Author: c001os

Rabobank, assessing the impact of the conflict in Israel on food, energy, and fertilizer trends, says that if it is contained to the Israel and Gaza region it may not move the needle too much for energy, commodity or livestock prices. Mike Every, Rabobank’s global strategist and geopolitics expert, and Stefan Vogel, general manager RaboResearch for Australia and New Zealand, discussed the current situation in the Middle East and its potential impact for farmers in a podcast this week. If Israel moves into Gaza, and initiates a ground offensive, there is a very high probability that the Iranian backed and funded militia, Hezbollah, based in south Lebanon, would open fire on Israel and start a two-front war (these two steps have already been taken – ed.). And were that to happen, it is extremely likely that other Iranian backed forces such as militias in Yemen, in Iraq, and in Syria would also move towards the border and open fire with whatever missile forces they have. [In such a scenario] it is naive to think Iran would not press other buttons it has available at its disposal which would include trying to whip up an uprising in the West Bank and potentially even amongst Israeli Arabs.

Eventually, the conflict could spread even further, developing into a broad regional war with no easy resolution on top of the world’s major energy reserves. Oil and diesel prices would soar in such an escalation of the conflict, with oil potentially rising to $150 per barrel. “In a nutshell, if we get into that scenario, it is akin to what we saw in the 1970s after the Yom Kippur war when the Arab economies decided to restrict flows of oil to the US, and then again in 1979 after we had the Iranian revolution and the hostage crisis, when Iran did the same thing. The economic effects would be deep, biting and felt worldwide,” warned Every.

The geopolitical expert is worried about the propensity for the dominos to topple much quicker than commentators are currently predicting, as fear about security in Israel is climbing rapidly. He also outlined how there may be an incentive for other global powers such as China and Russia to support Iran and try and humiliate the US and Israel in the Middle East region, keep them bogged down in a big war, distract the US from Ukraine and also from its military build-up in East Asia to protect Taiwan. “This is not a forecast, but it is a worryingly logical set of events which, if they were to transpire, would happen faster than you think.” The implications, evidently, of such escalation of the war for the food, agriculture, and energy markets would be quite devastating.

In a groundbreaking achievement, scientists, led by University of Nebraska–Lincoln researcher James Schnable, have successfully mapped the complete genome of corn. This milestone development promises to revolutionize the future of agriculture, offering invaluable insights into crop health, resilience, and productivity. Published recently in the prestigious journal Nature Genetics, the study represents a significant leap forward in the field of genetics, coming on the heels of the human genome’s complete mapping just a year ago. The corn genome, due to its sheer size and complexity, has long posed a formidable challenge for scientists seeking to decode its genetic makeup.

Over the years, technology has made strides in this area, with the first draft of the corn genome emerging in 2009. However, numerous gaps remained, comprising over 100,000 unresolved genetic sequences. James Schnable, the Charles O. Gardner Professor of Agronomy, explained, “Our team drew on the latest technology, plus the particular expertise of the individual team members, and that finally made possible the mapping of the complete corn genome.” A significant aspect of this achievement was the resolution of complex genetic regions containing nearly identical paralogs – genes that are so similar they were previously indistinguishable. Corn’s genetic repetition presents an extraordinary challenge, with vast stretches of genetic material intermingled, making it difficult to pinpoint individual gene functions.

The fully sequenced corn genome holds immense potential for developing improved corn varieties by enhancing the understanding of how genetic differences influence traits. Schnable explained, “Rather than conducting selection, we will have the potential to design and engineer corn varieties to adapt to changing climates and grow in more nitrogen-limited conditions.” Now that the corn genome is fully sequenced, scientists can embark on essential follow-up research to study and understand the function of individual genes previously unidentified. Schnable emphasized the university’s advantage in this endeavor, given its robust research and Extension network and the ability to grow corn varieties across a wide range of environments.

Results published in the European Soy Monitor 2021, points to 40% of soybean meal equivalent of total European soy consumption to be sourced according to the FEFAC Soy Sourcing guidelines and 24% certified deforestation-free soy. The report also refers to FEFAC’s initial risk assessment which estimates that just under 94% of EU soy imports were sourced from low-deforestation regions, based on EU trade statistics and industry expert assessments. The figures show good progress continues to be made. Since the publication of the first European Soy Monitor of 2018 estimations, the provisional data for 2021 indicates that FEFAC members reported an increase of 21% over the past 3 years. However, the 40% figure was slightly lower than the 43.8% recorded in 2020. Pedro Cordero, FEFAC president, welcomed the latest figures: “I am pleased with the continued positive trend that the European feed sector and its supply chain partners have been able to display as regards the industry’s use of responsible soy. FEFAC’s internal estimates indicate that a significant part of soy used in the EU in 2021 came from regions with low deforestation risk, including the EU, United States, Canada and Ukraine. These sources are considered “deforestation-free”, although not officially certified as such. The soybean trade itself has remained relatively unaffected. Brazil and the United States continue to be the world’s biggest producers and China by far the biggest soy consuming country. European soy production increased from 2.68m tonnes in 2020 to 2.71m in 2021.

The Russian authorities unofficially prohibit farmers from selling grain to foreign customers at a price below the minimal threshold, though this strategy visibly hurts the industry. Russia blocked the delivery of 480,000 tons of wheat to Egypt in September since the sale price was below the minimal threshold of $270 per ton FOB (“Free on Board”) allowed by the government, Russian newspapers Kommersant and Forbes reported, citing their own sources. Russian publications assumed that by sticking to the minimal export price, Russia targets to use its dominant position in the global market to the advantage of the Russian farmers, who see their financial health worsening, and secure additional income to the federal budget. Russian publication Gorodn disclosed that the Russian strategy has already put pressure on the supply chain. In the southern regions, largely trade companies have already suspended purchasing grain from farmers, citing a lack of available warehouse capacity to store it. Andrey Sizov, director of SovEcon, a Moscow-based consultancy, admitted that the government policy slows down Russian grain exports, and the country could end up with record carryover stocks similar to what happened a year before. One source who wished to remain anonymous told Gorodn that wheat, similar to Russian wheat, is now sold on the global market for a maximum of $240 per ton FOB. “Agricultural Ministry believes that foreign buyers cannot live without Russian grain; they will buy at our price; we just need to wait. But there is a question for how long,” the source said, explaining that Algeria recently purchased the amount needed until the end of the year, Egypt will hold a couple more tenders and will stop purchasing until January. “So, wait until January? But in November, harvesting starts in Argentina, then in Australia, and everyone sells [grain] on the same market. So, it is not guaranteed that prices will rise to the desired level in January, especially given that the market is oversaturated with grain, including Ukrainian, the supply of which has again resumed through Odesa,” the source told Gorodn. A minimal export price is set also for the sunflower oil. As a result, some Russian oil factories suspended the start of work towards the end of September, while usually they open their doors around September 10. On the domestic market, farmers are trying to sell sunflower seed at the level only covering the production costs. Some farmers complain that the new measure puts heavy pressure on the industry, already troubled by export duties. As a result of the duties, the average profitability in the industry plummeted from 17% to 3%, estimated Alexander Yaroshenko, director of grain company Ural-Don. The minimal export price has proved to be another blow for farmers. “I believe that 4 more years of such restrictions and there will be no more grain export from Russia,” said Yaroshenko. “Perhaps we will not roll back to the state when we buy grain in Canada, like in Soviet times, but we will definitely lose an opportunity to export it,” he said.