Friday, July 29, 2022

Supply Lines: Bumper US Wheat

From a missile attack on a Ukrainian port endangering a deal to release grain from the invaded nation to signs food inflation will get worse

From a missile attack on a Ukrainian port endangering a deal to release grain from the invaded nation to signs food inflation will get worse, here's a snapshot of the latest key food stories from around the world:

Black Sea Uncertainty

Russia attacked the sea port of Odesa with cruise missiles last weekend, just hours after signing a deal to unblock grain exports from Ukraine, a move that was hailed as a vital step toward alleviating the global food crisis. Although the United Nations said all parties reconfirmed their commitment to ship grains, the attack served as a stark reminder of the risks for shippers and insurers as the war rages on. Millions of tons of grain are stuck in Ukraine after Russia's invasion blocked its major ports, and major customers in the Middle East and North Africa have been forced to look elsewhere for supplies.

Even Pricier Food

Food inflation will get worse than previously expected this year before easing in 2023, according to US government forecasts. The agency raised its estimate for 2022 food inflation for the sixth straight month Monday to a 9% increase at midpoint, up from 8% a month earlier. Some main drivers are poultry, dairy and cereals.

The impacts of inflation are starting to show up in US consumer behavior. Chicken wing prices are sliding because Americans aren't going to restaurants as much, and they're switching to cheaper parts of the bird, like the legs. That could be a harbinger for more declines in meat markets, as consumers buy less pricey beef and pork, too. 

Crop Tour

There are signs some relief may come to world wheat markets soon. The US is poised to deliver a bumper spring wheat crop in the upcoming weeks, which if realized could help relieve the global shortfalls caused by turmoil in the Black Sea. Fields in North Dakota, the top producing US state, are forecast to yield a record high 49.1 bushels per acre, according to the final estimate of a three-day crop tour led by the Wheat Quality Council. While all signs now point to an ample harvest, it's coming later than normal, so late-season problems could still hurt production.

Lydia Mulvany in Chicago

(Editors Note: Supply Lines is taking the next two weeks off for summer holiday. We'll return to your inboxes on Monday, Aug. 15. Thanks as always for reading. To stay up to date with another Bloomberg newsletter, subscribe to New Economy Daily here.) 

Charted Territory

Canadian Prime Minister Justin Trudeau's push to accelerate the fight against climate change is sparking a showdown with the nation's farmers, who say it's threatening food supplies and their profits. One estimate forecasts accumulated losses of over C$10 billion by 2030.

Today's Must Reads

  • Lumber spat | A lingering trade dispute between the US and Canada is expected to keep tariffs on softwood lumber in place, adding to soaring inflation costs.
  • Stuck vessels | Now that Ukraine's grain-export deal has been signed, all eyes are on clearing a major obstacle: freeing the scores of ships stuck there since February. 
  • Chicken merger | A merger of two US chicken companies may transform how American poultry farmers get paid, as it does away with a compensation system criticized as unfair and abusive.
  • Pricey meat | Meat eaters stung by the worst food inflation in four decades are trading down from beef to chicken, according to one of the world's biggest crop traders.
  • DOJ settlement | US poultry producers Cargill Inc., Sanderson Farms Inc.and Wayne Farms LLC agreed to pay $84.8 million restitution for conspiring to lower wages for workers at chicken slaughterhouses as part of a settlement with the US Justice Department.

On the Bloomberg Terminal

  • New markets | A Senate panel wants Doug McKalip, Biden's nominee to be chief agricultural negotiator, to cut down trade barriers and reduce the US export market's reliance on China, Bloomberg Government reports.
  • Beyond Meat | Beyond Meat's sales and profit could remain volatile until it makes greater strides in containing operating expenses and the split between retail and slower-growing food service rebalances, which may not be until 2023.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

Like Supply Lines?

Don't keep it to yourself. Colleagues and friends can sign up here. We also publish the New Economy Daily, a briefing on the latest in global economics.

For even more: Follow @economics on Twitter and subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and gain expert analysis from exclusive subscriber-only newsletters.

How are we doing? We want to hear what you think about this newsletter. Let our trade tsar know.

No comments:

Post a Comment

Take Your Family To Dollywood! 🎢

We have the perfect accommodations! ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ͏ ‌     ...