0

May 2016

0

CONTENTS

FOCUS ON CHINA ············································································································································· 1

China’s New Sports Nutrition Safety Standard ······································································································································· 1

China corn reserves eyed as crop area to fall for first time in 13 years ······································································································ 2

China’s demand for imported soybeans to remain strong ······················································································································· 3

INTERNATIONAL NEWS ··································································································································· 4

U.S. Corn Planting 45% Complete, Soybeans 8% ······································································································································· 4

Increased demand for South African mangoes in Europe ························································································································ 4

Global staple food prices rose in April and Index averaged 151.8 points ··································································································· 5

EFSA risk assessment finds process contaminants in vegetable oils and foods ························································································· 6

USDA Announces Conservation Reserve Program Results ······················································································································· 7

Zimbabwe’s agri market trends ····························································································································································· 8

Soybeans rise on tighter supply outlook, pull up wheat, corn ················································································································· 9

Unexpected recovery potato market ······················································································································································ 9

Malaysian palm oil production sharply lower due to drought ················································································································· 10

SAFETY ALERTS ············································································································································· 11

ENTERPRISE NEWS ········································································································································ 14

US Foods to acquire Freshway Foods ······················································································································································ 14

Cargill and Jollibee Foods to build poultry processing plant in Philippines ······························································································ 15

InnovAsian Cuisine issues voluntary recall of its Frozen Chicken Fried Rice products ··············································································· 16

Sugar shortage forces Coca-Cola Femsa to stop production in Venezuela ································································································ 16

Wal-Mart vs. Amazon in FMCG and food in new online battle ················································································································· 17

Fonterra launches global food service brand Anchor Food Professionals ································································································ 17

HMSHost Recalls Multiple Brands of Cape Cod Cranberry Trail Mix Because of Possible Health Risk ························································ 18

MARKET NEWS - REPLY ·································································································································· 18

1

May 2016

MARKET NEWS

Focus on China

China’s New Sports Nutrition Safety Standard

Sports nutrition is a relatively untapped market in China, which only has one major

domestic player—the company name translates to “competitor," according to the

U.S.-China Health Products Association (USCHPA). Foreign sports nutrition brands are

sporadically available in China, especially online, but fakes abound.

Unauthorized selling has been a primary challenge to fully developing the sports

nutrition market in China, but new regulations for cross-border e-commerce were

released in October 2015. According to the English translation from USCHPA, the

regulations apply to operating companies, online platform companies and firms that

either warehouse or provide logistics for e-commerce fulfillment.

The cross-border regulations establish the General Administration of Quality

Supervision, Inspection and Quarantine (AQSIQ) as the governing body and lay out

requirements for the registration of operating companies and imported products, as

well as the supervision and inspection of these companies. Health products, GMOs

(genetically modified organism) and other special products may require additional

approvals from other agencies.

More specifically to sports supplements, China’s National Health and Family Planning

Commission approved and published the renamed Food Safety National Standard,

General Standard of Sports Nutrition (GB24154G2015) in November 2015, and the

USCHPA finalized its translation in April 2016. The standard has a scheduled effective

date of Nov. 13, 2016, at which time all imported sports nutrition products will be

covered under the requirements.

The new standard defines sports nutrition as: “Specially processed food aim to satisfy

the physiological metabolism status and sports ability of sports population." It further

classifies sports nutrition products into several categories, including energy, energy

control (weight management), and protein supplements, and includes technical

information on ranges of carbohydrate, protein and fat content for each classification.

The standard further offers classification

as either: “speed and strength,"

“endurance" or “recover from exercise"

products. For each, it has mandatory

ingredients: creatine for energy

supplements; vitamins B1 and B2 for

energy control supplements; and

peptides for recovery products. Among

the suggested ingredients for each

classification are glutamine and HMB

(beta-hydroxy-beta-methylbutyrate) for

energy; peptides, L-carnitine, caffeine and vitamin B6 for energy control; and, glutamine,

L-leucine, L-isoleucine and L-valine for recovery. For all of these ingredients, there are

daily dosage range requirements, some of which have an associated testing method for

verification.

