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African swine fever, which harms pigs but not humans, has swept across the country, the world’s largest pork producer. And the government knows about only some of the cases.
Retail Prices for Boneless hams are the highest since 2015. China has culled more than 1 million hogs due to swine fever
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Mexico’s central bank raised its key lending rate by a quarter point to 8 percent in November 2018, warning of “important medium- and long-term risks that could affect the country’s macroeconomic conditions, capacity for growth and price formation in the economy.” Christian Lawrence, Rabobank’s Senior Markets Strategist, told the Financial Times: “Our base case is still that 8 per cent is likely to mark the peak of rates for this cycle but the risk remains skewed towards further tightening.”
U.S. wine imports rose 9 percent in value but declined 4 percent in volume during the first six months of 2018, compared with the same period a year earlier, reported Wine Enthusiast Magazine, citing Rabobank’s Wine Q3 report. “There is a clear trend in the U.S. of shifting to higher-quality imports,” said Stephen Rannekleiv, Global Beverage Strategist at Rabobank. “The imported wine market is just like the rest of the U.S. wine market—consumers seeking more premium brands.”
Factors contributing to the bearish oil market in 2018 included record U.S. output and waivers given to importers of Iranian crude, including China. Investors waited to hear whether OPEC would decide to trim production at its November meeting. “The supply side didn’t necessarily play out as they had expected, especially given the waivers, and at the same time, we were building stock and we still are,” Rabobank Energy Strategist Ryan Fitzmaurice told Bloomberg.
Global Beverage Strategist Stephen Rannekleiv discussed Disney’s decision to serve alcoholic beverages at its U.S. theme parks in Forbes. “Disney’s decision to add wine reflects the evolving view that consumes have about consumption of alcohol in general—and wine in particular,” he said. “Any stigmas around moderate consumption of alcohol are quickly fading particularly in California, the heart of the U.S. wine industry.”
Rabobank’s Senior Animal Protein Analyst Christine McCracken spoke with Successful Farming about challenges currently facing pork producers, such as the spread of African Swine Fever and the tightening labor market. “We [the U.S.] are so heavily dependent now on exports,” she said. “It all comes down to China. They’re likely to have massive losses, and the question is how do they backfill those losses?”
Premiums paid for growing consignment crops might incentivize farmers to focus on quality rather than quantity, said Senior Grains and Oilseeds Analyst Stephen Nicholson in an interview with Bloomberg. This is already becoming the new normal, he added.
Senior Grains and Oilseeds Analyst Stephen Nicholson evaluates challenges ahead for soybean farmers in light of trade uncertainties, large yields and excessive stocks. “Farmers with costs in line will fare okay, but those who don’t have costs under control will really struggle,” he said. Profitable price opportunities will be short, he added. “If you see an opportunity, you have to take advantage of it.”
Worker shortages have forced many U.S. meat and poultry processors to boost wages and benefits packages. Despite these efforts to attract and retain workers, companies may still face labor challenges as they look to ramp up production, said Senior Animal Protein Analyst Christine McCracken in Bloomberg
Many large beverage companies view coffee as a white space — a place to broaden and strengthen their portfolio, said Senior Beverage Analyst Jim Watson in the Financial Times. He predicted that heightened M&A activity in the coffee sector would continue in 2019, due in part to consumers’ growing preference for coffee over soda as a refreshment beverage.
Senior Beverage Analyst Jim Watson discussed opportunities for craft, premium and light lagers to grab market share from mainstream brewers, such as Budweiser, Miller and Coors. Those brands are supported by heavy advertising, a massive distributor push and a little bit of legacy, said Watson. “But I don’t think that their market share reflects consumer interest in the brands,” he added.
Chinese tariffs on American fruit and nut imports will hurt cherry and grape shipments the most, said Senior Analysts David Magana and Roland Fumasi in a report cited by Bloomberg. The U.S. exports about $13 billion of fruit and tree nuts annually, 15 percent of which goes to China and Hong Kong, they wrote. U.S. exports of cherries and grapes were projected to fall more than 20 percent as a result of the new tariffs.
