Raw Sugar Surges on Brazil Fires

Plus: Ukraine limits wheat exports, and Big Ag faces scrutiny

Grains & Oilseeds

Ukraine caps wheat exports for 2024-25

Ukraine will limit wheat exports to 16.2 million metric tons for the 2024-25 season, a move aimed at ensuring domestic supply following a summer heatwave that impacted yields. This agreement between the Ukrainian government and agricultural traders marks a significant decrease from the 18.3 million tons exported in the previous year, reflecting concerns over the potential impact of reduced harvests. The export cap could be revised in January 2025 based on market conditions and production figures.

European summer crops hit hard by heat

Exceptionally high temperatures across southern, southern-central, and eastern Europe have negatively impacted summer crop yields, according to the latest JRC MARS Bulletin. Grain maize and sunflowers have been particularly affected, especially in regions like Hungary, Romania, Bulgaria, and Greece, where hot conditions were coupled with limited water availability. These conditions have led to a downward revision of yield forecasts for these crucial summer crops.

Softs

Raw sugar prices soar as Brazil fires escalate

Raw sugar futures continued their upward climb this week, driven by escalating wildfires in Brazil and concerns over the country's worst drought in 40 years. These factors have prompted analysts to significantly increase global deficit forecasts for the 2024/25 season. The most actively traded sugar contract in New York rose by as much as 2% on Tuesday, adding to the previous week's gains of over 5%. Fires and drought conditions have severely impacted sugarcane quality and production in Brazil's key Center-South region. Bloomberg reported a projection of a global sugar deficit of 600,000 tons — double the previous estimate from August.

Cotton prices weakened by ample global supplies

Cotton prices experienced a downturn over the past month, driven by expectations of a substantial global surplus. The USDA's latest report projects record-high global cotton stocks for the 2024/25 season, excluding the anomalous years impacted by COVID-19 and periods of exceptional Chinese reserves. While demand may eventually improve as economies recover, the current abundance of supply, particularly from major exporters like Brazil and Australia, is likely to keep downward pressure on prices in the near term.

Biofuel

US biofuel production capacity expands, driven by ethanol

U.S. biofuel production capacity reached a record high in June 2024, hitting 25.12 billion gallons, according to the EIA. This growth was primarily attributed to a 0.39% increase in fuel ethanol production capacity, reaching 18.203 billion gallons. This continued expansion in the ethanol sector underscores the increasing demand for cleaner-burning transportation fuels. Biodiesel capacity remained stable at 2.022 billion gallons.

Agribusiness & Finance

Big Ag's lobbying power under scrutiny

The agricultural industry's powerful lobbying efforts are facing increased scrutiny as concerns mount over the sector's environmental impact and slow pace of decarbonization, according to a recent report from the Financial Times. Critics argue that agricultural lobbying has secured exemptions from environmental regulations, generous subsidies, and favorable tax breaks, hindering the transition to more sustainable practices. In the US, agricultural interests spent $177 million on lobbying efforts last year, surpassing even the oil and gas industry's spending. In the EU, these groups spend between €9.35 and €11.54 million annually lobbying Brussels alone.

One key issue is the distribution of agricultural subsidies. In the US, 27% of subsidies between 1995 and 2023 went to the wealthiest 1% of recipients, highlighting concerns about fairness and environmental effectiveness.

Cargill opens first blending facility in Southeast Asia

Cargill has expanded its footprint in Southeast Asia with the inauguration of its first blending facility in Indonesia. This move aims to capitalize on the growing demand for multi-sensorial sugar confectionery products in the region. The facility, equipped to produce innovative blends of starches, sweeteners, and texturizers, will enable Cargill to cater to the specific preferences of Asian consumers, who, according to Cargill’s research, highly prioritize texture and seek diversity in their confectionery choices.

(Sources: Reuters, European Commission, Bloomberg, Cotton Incorporated, USDA, Financial Times, Cargill)

You received this message because you are subscribed to the newsletter Agricultural Commodities Focus. If a friend forwarded you this message, sign up at the button below get it in your inbox.