Evening Report: Dec. 6, 2021
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AgRural: Drier weather poses risks to crops in southern Brazil... Rainfall was below average in southern Brazil last month and forecasts signal the drier trend will continue at least the first half of this month. The lack of moisture has slowed late planting efforts in Rio Grande do Sul and the soybean crop in those states, along with Mato Grosso do Sul and Sao Paulo is at risk of potential losses due to the dryness, according to AgRural. It says the soybean crop is “progressing really well in the rest of the country.” AgRural expects soybean harvest to begin “around Christmas” in some areas of Mato Grosso.
The firm noted the country’s first corn crop could face potential losses due to hot, dry conditions in Rio Grande do Sul, along with parts of Santa Catarina and Parana.
U.S. announces diplomatic boycott of 2022 Beijing Winter Olympics... The U.S. on Monday announced a diplomatic boycott of the 2022 Beijing Winter Olympics, citing human rights abuses. “The Biden administration will not send any diplomatic or official representation to the Beijing 2022 Winter Olympics and Paralympic Games given the PRC’s (People’s Republic of China) ongoing genocide and crimes against humanity in Xinjiang and other human rights abuses,” White House Press Secretary Jen Psaki said.
Senate Foreign Relations Committee Chairman Robert Menendez, D-N.J., called such a diplomatic boycott “a necessary step to demonstrate our unwavering commitment to human rights in the face of the Chinese government’s unconscionable abuses.” He called on “other allies and partners that share our values to join with the United States in this diplomatic boycott.”
U.S. athletes will still be allowed to compete in the Games. “The athletes on Team USA have our full support. We will be behind them 100% as we cheer them on from home,” Psaki said.
Chinese Foreign Ministry spokesperson Zhao Lijian called the boycott “outright political provocation,” but gave no details on how China might retaliate, only saying Beijing “will take firm countermeasures.”
Consumers willing to pay less at the grocery and more at restaurants for meat... The amount consumers were willing to pay for protein was down in six of the eight categories for the retail sector, but up for all eight categories at restaurants, according to the Meat Demand Monitor conducted by Kansas State University. The only two proteins consumers were willing pay more at the retail level were a plant-based patty and beans and rice.
The survey showed lower market share for beef and pork in November at the retail level. Retail beef market share was down two percentage points to 32% and pork market share was down a point to 21%. Beef market share at restaurants increased a point to 41%, while pork was unchanged at 15%.
Consumer expectations of price increases continued. These consumer expectations and realized prices continue to align with broader discussions around food and non-food inflation.
Around 83% of the consumers say they have either the same, or more-than-normal amounts of meat on-hand, indicating both ongoing demand strength and supply availability.
Brazil eyes $1.17 trillion halal food market... Brazil is keen to increase ag exports to Islamic countries, said Flavio Bettarello, deputy trade secretary. Bettarello said his country is in talks with Indonesia, Lebanon and Morocco to expand access to such markets and sell agricultural products other than corn, beef, chicken and raw sugar.
The Organization of Islamic Cooperation (OIC), which comprises 57 members, imported $190.5 billion of food items including wheat, corn, sugar, rice, milk and dairy products in 2020, according to data compiled by the Arab Brazil Chamber of Commerce. Of that total, Brazil accounted for $14.1 billion. About half of Brazil's exports to OIC countries to go only five nations – Turkey, Iran, Indonesia, Saudi Arabia and Bangladesh.
Brazil will continue to push to access new markets and diversify products sold, and cited the benefits of a recent commercial agreement with Egypt. The move reflects Brazil's desire for a bigger share of the global food trade.
The country is already the world's biggest exporter and producer of halal meats including beef and chicken, which are produced according to Muslim dietary requirements.
Muslims spent an estimated $1.17 trillion to buy food in 2019, according to the widely cited State of the Global Islamic Economy Report. By 2024, Muslims are projected to spend $1.38 trillion to buy food, according to the report.
Canadian National resumes rail movement in flood-hit British Columbia... Canadian National Railway said on Sunday it resumed operations in the crucial Kamloops-to-Vancouver corridor in the flood-hit province of British Columbia. Canada's Trans Mountain pipeline also said it restarted its operations on Sunday, weeks after shutting them down during the record-breaking rainstorm in British Columbia.
Fed waited too long to taper, will it now go to fast to reverse course, including rate hikes?... That seems to be what some traders and markets are suggesting, looking at a Federal Reserve that stuck with its transitory determination on inflation way too long. Just four weeks ago, the Federal Reserve set in motion carefully telegraphed plans to gradually wind down a bond-buying stimulus program by June. Officials are making plans to accelerate the process at their policy meeting next week, ending it by March instead.
The abrupt shift opens the door to the Fed raising interest rates next spring rather than later in the year to curb inflation, marking a significant policy pivot by Chair Jerome Powell, says the Wall Street Journal. With this move, Powell would be focusing the Fed’s efforts more on restraining inflation and less on encouraging employment to return to its pre-pandemic levels. Inflation has surged this year — to 5% in October from a year earlier, according to the Fed’s preferred gauge — amid strong demand for goods and services and supply-chain bottlenecks associated with reopening the economy.
China will encourage listing of leading futures firms; will issue futures law... China will help leading futures companies to speed up their development and encourage qualified firms to be listed, the China Futures Association said, citing an official from the securities regulator. Authorities would support futures companies to widen and diversify their financing channels and allow them to compete with overseas players, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, told an industry conference on Sunday.
Leading futures firms should “make due contributions” to ensure China’s energy and mineral security, Fang said. China’s commodities market had been volatile this year amid the uneven global economic recovery, easing liquidity and speculation. Metal and coal futures, for example, surged to historical highs before plunging after government interventions.
Fang said China is expected to release its first futures law in 2022 after considering it for years, which will help further regulate the derivatives market. He also reiterated China will allow more foreign traders to participate in domestic markets while deepening price influence of existing products such as crude oil and iron ore.
