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EU facing most severe drought in 500 years
IN BRIEF
UKRAINE: The CEO of leading Ukrainian agribusiness Nibulon was killed during Russian aerial bombardment of the southern city of Mykolaiv, World Grain reported on 2 August.
Oleksiy Vadaturskyy and his wife, Raisa, were killed when a missile struck their home on 31 July.
An adviser to Ukraine President Volodymyr Zelensky told the Kyviv Post that Vadaturskyy had been deliberately targeted.
One of the richest businessmen in Ukraine, Vadaturskyy founded Nibulon – one of the country’s largest agricultural companies – in 1991 and turned it into a major player in the global grain industry, World Grain wrote on 2 August.
With an annual turnover of some US$700M, Nibulon was among the 20 largest companies in Ukraine, exporting almost 1M tonnes/ year of grain prior to Russia’s invasion of the country on 24 February.
Nibulon's activities include grain and oilseed processing, storage and shipment.
It runs its own fleet, has a total grain storage capacity of 2.25M tonnes and operates a network of 27 trans-shipment terminals and grain and oilseeds complexes in the country.
RUSSIA: The Ministry of Agriculture will reduce the export duty on sunflower oil by 85% from 1 September, AgriCensus reported on 25 August.
The duty would be RUB8.621.3/tonne (around US$143.4/tonne), which would remain in place pending an update, the report said. The move followed a change to the export duty formula in July, when the government introduced a new duty in roubles following a sharp drop in the exchange rate against other currencies.
EU facing most severe drought in 500 years
Photo: Adobe Stock
The EU is suffering its most severe drought in 500 years, Olive Oil Times reported the European Commission’s Joint Research Center as saying.
With western and central Europe recording virtually no rainfall in the past two months, the centre warned that conditions were likely to worsen over the next three months, the 18 August report said. Officials at Europe’s leading science and knowledge service estimated that 47% of the 27-member EU bloc was at risk of being impacted by the drought, with farmers across four of the continent’s largest olive oil-producing countries among the most severely affected.
France, Italy, Portugal and Spain produced 88% of the EU’s olive oil in 2021/22 and had felt the impacts of an unusually dry winter and spring followed by several extreme heatwaves, the report said.
In Spain, the Association of Young Farmers and Ranchers (Asaja) said that sunflower yields would be 40-50% lower and, despite a 30% increase in planting area, the harvest would be around 800,000 tonnes. Spain – the world’s largest olive oil producing country – is also forecast to produce just 1M tonnes of olive oil in the 2022/23 crop year, the lowest total since 2013/14 and down from the five-year rolling average of 1.37M tonnes, the Olive Oil Times report said.
In Portugal, rain-fed groves – which represent 30% of all its olive groves – were hardest hit by the drought and expected to see significant production declines.
France was also facing its “most severe” drought on record, with producers expecting to see a 50% drop in olive oil production due to the drought, Olive Oil Times wrote.
In Italy, the agriculture minister warned that a third of the country’s agricultural production was at risk of failing, with conditions in the southern regions of Puglia, Calabria and Sicily expected to result in olive oil production dropping by a third.
Ukraine exports 1.5M tonnes of products
A total of 61 cargo ships carrying around 1.5M tonnes of agricultural exports have so far left Ukraine following a United Nations (UN)-brokered deal to unblock the country's sea ports, Reuters reported the Ukrainian infrastructure ministry as saying.
Ukrainian grain traders union UGA said that corn accounted for 62% of the exports, wheat 17% and barley for 6%. Ukraine had also exported rapeseed, sunflowerseed, soyabean and other commodities, the 30 August report added.
Grain exports from Ukraine fell following Russia’s invasion of the country on 24 February and ports blockade.
Three Black Sea ports were reopened under the UN deal signed on 22 July, with the ministry saying these ports could load 100-150 cargo ships per month.
Agriculture Minister Mykola Solsky said the country's agricultural exports could rise to 6-6.5M tonnes in October, double the volume in July.
