

Click here to download the Agri Commodities Monthly January 2019

Click here to download the Agri Commodities Monthly October 2018

Click here to download the Agri Commodities Monthly September 2018

Agri Commodity Markets Agri Commodity Markets Thu, 25 Apr 2019 13:04:39 GMT 259338
<![CDATA[Brazilian G&O Monthly Update – April 2019]]> /far/en/sectors/grains-oilseeds/Brazilian-G-and-O-Monthly-Update.html?utm_medium=RSS Our latest progress report for Brazilian G&O, detailing farmgate prices, amounts sold, exports and crush margins for corn & soybeans, as well as regional weather developments.

- Brazilian soybean farmgate price 1% down MOM and 4% down YOY
- Brazilian corn farmgate price 5% down MOM, but 1% up YOY
- 67% of the 2018/19 soybean crop is sold in Mato Grosso 4pp below the percentage reached in this same period last year and 3pp below the five-year average for this month
- In Q1 2019, Brazilian exports reached 17.2mmt for soybeans and 6.9mmt for corn, 30% and 41%, respectively, higher than the volumes exported in this same period of 2018
- Good levels of rainfall volumes in March and early April 2019 are resulting in second-crop corn conditions based on weather evaluation at a level above the five-year average

Grains & Oilseeds Wed, 24 Apr 2019 16:11:26 GMT 254390