Russia is scrambling to slow down rising food costs within its borders.
Fueled by the combo of pandemic-related uncertainty and a drought-stricken wheat crop, Russia is grasping for anything to bring stability to its domestic food and grain markets.
And last week, the country announced a preemptive wheat export tax increase…on a tax that’s not even in place yet.
A 25 euro per tonne tax that begins February 15th will now double to 50 on March 1st.
Why it matters: Last year Russia shipped 34.4 million tonnes of wheat and was projected to top 40 million tonnes this year, cementing its place as the top wheat exporter globally.
It’s pretty much like the big kid on the playground taking his toys and going home.
Egypt is one of the kids still sitting on the playground, left high and dry. As Russia’s top wheat customer, they are left searching elsewhere for the small grain. Bangladesh is in a similar position, now relying on Ukraine for its gluten fix.
On the home front: U.S. wheat prices have spiked over the winter months. The grain has been trading around $6.75, almost a full dollar higher than in early November.
Where this goes: The Russian export developments are only adding to the fear of tight global grain piles. With tighter supplies, grain buyers are left paying a premium while producers sit in a sweet spot when they have market access.
Corn and soybean data stole the show at Tuesday’s WASDE report reveal.
The commodity cousins duked it out for the top headline as 2020 corn yield projections tanked and soybean stocks were tight.
The rundown: A 3.8-bushel yield drop for corn was the first bomb to drop in the USDA’s report. The department noted that August’s derecho plus a pretty crispy summer knocked yields in the Corn Belt much more than expected. A projection dip this steep between the December and January reports hasn’t been seen in 30+ years.
On the soybean side, 35 million bushels evaporated from ending stocks, making farm economists mull over the word ‘shortage.’ But ultimately, the crop has experienced tighter supply squeezes, even in 2013-2014.
And yes, the markets noticed…
Within minutes of the USDA’s report, soybeans skyrocketed 60 cents and corn shot up to its daily limit.
What else we learned:
- Growth in milk per cow and more dairy cows led to higher ‘20-’21 milk estimates.
- Production estimates for beef ticked down on lower cattle slaughter.
- Heavier pigs couldn’t offset the slowed slaughter rate as estimated supply dropped.
- A 500K-bale decline in Texas took cotton production lower.
The e-commerce meat biz is busy.
Just last week, Canadian meat subscription service truLOCAL, the country’s 14th fastest growing startup, was acquired. And in 2020, U.S.-based peers like ButcherBox and Omaha Steaks saw year-over-year growth ranging from 138% to 300%. Even Beyond Meat, the alt-meat powerhouse, set up its direct-to-consumer shop during the pandemic.
And it’s only the beginning.
While direct-to-consumer companies often snag the headlines, most animal protein sales are still made at the grocery store. But even those transactions are trending online. Before COVID-19, 19% of Americans had purchased groceries online. That number more than doubled to 40% by May.
And beef wants its share of the action.
Sign of the times: The National Cattlemen’s Beef Association signed a partnership with digital shopper marketing platform Chicory to boost beef’s e-profile.
Chicory’s Digital Shopping Aisle serves up recipes and ads to shoppers on the web. From there, consumers are driven to the ‘digital meat case’, where they can plop steak, roast, or ground beef into their digital basket for checkout. A quick pickup at the nearest Kroger, Walmart, or Albertsons is all that’s left to do.
Where this goes: The global pandemic pressured the meat value chain in numerous ways. But by putting the pedal to the metal on e-commerce tools and subscription service systems, the industry is setting itself up for long-term success. Expect to see more in this space sooner rather than later.
Apples are ready for their year in the limelight.
As if healthy-eating resolutions weren’t going to boost early demand for the original superfood, the United Nations gave it another lift by announcing 2021 as the International Year of Fruits and Vegetables.
This comes as apples ended 2020 on a high note.
Refresher: After the initial shock of COVID-19 subsided, grocers doubled down on logistics to maintain their fresh produce offerings. By the end of the year, expected lower supplies for the ‘20-’21 crop had apple prices rising.
In Washington, where 69.5% of U.S. apple production occurs, weather and smaller-bearing varieties sunk volumes 8-10%.
Bottom line: 2021 looks to be another banner year for apples. Even as shoppers frequent grocery retailers less often, trends point to higher volume apple purchases as folks stockpile the shelf life-strong fruit.
It was controversial then. It is controversial now.
In 2019, you likely remember when two arms of the USDA, the Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA), were moved out of Washington, D.C. to Kansas City. The move was largely due to the Trump administration’s policy focuses.
How’d it go? Not great.
The move caused mass resignations, resulting in a loss of staff expertise plus lots of unfinished research projects.
And morale? Well, it’s like playing limbo – it keeps getting lower.
- The Counter reports ERS has funding for 329 positions. Vacancies topped 200 in early 2020.
- In mid-August a spokesperson reported 172 staffers, only 52% of a complete department.
Those who remain at the agency say the move “affects their research every day.”
What’s ahead: Biden’s ag agenda has one hot topic – climate change – that ERS & NIFA are intimately familiar with. So he and his Ag Secretary nominee, Tom Vilsack, have some deciding to do. Do they move the teams back to D.C.? Does Kansas City remain home? Will a hybrid approach be the way? Time will tell.
There’s a fine line between the risk & reward of a promising strawberry season in Florida.
And with the potential of losing millions of dollars of crop, growers are on high alert to cold spells in the Sunshine State like they were the last week of December.
But cold weather can actually produce plump, prime strawberries that are sweet and firm.
The catch: Farmers have to balance the cold weather and their crop care strategies to avoid disaster.
“It can actually freeze the berry, freeze the fruit. The cold will just turn it into Jell-O,” noted Tres McQuaig, a farm manager at Astin Farms.
So what’s a farmer to do? Ice ‘em.
Warm water is pumped over the strawberries, creating a thin layer of ice as the cold air on the berries’ skin meets the hot H²O. Insulation 101.
Zoom out: Florida strawberries are clawing back from a disappointing end to the 2019-2020 season.
In Dover, Florida, Parkesdale Farms was packing 35,000 boxes of berries a day last spring before brokers called off orders headed to shuttering East Coast cities.
But for now, projected demand for strawberries looks solid. And assuming demand doesn’t shrink and the crop can withstand the cold, producers will be in a sweet spot for 2021.