One notable technical requirement in the standard is that raw material for sports

nutrition should not be banned by the World Anti-Doping Agency (WADA).

2

May 2016

MARKET NEWS

As for potential toxicity, the standard details limits for pollutants (lead and arsenic),

mycotoxins (aflatoxins), and microorganisms (Salmonella, Staphylococcus aureus).

There were no special requirements for food additives, as the standard simply requires

sports nutrition products to conform to existing Chinese Standards for Food Additives

(GB 2760-2015). Likewise for labeling, sports nutrition products are required to conform

to the existing law, China Food Safety National Standard, general Rules for the Labeling

of Prepackaged Food for Special Dietary Uses (GB 13432-2013), however there is a

special requirement for sports nutrition products to be identified on a" main area of the

label."

The new sports nutrition standard outlines quality and testing requirements for creatine

monohydrate, including the mandate the “mass fraction of creatine monohydrate

should not be lower than 99.97 percent." It details equipment, material and procedural

requirements for testing creatine samples, and spells out the calculation method for

determining mass fraction.

China corn reserves eyed as crop area to fall for first time in 13 years

China has estimated the country’s corn planting area

will fall by more than a million hectares this year, the

first drop in 13 years, as global grain markets brace

for the fallout from Beijing’s biggest agricultural

reforms in nearly a decade.

China said in March that it would end its corn

stockpiling program, which had driven up domestic

prices and spurred imports of cheaper substitutes

like sorghum and distillers’ grains.

The scheme, under which large volumes were bought at fixed prices, was

designed to support rural incomes, but it has left the state with a bulging

stockpile to sell.

China is sitting on close to 250 million tonnes of corn, enough to fill Beijing’s

Bird’s Nest stadium around 34 times, and how it plans to dispose of this is being

carefully watched by markets.

“During this reform process, and as the corn market changes, we must ensure

that farmers remain positive about growing, and at the same time encourage

them to change to other crops in non-optimal areas,” Vice-Agriculture Minister

Yu Xinrong said on Thursday.

Yu said China expected to reduce its corn planting area by 1.33 million hectares

(3.29 million acres) this year.

China’s support for corn saw the area under cultivation hit 37 million hectares

last year, up from 23 million hectares in 2001, according to U.S. Department of

Agriculture data.

After the government decided it would no longer buy corn at artificially high

prices, farmers in China were expected to switch to other crops, including

soybeans.

However, the ministry predicted last month that soybean imports would reach

82.28 million tonnes in 2016, around the same as last year, even though it

expects the growing areas to rise by 400,000 hectares this year.

EXPORTS OR IMPORTS

The policy changes have raised fears on overseas markets that China would

export surplus corn.

3

May 2016

MARKET NEWS

“We are looking at a big possibility of corn exports from China as domestic

prices are likely to fall to the level of the international market,” said a

Singapore-based trader.

However, some Chinese observers have been concerned that cutting domestic

production could eventually mean the country increased its dependence on

imports.

Another agriculture ministry official, Zeng Jinde, said corn was not likely to go

the same way as soybeans, where more than 80 percent of demand is met

through imports, with domestic corn supply security still a priority.

China’s corn production had risen by more than 108 million tonnes in the last 12

years, he said, and the country continued to impose a 7.2 million-tonne annual

import quota.

A recent forecast by the Ministry of Agriculture said 2016 corn output was

expected to drop 4.2 percent to 215.17 million tonnes. It said production would

also be hit by bad weather in growing areas in the northeast, as well as floods in

the south.

Though production is set to fall further to 205.67 million tonnes by the end of

2020, consumption is forecast at 221.92 million tonnes, with the gap to be met

through inventories, rather than through imports.

The agriculture ministry also said that it would work to rectify “structural

contradictions” in the pork market, which has seen prices soar recently as a

result of shortages.

New environmental constraints have made it difficult to increase supplies, but

China aims to scale up and relocate pig farms to more suitable regions, the

ministry said.