Rabobank’s Tom Bailey and Nina Meijers previewed the pitch companies competing at FoodBytes! NYC in October and discussed trends in food innovation. “There’s a lot of innovation around alternative proteins and new product design and development. But I would say we’d love to see more downstream dairy products that are also going head-to-head with some of these alterative protein products,” said Bailey.
Senior Markets Strategist Christian Lawrence offered his take on the new USMCA agreement in a Bloomberg story. “It’s clearly a positive development, but we’re basically where we were at to begin with,” he said. “The market was still running with the base case that an agreement would be reached…the real risk was going from a trilateral agreement to no agreement.”
Multinational leaders including Nestlé, GrainCorp and Tate & Lyle team up with top emerging growth companies from around the world to fuel groundbreaking transformation in Food and Agriculture
Senior Animal Protein Analyst Christine McCracken told USA Today that pork prices would likely not change as a result of Hurricane Florence. She said the main issue would be the logistics of getting the hogs to the processing plants due to freight routes downed by flood waters. “Meat companies will struggle. They will have lower sales for some period of time,” she said.
Danish brewery Carlsberg replaced the plastic wrapping used to hold its six-packs together with glue. The new packaging, dubbed the “Snap Pack,” is a novel solution to an age-old problem, said Senior Beverage Strategist Stephen Rannekleiv in Forbes. “Consumers are increasingly looking for packaging solutions that use less plastic. The glue pack shows what can be done when the industry starts to push outside its comfort zone.”
In the first half of 2018 Rabobank posted a net profit of EUR 1,698 million, 12 percent more than in the first half of 2017. This result was underpinned by favorable economic conditions, which contributed to a net release in impairment charges.
Senior Market Strategist Christian Lawrence spoke with CBC News about the longest running U.S. bull market. “We’re on the verge of the longest expansion the U.S. has ever seen,” he said. Analysts and investors questioned whether the market boom could last much longer, and Lawrence offered his take, saying that the market would “run out of steam sooner rather than later.”
Senior Beverage Analyst Jim Watson joined Bloomberg Radio host Lisa Abramowicz to discuss PepsiCo’s acquisition of SodaStream for $3.2 billion in August. The deal not only allowed Pepsi to expand its portfolio of healthier, low-calorie beverage options, but also gave the company access to the at-home segment, he said.
In a recent interview with Beverage Daily, Senior Beverage Analyst Francois Sonneville explained why consumers in all major beer drinking countries are choosing foreign imports. He pointed to global positioning and consumers’ growing preference for premium products as two of the reasons behind this trend.
Trade uncertainty caused significant issues – including oversupply and dropping prices – for North American pork suppliers in the summer of 2018. Senior Animal Protein Analyst Christine McCracken explained how trade uncertainties have affected U.S. producers in this Financial Post story.
In CoffeeTalk Magazine’s August cover story, Senior Beverage Analyst Jim Watson explained how consumer trends – like the demand for traceable, sustainable goods – have driven significant changes in the coffee industry. In 10 years, most coffee will be served straight from bean to cup, leaving pods and capsules as a thing of the past, he said.
The U.S. wine market is now the largest in the world, but retailers are still struggling to compete on ecommerce channels, reported Beverage Daily, citing Rabobank’s Wine Quarterly Q3 report and an earlier report on alcohol ecommerce. “Changes in technology, business models and market structure are disrupting the market and creating new sets of winners and losers among wholesalers, retailers and suppliers,” Senior Beverage Analyst Stephen Rannkeleiv wrote in the Wine Quarterly. “Responding quickly to these changes will determine who survives, who thrives and who fades away.”
