Food and Agribusiness Talking Points 22-02-2016

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China makes largest foreign purchase with $43billion bid for Swiss Syngenta

State-owned ChemChina agreed a $43billion bid for Swiss seeds and pesticides group Syngenta on Wednesday. This move comes as a set-back to US firm Monsanto which failed to buy Syngenta last year. The purchase of Syngenta should precede a major improvement of China’s potential output and is part of China’s attempt to modernise agriculture over the next five years. This is part of the overall goal that China has to secure food supply for its population. Last year ChemChina bought Italian tyre maker Pirelli and said last month it would buy German industrial machinery maker KraussMaffei Group for $1billion. Click here for full article.


Link between food and crude oil prices weakens

The Bank on New Zealand are saying that there has been a strong relationship between the price of food and crude oil up until last year. Growing use of crops to make biofuel, and the importance of using oil and its kin as an input cost in food production are all reasons claimed by the BNZ to have been what kept the prices in tandem. The price link has since broken down with food prices greatly outperforming oil. While prices are falling for both, food prices haven’t fallen as far as oil. Tregg Cronin at US grains broker Halo Commodity Company said “Until energy prices find a bottom it’s difficult to see our space mounting a sustained recovery”. Click here for full article.


China’s crop imports predicted to dramatically diminish in coming years

Crop import prospects from China have decreased recently due to their economic downturn. US farm officials and the US Department of Agriculture (USDA) brought the issue to light when they forecasted imminent reductions in Chinese imports of Barley, Corn, Cotton, Sorghum, Soybeans and Wheat between the years 2014 and 2025. The US Department of Agriculture foresaw a “particularly notable slowdown” in Chinese economic growth, “from historical highs near 10% to an average of 5.3% per year over the next decade. Sorghum estimates were slashed by 79% is 1.2m tonnes while corn imports are predicted to fall by 4.1m tonnes. The USDA stated also that “China’s demand for commodities and other intermediate inputs has been a significant source of income” for many exporting nations” and that a slowdown in China’s demand for commodities and other intermediate inputs is likely to negatively affect other developing countries in Asia. Click here for full article.


Global meat demand growth projected to slow in coming ten years

US department of Agriculture is predicting a slower growth rate of meat consumption in the coming ten years due to weak economic outlooks and domestic production will limit import pressure on key markets. Demand for poultry is expected to see biggest increase in consumption (1.8% annually over the next ten years) while pork and beef will have more modest growth (0.8% annually over the next ten years). While South-East Asia, Sub-Saharan Africa and North Africa will see the highest growth rates, almost half of all meat consumption growth will occur in China, India, Brazil and the United States. Click here for full article.