China’s demand for imported soybeans to remain strong

With China’s policies continuing to favor grain production over soybeans and its

feed and livestock industries expected to continue growing, the country’s

demand for imported soybeans is projected to remain strong over the next

decade, increasing from 83 million tonnes in 2016-17 to 109.5 million tonnes in

2025-26, according to the U.S. Department of Agriculture’s (USDA) Economic

Research Service (ERS).

China is the world’s

largest importer of

soybeans. Its

dominance as an

importer reflects

government

policies that favor

imports of

soybeans over feed

grains, coupled

with dietary shifts toward more animal proteins, which creates a strong demand

for soybean meal used for livestock feed rations.

In 1995, China adopted a policy of 95% self-sufficiency for grains, and from

2008-12 the country increased price supports for wheat, rice, and corn at higher

rates than those for soybeans, making soybean production less attractive to

farmers and resulting in an 18% decline in domestic production while soybean

imports jumped 50%. China’s border policies also favor soybean imports.

4

May 2016

MARKET NEWS

Import tariffs for soybeans are lower than those for soybean meal or oil,

resulting in China’s oilseed-crushing industry becoming the largest in the world,

and supplied mainly with imported soybeans.

International News

U.S. Corn Planting 45% Complete, Soybeans 8%

The U.S. corn farmers are approaching being halfway done putting this year’s

crop in the ground, according to the USDA. But, extended drying out periods,

due to recent rains, could slow planting this week.

In its weekly Crop Progress Report Monday, the governmental agency noted

that 45% of corn has been planted, compared with a 30% five-year average.

In its report, the USDA pegged the national corn emergence rating at 13% vs. a 8%

five-year average.

Al Kluis, Kluis Commodities, says that the USDA corn planting rating is close to

what he expected, while others in the trade expected 47% of the corn to be in

the ground.

“The states that are way ahead are in the central Corn Belt with Iowa, Illinois,

Missouri, and Minnesota way ahead of normal. With all of the weekend rain and

now just a four to five day window to plant later this week, I do not think a lot

will be done in the western Corn Belt this week,” Kluis says.

Kluis adds, “Today’s report is slightly negative for prices tonight. I expect corn to

start out 1 to 2 cents lower tonight.”

For soybeans, 8% of the nation’s crop has been planted vs. a 6% five-year

average.

Increased demand for South African mangoes in Europe

The mango season came to an early

end in South Africa this season. It was

by no means an easy season due to

hail at the end of last year and

extreme temperatures during the

growing season.

Erwee Topham from Alliance Fruit said

that "The mango harvest finished at

the end of February, around a month

earlier than normal. We had hail

damage in the Hoedspruit area which

destroyed around half of our crop, but

the lack of volumes did lead to better prices."

Traditionally most of South Africa's mango export goes to Africa and the Middle

East. Alliance Fruit mainly supply the South African supermarkets and the fresh

cut industry and don't go directly to Africa, they do export to the Middle East

and sent a container to Europe this year for the first time in years.

"The price on EU markets is increasing and South African mangoes fit into a nice

gap in the supply from South America. We supplied the same customers who

also take our citrus. We only did one container this season but that will increase

in the future," explains Erwee.

In Europe the trend is towards 'ripe and ready' but the South African consumers,

for whom the mango is a very well known fruit, know how to ripen the fruit

themselves, it also a lot more ripe when sold on the local markets. Mangoes

which are sent to Europe are ripened before they go on the shelves.

"Demand for freshcut mangoes is increasing. For the freshcut side of the

business we work with In2food to supply the local and UK demand. Our main

5

May 2016

MARKET NEWS

varieties are Tommy Atkins, Kent and Keitt, we only send fibreless cultivars to

Europe. There are some new varieties on the horizon which seem to good

fibreless alternatives. Tommy Atikins are good for the local market as people do

not mind a bit of fibre and buy for colour/appearance. For us it not so much

about the fibre content but about getting good cultivars for the whole season."

Global staple food prices rose in April and Index averaged 151.8 points

Global prices of key staple

food commodities rose in

April, marking its third

consecutive monthly increase

after four years of decline.

The FAO Food Price Index

averaged 151.8 points in April,

a 0.7 per cent increase from

March. That is about 10 per

cent below its level of a year

ago and more than a third off its 2011 highs.

