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Global food trade looks set for a resilient year ahead despite supply and demand uncertainties, according to a report from the Food and Agriculture Organization of the United Nations (FAO).

Trade flows for agricultural, and particularly less-perishable, foods have reached record highs during the Covid-19 pandemic, leading the FAO to predict that the world food import bill in 2021 will be $1.72 trillion, 12% up on the previous high of $1.53 trillion in 2020.

But the optimism comes with some caveats: rising food prices are leading to concerns that “higher outlays may still mask deteriorating quantitative and qualitative dietary trends in vulnerable countries”, said the FAO.

In its forecast, the UN agency expects world output of the major food commodities to increase in the year ahead, with the exception of sugar, which is forecast to decline for the third consecutive year and fall short of global consumption.

For oilseeds and their derived products, the market outlook is viewed as tight, and the FAO warns that resumed production growth could well be insufficient to satisfy world demand.

World supplies of wheat and rice, meanwhile, are noted as “robust”. Early indicators for 2021/22 point to global rice production and utilisation “reaching new peaks”, while stocks remain ample leading the FAO to predict that international rice trade will expand in 2021, although smaller Asian imports may stall trade growth in 2022. Continued strong global demand for wheat is expected to counter large carryover stocks and forecast record production in 2021.

Stocks of coarse grains are expected to fall despite an anticipated record 2021 global production. World production of sugar in 2020/21 is also forecast to decline for the third consecutive year, while world trade in sugar is expected to contract slightly because of reduced availabilities in key exporters.

In its forecast, the UN agency expects world output of the major food commodities to increase in the year ahead

Meat growth

World meat output looks set to expand by 2.2% in 2021, to 346 million tonnes. This growth reflects “an anticipated rebound in meat production in China, where expansions are expected across all meat types, especially pig meat, facilitated by high investments in the value chain and efforts to control the spread of African swine fever”. However, global meat trade is seen as “heading towards a stagnation”, with higher trade in bovine and poultry meat offsetting a contraction in trade of pig and ovine meat.

Fish output is also expected to rebound with the FAO noting that pandemic-related restrictions catalysed a shift in sales trends benefiting small pelagics, such as sardines, anchovies and mackerel, as well as tuna.

The FAO calculates that the data reported so far for 2021 puts the value of global agricultural trade (measured by exports) “firmly on an upward trajectory, reaffirming the resilience of this sector to Covid-19 impacts”.

The annual increase in world exports from 2020 is projected at $137 billion or 8%. This is more than double the percentage increase of 2020 over 2019.

Looking at the geographic spread of global food trade growth, developing countries account for 40% of the almost $52 billion value of growth in 2020, which is already up 3.2% from the year before. For 2021, the value of global agricultural trade, measured by exports, is expected to increase by 8%, or $137 billion and much of that is accounted for by rising demand from East Asia. “While absolute growth in food inflows to East Asia is expected to match the growth observed in 2020, changes in the composition of food imports is projected to change significantly in 2021,” the FAO said. “Underpinning this development would be the recovery of China’s livestock sector from African swine fever, to the extent that meat imports could amount to a small increase of just $4 billion in 2021, compared with a more noticeable surge of $15 billion in 2020.”

The FAO calculates that the data reported so far for 2021 puts the value of global agricultural trade (measured by exports) “firmly on an upward trajectory, reaffirming the resilience of this sector to Covid-19 impacts”

Developed dominance

It is developed countries that are again expected to meet the rise in world food demand in 2021, more dominantly than was the case in 2020. The FAO notes that developed countries share of the global export expansion in 2021 amounts to 57%, compared with a 59% share in the expansion last year. “Notable changes among developing regions concern Latin American exporters, who in 2020 were instrumental in meeting international demand for oilseeds, as well as for sugar,” said the FAO.

More generally, the FAO expects global demand for commodities that tend to be more “income-elastic” to significantly rebound, especially beverages and fish. “Last year’s sharp decline of $20 billion in import expenditures registered for both product groups combined could turn into positive territory in 2021, with an increase of $21 billion foreseen,” said the FAO. However, it cautions that growth in export revenues and import expenditures must be put in the context of sharply rising prices and as such may not reflect actual increases in demand, measured by import volumes.

The full report is available here.
Source: The Baltic Briefing

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Record-breaking world food trade forecast: Robust supplies and resilient demand characterise outlook

Overview

A buyer’s payment instalments are at risk under a shipbuilding contract until the shipyard delivers the ship. To safeguard against the risk of the shipyard defaulting or becoming insolvent it is common practice to cover this risk with a refund guarantee issued by a bank. BIMCO’s Documentary Committee has adopted a clearly worded standalone refund guarantee that will assist parties in their shipbuilding projects.

Refund guarantees are complex legal documents and must meet the requirements of the issuing banks. BIMCO, in close co-operation with legal and commercial experts, banks and shipyards, has developed a standard refund guarantee which can be used with all widely used standard forms of shipbuilding contracts such as NEWBUILDCON, the SAJ form and Chinese forms.

“We have aimed to strike a fair balance between the interests of shipbuilders, their bank, and shipowners. There has been some evolution in terms of English Law in recent years in constraining these instruments and now they are almost invariably regarded as on demand guarantees rather than secondary guarantees. So, you do not have to prove your case and you do not have to prove the breach of the shipbuilding contract,” says Ian Gaunt, LMAA Arbitrator, who chaired the Refund Guarantee drafting committee.