Today’s beef is healthier than ever, reports Food Dive. Despite consumers’ concerns about their health and the environment, production and consumption of beef continues to rise. “Eating quality and wholesomeness of beef is the best it’s ever been,” Senior Animal Protein Analyst Don Close told Food Dive. “The industry collectively got together and came to a conclusion that we’re going to have to make changes and be more responsive to product quality and consumer input,” he said. “Those changes led to better genetic selection, cattle that gain quicker and use less feed per pound gain, leading to higher production expectations.”
Global retail sales of dairy alternatives have risen 8 percent annually for the past 10 years, and the current market for milk alternatives is valued at $15.6 billion, reports Food Business News. “Dairy alternatives are on the rise as consumers are increasingly going dairy-free, particularly when it comes to fluid milk used on things like cereal or in coffees,” said Senior Analyst Tom Bailey. “These products have competed in the dairy space for decades, but competition has intensified as dairy alternatives broaden in types, styles and categories of product.”
Senior Animal Protein Analyst Christine McCracken discussed the U.S. “Meat Glut” on CNBC’s Nightly Business Report. If frozen stockpiles of U.S. meat continue to grow, we could see a significant drop in meat prices, she said. Price drops could hurt farmers, but consumers could benefit from lower-cost meats this holiday season.
A record level of beef, pork, poultry and turkey began stockpiling in U.S. facilities in July, reported the Wall Street Journal. U.S. production of meat far outpaces consumer demand, leaving the U.S. increasingly reliant on exports. But Mexico and China—two of the largest foreign buyers of U.S. meat— both implemented retaliatory tariffs on U.S. pork products. The combination of trade risk and expanding meat supplies could result in “one of the biggest corrections we’ve seen in the industry in several years,” said Senior Animal Protein Analyst Christine McCracken.
Family-owned Italian coffee maker Illy Coffee is one of the biggest independent roasters still in the business. Most other independent chains and smaller brands have been consolidated among the three major coffee industry players – Nestle, JAB and Starbucks Corp. – reports Bloomberg. “It’s tougher and tougher to compete without growing. As the market consolidates around you, staying the size of an Illy or even a Lavazza becomes more difficult,” Senior Beverage Analyst Jim Watson told Bloomberg. “As they all get bigger, and even as Lavazza gets bigger, it definitely puts Illy’s place at risk.”
Tariffs in Mexico drove down U.S. milk prices in early 2018, and new tariffs imposed by China on cheese and whey further complicated the market outlook for U.S. cheese makers. “We are going to see more significant impacts to inventory,” said Senior Dairy Analyst Tom Bailey to the Wall Street Journal. “We will struggle to move cheese products into other markets.”
The Mexican peso surged in early July, boosted in part by newly elected Mexican president Andres Manuel Lopez Obrador’s announcement that he would not ramp up spending in the year ahead. Concerns about an increase in government spending could come back to hit the peso later this year when Lopez Obrador presents his first budget in December, Senior Market Strategist Christian Lawrence told Reuters.
If alcohol sales continue to underperform online and if online grocery sales grow as fast as analysts expect, then supermarkets could lose $3.9 billion in alcohol sales per year by 2022, said Beverage Analyst Bourcard Nesin in a June RaboResearch report. In this Progressive Grocer article, he offers four strategies to help retailers increase online alcohol sales.
Burgers were cheaper just in time for the Fourth of July in 2018. Because of a winter drought that dried out pastures, ranchers were forced to sell their cattle early. Higher supply drove down beef prices mid-summer, but supplies could tighten up down the road, Senior Animal Protein Analyst Don Close told Bloomberg.
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Consumer perceptions of dairy-free have shifted. While dairy alternatives may appear healthier than milk and dairy products, there is no evidence to prove that, Senior Dairy Analyst Tom Bailey told CNBC. Rather, “the makers of dairy alternatives generally appear to be doing a better job of connecting emotionally with consumers who favor more dairy-free options to meet their own perceptions about health and lifestyle,” he said.