The gradual increase is far from even across the board. April's increase was

driven by palm oil prices and, in a minor key, cereals, while sugar prices tapered

down after a strong increase in March.

The FAO Food Price Index is a trade-weighted index tracking international

market prices for five key commodity groups: major cereals, vegetable oils, dairy,

meat and sugar. Its decline over the past year reflects ample food supplies, a

slowing global economy and a stronger US dollar.

The FAO Vegetable Oil Price Index rose 4.1 per cent, due largely to a grim 2016

production outlook for palm oil coupled with a growing worldwide demand.

The FAO Cereal Price Index rose 1.5 per cent on the month, due primarily to

international maize quotations, themselves influenced by a weaker US dollar and

spillover from the oilseeds complex. However, rice prices declined marginally,

while wheat markets posted limited gains amid expectations of large supplies in

the new season for the crop.

The FAO Dairy Price Index dropped 2.2 per cent as stocks of butter and cheese in

major exporters continued to grow.

The FAO Meat Price Index rose 0.8 per cent, pushed up by strengthening US

demand for Australian beef.

The FAO Sugar Price Index, meanwhile, dropped 1.7 per cent in April after a

dramatic 17 per cent increase the previous month. While concerns about global

sugar production remain, Brazil - by far the main exporter - has had its

second-highest crop ever and the country's use of sugarcane for ethanol is

expected to decline.

Sugar and vegetable oils are the only sub-indexes currently at levels higher than

those of April 2015.

Outlook for cereals output improves

FAO raised its forecast for world cereal production in 2016 slightly to nearly 2,526

million tonne, virtually the same as in 2015 and potentially on course to be the

second-largest global harvest ever, according to FAO's Cereal Supply and

Demand Brief, also released recently.

The larger figure results almost entirely from improved prospects for wheat

production, as winter weather conditions have been favourable for prospective

yields in the European Union, the Russian Federation and Ukraine. At 717 million

tonne, the 2016 wheat output forecast remains 16 million tonne short of last

year's record.

FAO's new production forecast for global coarse grains - including barley, maize,

millet, oats, rye and sorghum - stands at 1,314 million tonne, about one per cent

above the 2015 output.

6

May 2016

MARKET NEWS

FAO left unchanged its worldwide rice production forecast at 495 million tonne,

about one per cent higher than the previous year, although the full impact of the

El Niño weather phenomenon will not be clear for a few more months.

World cereal utilisation in the season ahead is expected to rise by only 1.1 per

cent due to slower growth in the use of cereals - especially wheat and barley - as

livestock feed.

As a result, world cereal stocks are likely to drop by 3.3 per cent or 21 million

tonne over the course of the new season. Stocks are forecast to drop most in

Brazil, Thailand, India, China, Morocco, the Islamic Republic of Iran, Argentina

and South Africa, according to FAO.

World trade in cereals is expected to decline slightly - to 367 million tonne - with

sharp drops in China's imports of barley and sorghum as well as EU imports of

maize, more than offsetting soaring imports of maize by drought-stricken

countries in southern Africa.

The USDA delayed the release of the report to Tuesday from Monday.

EFSA risk assessment finds process contaminants in vegetable oils and

foods The European Food Safety Authority (EFSA) has found glycerol-based process

contaminants in palm oil, in addition to other vegetable oils, margarines, and

some processed foods. The agency assessed the risks for public health of the

substances glycidyl fatty acid esters (GE), 3-monochloropropanediol (3-MCPD)

and 2-monochloropropanediol (2-MCPD) and their fatty acid esters. The

substances form during food processing, in particular, when refining vegetable

oils at high temperatures.

The agency found the highest levels of GE, as well as 3-MCPD and 2-MCPD

(including esters), in palm oils and palm fats, followed by other oils and fats.

EFSA’s expert Panel on Contaminants in the Food Chain (CONTAM) considered

information on the toxicity of glycidol (the parent compound of GE) for its risk

assessment of GE, assuming a complete conversion of the esters into glycidol

following ingestion. “There is sufficient evidence that glycidol is genotoxic and

carcinogenic, therefore the CONTAM Panel did not set a safe level for GE,” said

Helle Knutsen, chair of the CONTAM Panel.

