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Demand growth for both salmon and shrimp is still uncertain in 2H 2024 although there is a silver lining for both markets as western economies are recovering. While biological challenges persist across salmon and shrimp farming, feed costs should come down as fish meal supply recovers.
Although supply is on the rise, the salmon market continues to be constrained. Prices are anticipated to follow seasonal trends, yet they are expected to stay elevated throughout the second half of 2024. Shrimp prices are unlikely to experience further gains during this period due to Chinese net import demand concerns. Meanwhile, fish meal prices are expected to experience a slight decline, influenced by the prospects of a more abundant supply and the continuation of low soymeal prices. Persistent macroeconomic challenges in China are poised to soften import demand in 2H 2024. Conversely, demand in Europe and the US is on an upward trajectory, albeit from a subdued baseline, with a gradual recovery anticipated throughout the period. Additionally, robust demand for fish meal is forecasted, as industry players aim to restock their diminishing inventories following a phase of constrained supply.
For the latter half of 2024, fish meal supply is anticipated to significantly improve, bolstered by the cooling effects of La Niña in the Pacific. In Norway, the severity of biological challenges in salmon farming is expected to diminish with the arrival of summer, although sustainable resolutions remain to be found. Additionally, shrimp production is set to increase, fueled by contributions from Ecuador, India, and Vietnam, even in the face of persistently low prices.
The USDA on July 12 also forecast durum wheat production in the United States in 2024 at 89.288 million bushels, up 29.959 million bushels, or 50%, from 59.329 million bushels in 2023. The durum crop was forecast to be the largest since 103.914 million bushels in 2016 and the second largest since 2010. The recent five-year average durum outturn was around 57 million bushels. The North Dakota durum crop was forecast at 53.36 million bushels, which would be the state’s largest outturn since 58.118 million bushels in 2016 and the second-largest crop since 2010.
In June, Brazil exported 3.6m bags of coffee, a 36% increase from June 2023 despite a 19% decrease from the previous month. This led to a record of 47.3m bags exported in the 2023/24 crop year (July-June), a 33% increase from the previous cycle.
- During 2023/24, Brazil’s exports of arabica coffee saw a rise of 17% from the previous cycle, amounting to 35.4m bags. Meanwhile, canephora coffee (conilon and robusta) exports surged by 461%, totaling 8.2m bags, due to supply constraints in Vietnam and Indonesia.
- According to the Cecafé report, Brazil still faces intense logistical challenges, with issues overseas due to ongoing geopolitical conflicts, and domestically, due to the saturation of the main Brazilian port, in Santos (SP).
- The barter ratio improved through July 2024, requiring 1.7 coffee bags (60 kg) to purchase one metric ton of fertilizer (blend 20-05-20). Despite slightly higher fertilizer prices, the sharp increase in coffee prices has significantly favored the barter ratio, marking the lowest barter ratio of the past decade. For the coming weeks, urea is projected to continue its price appreciation trend, while potash may face pressures.
- Coffee prices remained high in Brazil. In June, arabica was BRL 1,349/bag, a 45% YOY increase, and conilon was BRL 1,214/bag, a 72% YOY increase. Coffee prices continued to rise in July.
- Concerns about the supply of robusta coffee, particularly in Vietnam, global logistical bottlenecks due to ongoing conflicts in the Red Sea, and a potential reduction in the 2024/25 Brazilian crop have all contributed to market volatility. Furthermore, non-commercial funds maintain large net long positions in the coffee market, contributing to the volatility.
- Dry weather in June favored harvesting activities in major coffee regions for both arabica and conilon/robusta types.
- As we enter the second half of July, with reports showing no significant improvement in yields (outturn) or screen size (small grains), it seems appropriate to revise our crop estimate downward. Following these adjustments, the revised estimate for the 2024/25 Brazilian crop stands at 44.1m bags for arabica (down from 46.5m) and 23m bags for conilon (down from 23.3m). This totals 67.1m bags, compared to the previous estimate of 69.8m bags.
An ambitious new 3-year project, supported by the Bill & Melinda Gates Foundation, aims to improve regulation to enhance access to quality veterinary products for millions of livestock farmers in sub-Saharan Africa, according to a news release from the Global Alliance for Livestock Veterinary Medicines (GALVmed).Africa has an estimated 800 million livestock keepers. The livestock sector contributes between 30 to 50% of agricultural GDP and supports the food security and livelihoods of about one-third of Africa’s population, or about 350 million people.
The high prevalence of livestock diseases is a major constraint to increasing farmers’ incomes and enhancing agricultural development, food security and resilience. Availability and accessibility of high-quality veterinary medicines are considered key to combating animal diseases and helping to curb economic losses. Registering veterinary medicines in Africa through the currently established processes is cumbersome and time consuming. Improving the registration system for veterinary medicines across nations and harmonising the requirements will simplify the process, save time, and resources and help to ensure the quality, safety, and efficacy of veterinary products.
Currently, there is no overarching framework or governance structure for cooperation between agencies responsible for veterinary medicines in Africa. The project seeks to support the development of a long-term governance structure to improve access to high quality veterinary medicines through better regulation in a coordinated manner. ‘Better Regulation’ is a multi-partner project implemented by Global Alliance for Livestock Veterinary Medicines (GALVmed), the World Organisation for Animal Health (WOAH), the UK Veterinary Medicines Directorate (UK-VMD) and the East African Community (EAC), with the support of the Bill & Melinda Gates Foundation.
AGCO and its subsidiary AGCO Power, has announced the opening of the company’s first clean energy laboratory. The lab is part of a 70-million-euro investment (approximately $77 million) in the Linnavuori plant in Nokia, and will support development and testing of innovative, sustainable battery and powertrain solutions for farm machinery. The Linnavuori team of scientists and engineers are developing next-generation engines powered by low- or zero-carbon electricity and alternative fuels, such as hydrogen and methanol, that will help minimize global agricultural emissions. While the number of hybrid and electric vehicles on world roadways has grown exponentially in the 21st century, adoption of alternative power for off-road/farm machinery has lagged. The capacity of existing battery technologies restricts the size of fully electric farm machinery, but the AGCO Power lab is working to change that paradigm.
El Niño weather conditions have now fortunately subsided, and we are now in El Niño Southern Oscillation (ENSO)-neutral conditions. Better still, La Niña conditions (that are usually associated with above average rainfall for Southern Africa) are forecast to develop during August-October 2024 at 70% chance and persist into the Southern Hemisphere’s 2024/25 summer at 79% chance during November-January. This bodes well for the 2024/25 summer crop production season of South Africa, which commences in October 2024. According to the South African Agricultural Machinery Association (SAAMA), in June 2024 South Africa’s agricultural machinery sales receded following a marginal increase in May 2024 that was attributed to the NAMPO harvest day. SAAMA noted that in June 2024, 487 units of tractors were sold, which shows a decrease of 48% y/y, while combine harvester sales amounted to 21 units, showing a strong decline of 67% y/y. This decline was inevitable, following a period of robust agricultural machinery sales. Fortunately, due to the weather forecast and historical trends in the industry, there is an expectation that agricultural machinery sales will recover towards the end of this year.
CommoditiesJuly 22