In a separate statement reported by Reuters on 23 August, the agriculture ministry said exports of key Ukrainian agricultural commodities had almost halved since Russia's invasion. Exports between 24 February and 15 August dropped to 10M tonnes from around 19.5M tonnes in the same period last year, according to the ministry data.
Ukraine exported 3.8M tonnes of corn, 1.4M tonnes of sunflowerseeds, almost 1M tonnes of sunflower oil and around 640,000 tonnes of wheat during the period, according to the data.
This year’s grain harvest in Ukraine was forecast to drop to around 50M tonnes from last year’s record 86M tonnes, Reuters said on 23 August.
Meanwhile, APK-Inform wrote that Ukraine, the world’s largest sunflower oil producer and exporter, was likely to reduce its sunflowerseed harvest to no more than 10.7M tonnes this year compared to 16.6M last year.
Sunflower oil production was forecast between 3.5M-5M tonnes in 2022/23, compared with an expected 4.97M for 2021/22. Exports were projected at 3.1M-4.69M tonnes, depending on production and logistics impacted by the war.
Ukraine accounts for 16% of the world’s corn supplies and 42% of sunflower oil, according to UN data.
IN BRIEF
BRAZIL: US renderer and renewable diesel producer Darling Ingredients announced on 1 August that it had completed its US$542.6M acquisition of Brazil’s largest independent rendering company FASA Group.
As part of the transaction, Darling Ingredients has acquired 14 rendering plants with a total processing capacity of 1.3M tonnes/ year, with an additional two plants under construction.
Darling Ingredients operates 250 plants in 17 countries and repurposes nearly 15% of the world’s meat industry waste streams into value-added products, such as renewable diesel, fertiliser and pet food.
BASF cuts fertiliser production
German chemical giant BASF announced it would be reducing its production of ammonia for fertilisers in response to surging gas prices, AgriCensus reported on 27 July.
Ammonia is used to produce nitrate fertilisers such as ammonium nitrate (AN).
“We are reducing production at facilities that require large volumes of natural gas, such as ammonia plants,” BASF CEO Martin Brudermüller said during a media call on 27 July following the company’s second quarter results.
The higher energy costs would be passed on to consumers and farmers could expect a sharp increase in fertiliser costs next year, he added.
According to BASF, the gas bill for its European production sites during the second quarter of 2022 has increased by around €8M (US$8.17M) compared to the same period last year.
BASF’s news follows an August statement from leading Norwegian fertiliser producer Yara International that it was further reducing production at several plants, cutting output to 1.3M tonnes/year of ammonia and 1,700 tonnes/year of finished fertiliser, AgriCensus wrote.
Against this backdrop, the European Commission (EC) has proposed dropping tariffs on two key ingredients used to manufacture nitrogen fertilisers in a bid to reduce production costs for farmers, Olive Oil Times reported on 25 July.
According to market research firm Chemanalyst, the average price of ammonia has risen steadily over the past few years, increasing from approximately US$215/tonne in September 2020 to US$1,200/tonne by the end of March this year. Urea prices also rose in the same period, although less dramatically.
The dramatic price increases were due to several factors including Russia’s invasion of Ukraine, the closure of Chinese ports in response to outbreaks of COVID-19 outbreaks, inflation and rising natural gas prices, Olive Oil Times reported Chemanalyst as saying. The war in Ukraine had severely reduced the country’s production of ammonia and urea while the EU had also imposed retaliatory sanctions on producers in Belarus and Russia.
AAK invests in lab-grown fats and oils start-up
Plant-based oils company AAK has invested in Swedish foodtech start-up firm Green-On, which produces lab-grown fats and oils.
The customised saturated fats are used in products such as baked foods, cheese, chocolate, ice cream, shortening and cooking oils.
“There are today – besides palm oil – very few plantbased oils with which we can create the functionality of solid, high-melting fats which are used in, for example, plant-based meat, bakery and confectionery applications,” AAK chief technology officer Karsten Nielsen said on 15
Green-On says growing fats in labs reduces arable land and water use Photo: Adobe Stock
July. “This technology provides the exact part of the fat that is needed to create the functionalities of future food production and with a much lower environmental impact.”
