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South Africa - The DA’s leader, John Steenhuisen, takes charge of the agriculture portfolio, which has been split from land and is now a stand-alone department.
This periodical update provides a market outlook for dairy, cattle, wheat, and other key commodities, and gives an overview of what developments to watch in the upcoming months in North America.
Economy: Slow progress on inflation. - Climate: Global weather market. - Logistics: Port congestion adding fuel to the stressed supply chain. - Consumer: The widening gap between eating at and away from home. - Cattle: US beef cow herd stabilization is possible this year; US beef supplies remain ample due to robust imports. - Corn: Growers and buyers at an impasse. - Dairy: Milk production marks tenth consecutive decline in April; higher cheese prices point to improved farmer margins. - Feed: Strong demand for corn, lower DDG prices and lower soymeal demand. - Fruits: Prices for lemons and oranges at a healthier level than in the previous season. - Pork: Near-term oversupply on optimal growing conditions; demand steady. - Poultry: Solid chicken demand as retailers and foodservice hunt for value. - Soybeans: Is USDA or CONAB closer to reality? - Sweeteners: Mexico's drought continues to shock the sugar market. - Tree Nuts: Manageable carry-out across the board and a mixed bag in terms of 2024 crop prospects. - Vegetables: Steady demand for leafy greens reported, while supplies show weather-related variations. - Wheat: Global challenges turn US positive for exports. - Cotton/Rice: Excellent start to 2024 growing season/ Strong recovery for US rice exports.
When it comes to food and drink service industry leaders, U.S. quick service restaurant (QSR) companies hold the most top spots. Coffee shop behemoth, Starbucks, has been the largest coffee shop chain in the world for many years, while world-famous QSR McDonald's is always high in the rankings. Meanwhile, when looking outside of North America, Yum China Holdings, Inc. accounted for the highest sales of any food service company in Asia. The food and drink services industry can be broadly defined as the process of preparing, presenting, and serving food and drink to customers. It incorporates many different sectors, including quick service and causal dining restaurants, full service restaurants, cafes and coffee shops, bars, clubs, nightclubs, catering services, canteens, and more. Additionally, these individual sectors are subject to different trends, one example that is relevant to all of them is the rise of digitization and the online market. However, trend topics can also be more specific, for example, the demand for ethically sourced coffee in cafes and coffeeshops. New trends will continue to transform the outlook of this industry, the most notable of which being the coronavirus pandemic which is predicted to change food and drink services for years to come.
Here are the main highlights for some of Australia’s key commodities and economic influences for this month. The full report provides an overview of the developments to watch in the upcoming weeks.
Wheat and barley: Fundamentals in the global wheat markets changed from oversupply to potential tightness, which saw a robust rally of double-digit growth MOM on the back of Black Sea dryness and late frost. Australian prices also grew, though at a smaller rate because of the previous seasons’ carryover.
Canola: The European decision to impose duties on Russia’s and Belarus’ oilseeds imports might tighten meal and oil availability in the EU and could become a key price-supporting element. Globally the stock-to-use ratio of canola is expected to slide as bad weather takes tons away from the global inventory.
Dairy: Minimum milk prices for the 2024/25 season have been announced and are broadly in line with Rabobank’s expectations. Lower milk prices are on the cards for southern production regions, which will likely mean that there is margin pressure needing to be budgeted for leading into the new season.
Beef: Prices continue to track sideways with many cattle categories now surpassing cattle prices from a year ago. Drier conditions in southern Australia heading into winter may cause some prices to ease a little in the coming months.
Sheepmeat: Finished lamb (trade and heavy lamb) prices are seeing a gradual trend upwards which is in line with a more traditional trend. We think this should continue as lamb volumes decline but dry conditions in southern Australia may see restocking, merino and mutton prices slip over the coming months.
Cotton: ICE #2 Cotton futures collapsed to 18-month lows as funds quickly exited their massive net long position over the course of April in anticipation of a strong global 2024/25 supply outlook and sluggish demand.
Wool: Wool prices expected to remain steady but EOFY and the winter recess may cause some small fluctuations in the market over the coming months.
Consumer foods: The Australian food market is still facing some headwinds. The latest monthly data showed food inflation remains sticky, while combined turnover in food retail and foodservice continues to show signs of softness by historical comparison.
