Easy Newz Agriculture Themes to Start 2024
Here are the themes Easy Newz is focused on to start 2024. We wish everyone a safe and prosperous new year.
-Easy Newz Team
China grain imports
South American weather is certainly front and center, but the biggest question mark may be China’s grain import appetite, especially if prices are higher in Q1 2024. China’s import potential in 2024 is massive. Analysts will be talking about soybeans, but grain is the wildcard. China bought much more corn and wheat than production figures would have suggested. Was all of this buying in late 2023 restocking? Food security? Or the beginning of a larger trend?
Who’s not going to process soybeans?
Argentina, Paraguay, and Uruguay will produce 35 million tonnes more soybeans than a year ago. Even with a Brazilian production loss of 25 million tonnes, western hemisphere processing will have too much capacity. Will foreign countries get a pathway for their oil into renewable diesel production? In the short term, Argentina’s tax changes will push more soybeans into the export channel. The US will continue to bring on new capacity in early 2024. Brazil’s increased biodiesel blend will support domestic crush. Is it the USA or Argentina that will need to slow if soybean meal stocks get heavy by Q2 2024?
Will governments face another food versus fuel debate?
SAF (sustainable aviation fuel) is the next big biofuel boom. Airlines worldwide are committing to transition from traditional jet fuel to low-carbon alternatives. This is projected to drive the next big ethanol and biodiesel demand boom. The world’s balance sheets are struggling to rebuild global stockpiles of biofuel feedstocks. The big question is, will governments and their citizens accept higher food prices for airlines and transportation companies to meet their carbon reduction goals?
January 3rd ready to start the new year strong compared with a future photo after another volatile year.
Softs need investment and better weather
Sugar, cocoa, and coffee have extremely tight individual balance sheets and weather risks ahead. All three were top-performing commodities in 2023, and prices remain elevated. Cocoa is struggling with disease issues in West Africa. Sugar has been suffering from underinvestment for years. El Niño is taking a toll on South American coffee crops. Companies and producers need to invest in new trees.
Can China’s hog industry finally find support?
There are two specific issues. The first is high grain prices and poor consumer demand, weighing on prices and production margins. The second is a more significant risk: China is already past peak pork demand. China is the largest per capita pork consumer in the world. Some analysts have suggested China is now past its peak for pork demand. This would imply the sector has more pain to come.
India’s monsoon and export restrictions
India is in an election year, and food security is a top priority. The country has restricted exports of major crops like rice and wheat while cutting tariffs on vegetable oil imports into 2025. The current weather trends remain dry and warm. The risk of another below-average monsoon will have traders’ attention in early 2024.
Supply chain normalization
The last day of 2023 ended with strikes on Houthi boats in the Red Sea as Maersk again suspended its shipping. There needs to be more conversation about the impact of supply chain disruptions on global inflation. The supply chain challenges were both a function of reversing over three decades of globalization and post-pandemic challenges. 2024 will keep the focus on freight vulnerabilities in the world’s most trafficked areas, such as the Panama Canal drought and the Middle East attacks, driving up costs.