Green-On chemically synthesises molecules such as fatty acids or triglycerides, using sustainably-sourced electricity, a minimum amount of water, and carbon dioxide from the air or from third-party industrial emissions.
The company said this bypassed traditional agricultural production, decreasing the use of fresh water, nitrogen, phosphorous and large areas of arable land.
As part of the investment, AAK said it would provide Green-On with oils and fats knowledge and facilities to support and further develop the company’s work.
The FAO Vegetable Oil Price Index averaged 163.3 points in August, down 5.5 points (3.3%) month-on-month and marking an 11-month low, the Food and Agriculture Organization of the United Nations (FAO) reported on 2 September.
The August index value was slightly below its year-earlier level. "The continued decline of the index was driven by lower world prices of palm, sunflower and rapeseed oils, which more than offset higher soyabean oil quotations," the FAO said. "International palm oil prices fell for the fifth consecutive month in August, driven by increasing export availabilities from Indonesia, mainly thanks to lower export taxes, as well as seasonally rising outputs in Southeast Asia. In the meantime, world sunflower oil values declined on lingering subdued global import demand that coincided with the gradual resumption of shipments from Ukraine’s seaports," the FAO added. "International quotations for rapeseed oil also dropped in August due to ample supply prospects for the 2022/23 season."
In contrast, world soyabean oil prices rebounded only moderately, mainly due to concerns over the impact of unfavourable weather conditions on US soya production.
NEWS
Indonesian palm oil exports set to rise
The United States Department of Agriculture (USDA) is forecasti ng that Indonesia's palm oil exports in 2022/23 will reach 29.5M tonnes, an increase of 4M tonnes compared to the previous year due to expected demand recovery from major markets such as India and China.
Indonesia’s 2022/23 palm oil producti on forecast remained unchanged at 46M tonnes, the report said, while the USDA had reduced its 2021/22 producti on esti mate slightly to 45.3M tonnes due to a reducti on of processed palm fruit.
Palm oil consumpti on in 2022/23 is esti mated at 16.9M tonnes, an increase of 3% compared to the previous year due to higher demand from the biodiesel industry and the food sector, according to the USDA’s 4 August Foreign Agricultural Service (FAS) Global Agricultural Informati on Network (GAIN) report.
The USDA updated its esti mates for both 2021/22 and 2022/23 palm oil use in the biodiesel industry due to an expected slight increase in biodiesel producti on for export markets and fuel use in the transportati on sector.
Indonesia’s biodiesel mandate programme conti nued to be the main driver, with a 30% blending rate remaining in place, the report said.
The government’s plan to raise the biodiesel blending mandate to 40% (B40) had entered the road test phase in July and was expected to be implemented in 2025, the report said.
In the food sector, the USDA forecast palm oil use in Indonesia would rise by 4% to 6.6M tonnes in 2022/23 from 6.4M tonnes the previous year, in line with populati on growth and improved economic performance.
World harvest of rapeseed to hit record high
Global rapeseed producti on in 2022/23 is forecast to reach a record high globally, with Russia and Australia expected to see larger harvests, according to United States Department of Agriculture (USDA) data reported by Germany’s Union for the Promoti on of Oil and Protein Plants (UFOP).
The USDA expected world rapeseed output to rise to a new record level of 82.5M tonnes, up 14% compared to 2021/22, the report said.
Russia’s rapeseed output was expected to reach a record 3.9M tonnes, mainly due to an expansion in area, UFOP said. The Australian rapeseed harvest was expected to be around 700,000 tonnes larger than previously expected due to favourable growing conditi ons, with 6.1M tonnes now forecast. In the EU-27, the rapeseed harvest is projected to reach around 18M tonnes.
With global consumpti on expected to total 79.2M tonnes – 5.1M tonnes more compared to the previous season – there would be a 3.3M tonne surplus for the fi rst ti me in three years, the report said.
For Russia and China, the USDA said it expected higher demand than previously forecast.
Global 2022/23 ending stocks are likely to increase signifi cantly due to higher producti on to total 6.8M tonnes, 47.5% higher compared to the previous year's fi gure, and the largest ending stocks in three years, the USDA said.