Farm inputs: Farm input markets remain quiet as demand is soft and supply outputs are steady. On the other hand, high freight prices are negatively impacting further farmgate price reduction.
Interest rates and FX: The Federal budget and various state budgets last month included big new spending commitments that add to aggregate demand while reducing measured CPI. Much will depend on how the RBA chooses to respond in June. Rabobank forecasts two more rate hikes in August and November and no cuts in 2024 and 2025.
Energy and freight: Brent crude oil as well as Australian diesel prices eased and Rabobank forecasts some more price pressure for brent crude oil. Container freight jumped >50% in May to a new 2024 high due to congestions in major global ports, which will likely make imported goods into Australia more expensive.
The U.S. Food and Drug Administration has cleared Elanco Animal Health’s methane-reducing feed ingredient for lactating dairy cows. One tablespoon of Bovaer per lactating dairy cow a day can reduce methane emissions by about 30 percent, or about 1.2 tonnes of carbon dioxide equivalent emissions annually, the company said. Bovaer works by suppressing the enzyme in a cow’s rumen, where methane is produced. The feed ingredient would help dairy food companies buy carbon credits from their own farms and create a value stream of $20 a cow, Elanco chief executive officer Jeffrey Simmons said. The feed ingredient received market approval in Canada earlier this year.
Trucks show up at Han Langeler’s dairy farm in the Netherlands each spring and haul some of the cow manure up to 150 kilometres away.There, it is spread on fields in an area with fewer livestock farms than Langeler’s area near Aalten, near the German border. Langeler then buys nitrogen fertilizer to top up the manure he was allowed to spread.Trucking manure is part of the strange nitrogen mathematics used in Europe as it attempts to balance nutrient use and penalizes manure based only on its nitrogen effect, without considering other nutrients, soil organic matter and biological benefits.The regulations led to farmer protests across Europe this winter and spring, leading up to the recent European-wide elections.Langeler spends about 10,000 euros (C$15,000) per year to send his manure north to an area with more crops and clay soil. In two years, when the Netherlands decreases the amount of nitrogen allowed to be spread to 170 kilograms per hectare, Langeler’s bill will increase to nearly 30,000 euros ($44,400).His farm can now spread 230 kilograms per hectare of nitrogen. Farmers on clay soils can spread about 20 kg more per hectare.“We found we have a lot of problems among farmers with it. We said it is a little bit stupid because you must fertilize,” says Langeler during a visit to his farm, where he works with his wife, Marion, on the dairy farm started by her grandmother. They milk about 130 cows with two robotic milkers.
Saudi Arabia has expressed interest in importing 200,000 tonnes of red meat and one million tonnes of soybeans annually from Nigeria, as the African country seeks trade to earn dollars, Reuters reported, Nigeria's Agriculture Minister Mohammad Abubakar said on Thursday. Abubakar said Nigeria was seeking partnerships for trade to earn foreign exchange after it suffered severe dollar shortages which harmed its economy and caused the local naira NGN= currency to tumble to record lows. Nigeria has been seeking to diversify its exports from the dominant oil and gas sectors to promote non-oil exports to hedge its economy from oil price shocks. Saudi's interest came after the Kingdom's agriculture minister visited Nigeria and held meetings with the country's agribusiness entrepreneurs, Abubakar told reporters in Abuja. "Shortly thereafter, ... they sent an expression of interest. We have come out with the roadmap where we can supply and satisfy that demand," Abubakar said.
The US Department of Agriculture will soon begin compensating dairy farmers for the loss of milk supply due to bird flu-infected cows, Reuters reported, citing the agency on Thursday. Bird flu has infected 132 dairy herds in 12 states since March. Farmers with infected cows can suffer financial losses from reduced milk production and the cost of veterinary care. Though the overall US milk market has not been negatively affected by the spread of the virus, "to the individual producer, it's difficult and devastating," Agriculture Secretary Tom Vilsack told reporters on a call. The funding will compensate farmers with sick cows for 90% of lost milk production per cow, the agency said. Applications for the funding will open on July 1. The USDA is working with states to research how the virus spreads among cows and is also in talks with two dozen companies over production of a bovine vaccine for bird flu. Spread of the virus among cattle heightens the risk of infection in humans, though the risk to the public from the virus is low, federal officials have said. Three dairy farm workers have contracted avianflu since March, and all recovered after experiencing mild symptoms.
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