The objective has been to create an instrument that provides much needed legal certainty and protects the interests of all parties involved in a newbuilding project. The Refund Guarantee has been written as clearly and concisely as possible and it is hoped that this approach will appeal to the market.

The other members of the drafting committee were David Lan (ICBC), Insu Chung (Hyundai Heavy Industries), Professor Min Han (Ewha Womans University), Klaus Vilstrup (Dampskibsselskabet NORDEN A/S), Yu Yang (Innomarine) Richard Lord, QC (Brick Court Chambers), Chris Kidd (Ince Gordon Dadds LLP) and Sean Gibbons (Stephenson Harwood LLP).

The Refund Guarantee for Shipbuilding Contracts is available on SmartCon.

A PDF copy of the Refund Guarantee for Shipbuilding Contracts  together with explanatory notes can be downloaded free of charge from the BIMCO website.
Source: BIMCO, By Peter Sand, Chief Shipping Analyst

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BIMCO publishes new standalone Refund Guarantee for Shipbuilding Contracts

The dry bulk market is slated for a renewed rally during the summer months, one which could see rates return to records not seen since 2008. In its latest weekly report, shipbroker Allied Shipbroking said that “last week’s (7-11 June) stellar performance in the dry bulk market could well be a good sign of W-O-W change things to come. With the rapid rise in freight rates noted over the past few days coupled by the strong resurgence being noted in commodities market prices almost seems like a precursor of what is about to unfold. The massive gains noted across all market fundamentals since the start of the year across by these most recent positive signs leave for a feel that this year’s summer months could well be sit “ablaze” in terms of freight rates, leaving us with a possibility of seeing levels not seen since before the great recession of 2008”.

Source: Allied Shipbroking

According to Allied’s George Lazaridis, Head of Research & Valuations, “this rise is clearly driven by the insatiable appetite China has shown for imports of raw commodities of late. China’s central government bodies may well have put a major emphasis over the past few months in tackling the record pace that has been recorded in the commodity prices since the start of the year, but up to this point it seems all this effort has had minimal effect. Iron ore prices jumped on Friday to their highest level in more than three weeks, touching once again the US$ 220 per tonne mark. This has been on the back of a sharp rebound in still production being noted, indicating the strong appetite still held for higher import levels.

Source: Allied Shipbroking

At the same time there is indication that much of this strengthening has been in part pushed by the expectation of further steel production output curbs as China intensifies its aim to counter air pollution. This may well have had a dual effect as steel producers race to increase steel inventories before any further measures take effect, while at the same time have pushed for higher quality imports in order to reduce their emissions. Iron ore has not been alone in this climb, with coal, grains and other minor bulks following a similar pattern”.

Lazaridis added that “all this has not been without its drawbacks. China’s producer prices of goods from China’s factories have risen at their fastest pace in 13 years. China’s PPI (Producer Price Index) rose by 9% year-on-year in May, marking it its biggest increase since September 2008. This has been a major worrying sign, as many come see this as a potential Chinese imported inflation. During April the U.S. posted an annual rate in consumer prices of 4.2%, also the highest level noted since September 2008.

Source: Allied Shipbroking

Rising costs have been quick to spread across the globe and the fear is that such inflationary pressure could stifle consumption in the long-run, despite the boost being noted since the start of the year. Businesses may have seen a rejuvenation in recent months and unemployment levels may well have started to subside as the global economy regains its “feet”. Yet if things heat up by too much and too quickly in terms of prices, the inflationary pressure could potentially bring everything back to a halt. That is the reason why most governments are keeping a key out on the trends noted in recent months and why China has placed particular focus in holding back further price hikes from speculation and “trader hording” in the raw commodity markets”.

Source: Allied Shipbroking

“Yet despite what concerns all this may raise for the long-run, the summer months look set for an unparalleled performance. Given the seasonal hikes that we have see in demand for these dry bulk commodities, the feel is that a new high in freight rates may well be reached before the end of August. As always though, and given the potential for excessive risks still at play, any such assumptions on the interplay of past performance and current trends should be taken with a hefty pinch of salt”, Allied’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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Dry Bulk Market Could Be Headed Back to 2008

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Inmarsat gains first Fleet Data Premium reference In Asia Pacific

t Xpress and Fleet Data to support IoT-based fuel monitoring and management, installed in Japan at a moment when engine service attendance was not possible,” he said. “The charterer effectively pays a fixed monthly tariff for the data needed to cut its monthly fuel bill,” Mr Toh continued.

“Fleet Data provides the bridge between engine data acquisition and Nautilus Labs analytics without additional hardware, at minimal capital expenditure for the owner,” he added.

Nautilus Labs chief executive Matt Heider said this project is a good example of collaboration in the shipping industry.

“Nautilus Platform enables Diamond Bulk Carriers and Mitsubishi Ore Transport to strengthen their partnership for fleet performance,” said Mr Heider. “Our interoperable solution integrates with Inmarsat’s data transmission to provide predictive insights and a decision support tool,” he added.

“With more and more regulations coming up, these companies set themselves up for success by optimising fleet efficiency to reduce emissions and outperform in the market.”

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https://www.rivieramm.com/news-content-hub/diamond-and-mitsubishi-invest-in-data-connectivity-for-ship-optimisation-66080