IN BRIEF
BRAZIL: The country's grain and oilseed crop harvest is forecast to rise in 2022/23 to 308M tonnes, with increased corn, rice and soyabean production. according to the National Supply Company (Conab)'s 24 August Agricultural Perspectives report.
The increase compared with 2021/22's estimated total of 272M tonnes, the report said.
“Despite an increase in production costs, the crops still have good liquidity and profitability for the Brazilian producer,” Conab president Guilherme Ribeiro was quoted by World Grain on 25 August as saying.
For soyabeans, Conab forecasts a record production of 150.36M tonnes for the coming season.
“Prices should remain attractive, reflecting a growth trend of 3.54% in area for the soyabean crop, which could reach 42.4M ha,” Conab said.
“The productivity of the 2022/23 cycle should show recovery in relation to the current crop after the climatic problems registered in the southern states of the country and in part of Mato Grosso do Sul. "With the expected improvement in productivity, Conab estimates that greater availability should provide exports of around 92M tonnes, an increase of 22.2% compared to the 2021/22 harvest, a record for the crop.”
Wider foreign access to China commodity markets
China will expand access to key agricultural futures to foreign investors, three major commodity exchanges announced on 2 September.
The Dalian Commodity Exchange (DCE), Zhengzhou Commodity Exchange (ZCE) and Shanghai Futures Exchange (SHFE) all released notices of the move on their websites separately but simultaneously on Friday, AgriCensus reported on the same day. "Starting from today, Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors can participate in the trading of the following commodity futures and options contracts," the statements said, listing a range of agriculture futures including futures and options for No. 1 soyabean, No. 2 soyabean, soyabean meal, soyabean oil, RBD olein and iron ore on the DCE. Within these products, RBD olein had been open to international investors since the end of 2020, AgriCensus said.
On the ZCE, overseas investors would be allowed to trade in rapeseed oil, white sugar, methanol and purified terephthalic acid (PTA) futures and options, and polyester staple fibre futures. However, rapeseed, rape meal and wheat would still not open to international investors.
The SHFE would allow overseas trading in various metal futures and options.
AgriCensus said China was increasing efforts to improve transparency and accessibility to its domestic commodity futures markets, while also promoting its influence in the international financial market. However, trade sources said larger international firms and experienced traders had already been active in these markets for a while through local entities.
Wilmar posts record net profits over $1bn
Photo: Adobe Stock
Leading Asian agribusiness Wilmar International announced record net profits of US$1.165bn for the first half of this year.
Revenue for the Singapore-based company in first half 2022 increased by 22% to US$36.13bn from US$29.53bn in the same period last year, in line with higher commodity prices, the company said on 4 August.
The company’s performance was supported by improved sales in its Food Products and Feed and Industrial Product segment – particularly in oilseeds and grains – helped by the recovery of crushing margins and increased soyabean crushing volumes.
However, total sales volume fell by 5% to 24.8M tonnes, mainly due to lower sales volumes of tropical oils and sugar.
Looking ahead, the company said it was optimistic that its performance for the rest of the year would be “satisfactory, with recent corrections in commodity prices hopefully restoring some of the demand destroyed by high prices and improved margins in its downstream business."
ADM reports strong profits as grain supplies stay tight
Global agribusiness giant Archer Daniels Midland (ADM) expects strong profits this year, with robust demand for crops worldwide following Russia’s invasion of Ukraine on 24 February, Reuters reports.
Announcing its second quarter results on 26 July, ADM said its core Ag Services & Oilseeds unit had delivered “substantially higher” year-on-year results, with an adjusted operating profit of US$1.12bn, almost double the previous year’s total of US$570M.
North America had a “solid performance” as export volumes remained strong in a good demand environment.
“South American results were higher, based on stronger origination volumes and better margins driven by strong global grain demand,” the company said in its quarterly financial statement.
The crushing business delivered a yearon-year surge in operating profit from US$150M to US$468M.
“Strong soyabean crush margins drove improved performance in all three regions, as meal and oil demand remained robust,” the company said.
The company said it expected strong third-quarter results and very good earnings in the second half of 2022.
