Compiled 16/11/20
Recovery in US agriculture, demand from China sustainable in long term: The Andersons
04/11/2020
Topic: The Andersons announce recovery in US agriculture sustainable in long-term from China demand
Pat Bowe, President and CEO of US-based agribusiness the Andersons, announced in the company’s third-quarter earnings call on 4 November that US agriculture fundamentals will be sustainable in the long-term due to demand from China and other Asian countries. China has increased its purchases of US agricultural products, with Bowe expecting this increased demand from China “to run well into the first quarter of 2021.” Bowe also anticipates the demand for US corn to remain high into early 2021 as a result of both China’s buying and improved domestic demand from the ethanol industry. Additionally, the Andersons expects agricultural commodity prices to remain strong following dry weather in leading producers of corn and soybeans Brazil and Argentina, which will likely result in smaller crop output in both countries. In the third quarter of 2020, Andersons recorded improved on-year results from its ethanol segment, buoyed by higher crush margins and “relatively balanced industry supply and demand” that resulted in EBITDA attributable to the company of $11.1 million—up from the 2019 third-quarter EBITDA attributable to the company of $3.9 million.
Brazil forecasts record grain output in 2020-2021 harvest season
12/11/2020
Topic: Brazil anticipates record grain output in 2020-2021 harvest season
Brazil anticipates a record grain output of 268.9 million tonnes in the 2020-2021 harvest season, 4.6 percent more than the 2019-2020 season, according to the state-run National Supply Company (Conab). With an estimated 67.1 million hectares of land cultivated—the most land cultivated on record—Brazilian soybean production should reach 135 million tonnes. This would confirm Brazil’s ranking as the world’s largest producer of soybeans, with a cultivation area of 38.2 million hectares. Soybean exports are expected to reach approximately 82.7 million tonnes this year, with 81.4 million tonnes already exported between January and October. Next year’s exports should reach 85 million tonnes. For other agricultural products, corn production is estimated to reach 104.9 million tonnes, bean production is expected to reach 3.1 million tonnes, and wheat production—with 80 percent of the 2020 harvest already completed—estimated at 6.4 million tonnes.
Telus digs into agriculture as it diversifies its revenue
12/11/2020
Topic: Telus to power farming and food technologies
After making a series of acquisitions to help diversify its revenue, Telus Corp. is pushing its agriculture business to use its telecommunication networks to power farming and food technologies, including soil sensors and autonomous tractors. On 12 November, Telus announced that its Agriculture business unit will “provide supply chain management and data analytics services to businesses at each level of the food chain.” Executive vice-president Francois Gratton stated that Telus turned to the agriculture sector due to its different players not efficiently sharing information between themselves, explaining, “‘We saw a huge opportunity to increase yield, reduce waste and, importantly, be able to trace the quality and safety of your food from its origin.’” In the past year, Telus has acquired seven companies from Canada, the US, and the UK that, when combined, “cover the entire food system.” Telus argues that by connecting data across each level of the food chain, it could “help trace the origin of foods to the field level, helping retailers deal with foodborne illness outbreaks without having to indiscriminately throw out tonnes of product.” Telus states that its agriculture sector began much like its health sector, Telus Health, as part of a strategy to expand beyond its “classic” telecommunication services. This move also involves Telus’s expanding 5G mobile network generation.
Asia-Pacific countries sign one of the largest free trade deals in history
15/11/2020
Topic: Fifteen Asia-Pacific countries sign one of the largest free trade deals in history
On Sunday, 15 November, leaders from 15 Asia-Pacific countries signed one of the largest free trade deals in history as part of its effort to “reduce barriers in an area covering a third of the world’s population and economic output.” Following almost a decade of negotiations between the Association of Southeast Asian Nations and Australia, China, Japan, New Zealand, and South Korea, the Regional Comprehensive Economic Partnership (RCEP) indicates a significant step forward for economic integration in the region. RCEP combines a mix of separate arrangement into a single deal, aligning Asia more closely with other coherent trading zones like the EU or North America. While Japan and South Korea are expected to benefit the most from the deal, the benefit of cheaper goods will also spread as far as Europe and the US, Financial Times writers Robin Harding and John Reed state. However, analysts of the deal say the deal will likely further diminish US influence in the region following Trump’s withdrawal from the Trans-Pacific Partnership. Beyond this, the deal includes two significant chapters—the rules of origin, which determine where a product is made, and the first free trade deal between China, Japan, and South Korea. What the deal lacks is ambition, Harding and Reed observe, with the RCEP eliminating 90 percent of tariffs compared with almost 100 percent in the Trans-Pacific Partnership, agriculture being largely absent, coverage of services mixed, India’s withdrawal from the talks in 2019, and concern over China’s dominance in the deal.