Supply Lines: Field days in farm country

Supply Lines
Bloomberg

Harvests of America's biggest crops are advancing at the fastest pace in years, replenishing coffers for shippers at a time when few other countries are competing with the U.S. for export demand.

Importers such as China and Mexico have been gobbling up large amounts of U.S. agricultural goods. The deals, coupled with adverse weather in Russia and South America, have boosted prices during the harvest period that typically sees some of the lowest values of the year.

The stronger prices and booming demand could help solidify farmers' support for President Donald Trump ahead of his re-election bid on Nov. 3. While sales are still lagging the pace needed to meet China's trade-deal commitment in January to buy $36.5 billion in U.S. goods this year, buyers in China have bought record amounts in recent months.

Meanwhile, buyers in Brazil — which typically competes with the U.S. for international business — are instead purchasing from the U.S. due to short domestic supplies.

It's a positive turn of events for American farmers, who saw a hit to exports in 2018 due to the U.S.-China trade war and in 2019 were pummeled by rains that delayed plantings and then the harvest.

The American corn harvest was 72% complete as of Oct. 25, above the year-ago pace of 38% and the quickest in five years for the country's most widely grown crop, according to U.S. Department of Agriculture data. Soybeans, the second-biggest crop, were 83% harvested, versus 57% a year ago and the fastest in four years.

The dynamic has also boosted crop handlers, with Bunge raising its outlook for the second time in a year on profitable trading conditions and Archer Daniels Midland beating estimates with its third-quarter results Thursday.

Michael Hirtzer in Chicago

Charted Territory

American consumers who've worked their way through the trove of shelf-stable meals they frantically bought back in March are at it again. This time, food makers are prepared. Meanwhile, signs of more pantry loading is boosting shelf-stable food makers.

Today's Must Reads

  • Pigs are flying | China is flying in record numbers of pigs to improve genetics and productivity while rebuilding the nation's pipeline of pork. Germany, meanwhile, warned that its farms could face a glut of more than a million pigs by year-end. In the U.S., add prosciutto to the list of items flying off grocery shelves.
  • No fresh fruit | British farmers warned that they may not have enough workers to pick crops next year, further risking fresh-food shortages amid potential port delays and tariffs once the Brexit transition period ends.
  • Shell games | Companies committed to producing eggs with cage-free chickens have made progress this year despite the pandemic that roiled supply chains, according to the annual EggTrack report. 
  • Chicken trouble | Bumper corn crops typically signal cheap feed and fat margins for chicken producers in Brazil. Not this year though, as strong exports and increasing demand from the biofuel industry have sent grain prices soaring.
  • Stop the rot | Apeel Sciences is winning investment for an edible material it's developed that doubles the shelf life of produce and cuts harvest-to-market losses for small farmers.
  • An urchin matter | Vast stretches of seafloor have been overtaken by exploding populations of invasive sea urchins. A new startup wants to turn this invasive species into a new delicacy.

On the Bloomberg Terminal

  • Green shoots | There's a good chance that a one-term Donald Trump presidency may mark an enduring low in grain and agriculture prices, Bloomberg Intelligence says.
  • Feeding demand | The recent strength in grain and soybean exports could continue into 2021,adding to dry-bulk prospects next year, Bloomberg Intelligence says.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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