When assessing genotoxic and carcinogenic substances that are unintentionally

present in the food chain, EFSA calculates a “margin of exposure” for consumers.

In general, the higher the margin of exposure is, the lower the level of concern

for consumers. The Panel concluded that GE is a potential health concern for all

younger age groups with average exposures, and for consumers with high

exposure in all age groups.

In addition, the Panel set a tolerable daily intake (TDI) of 0.8 micrograms per

kilogram of body weight per day (µg/kg bw/day) for 3-MCPD and its fatty acid

esters based on evidence linking this substance to organ damage in animal tests.

However, they noted that the toxicological information is too limited to set a

safe level for 2-MCPD.

Palm oil is a major contributor to 3-MCPD and 2-MCPD exposure for most

individuals. Levels of 3-MCPD and its fatty acid esters in vegetable oils were

7

May 2016

MARKET NEWS

largely unchanged over the last five years.

This risk assessment will inform risk managers in the European Commission and

Member States who regulate EU food safety. They will use EFSA’s scientific

advice to consider how to manage the potential risks for consumers from

exposure to these substances in food. The Panel has also made several

recommendations for further research to fill data gaps and improve the

knowledge on the toxicity of these substances, particularly 2-MCPD, and on

consumer exposure to them through food.

USDA Announces Conservation Reserve Program Results

Agriculture Secretary Tom

Vilsack today announced the

enrollment of more than

800,000 acres in the

Conservation Reserve Program

(CRP). Through CRP, the U.S.

Department of Agriculture

(USDA) helps farmers offset

the costs of restoring,

enhancing and protecting

certain grasses, shrubs and

trees that improve water

quality, prevent soil erosion

and strengthen wildlife habitat. Farmers' and ranchers' participation in CRP

continues to provide numerous benefits to our nation, including helping reduce

emissions of harmful greenhouse gases and providing resiliency to future

weather changes.

"The Conservation Reserve Program provides nearly $2 billion annually to land

owners – dollars that make their way into local economies, supporting small

businesses and creating jobs. When these direct benefits are taken together

with the resulting economic activity, the benefits related to CRP are estimated at

$3.1 billion annually," said Vilsack. "Over the past 30 years, CRP has created major

environmental improvements throughout the countryside. The program has

removed carbon dioxide from the atmosphere equal to removing nine million

cars from the road annually, and prevented 600 million dump trucks of soil from

erosion. With today's announcement, USDA is continuing these achievements by

maximizing conservation benefits within the limitations provided by law."

This was one of the most selective sign-up periods in CRP's 30-year history, with

a record high Environmental Benefits Index cut-off and the lowest-percentage of

applications accepted. The high bar means that the per-acre conservation

benefits are being maximized and that acres enrolled address multiple

conservation priorities simultaneously.

A nationwide acreage limit was established for this program in the 2014 Farm Bill,

capping the total number of acres that may be enrolled at 24 million for fiscal

years 2017 and 2018. At the same time, USDA has experienced a record demand

from farmers and ranchers interested in participating in the voluntary program.

As of March 2016, 23.8 million acres were enrolled in CRP, with 1.7 million acres

set to expire this fall.

Over three million acres have been offered for enrollment this year across the

three main categories within CRP, with USDA's Farm Service Agency (FSA)

receiving over 26,000 offers to enroll more than 1.8 million acres during the

general enrollment period, and over 4,600 offers to enroll more than one million

acres in the new CRP Grasslands program. Coming off a record-setting 2015

continuous enrollment of over 860,000 acres, more than 364,000 acres already

have been accepted for 2016 in the CRP continuous enrollment, triple the pace

of last year.

FSA will accept 411,000 acres in general enrollment, the most competitive

selection in the history of the program, with the acreage providing record high

conservation benefits. USDA selected offers by weighing environmental factors

8

May 2016

MARKET NEWS

plus cost, including wildlife enhancement, water quality, soil erosion, enduring

benefits, and air quality.

The results of the first-ever enrollment period for CRP Grasslands, FSA will also

accept 101,000 acres in the program, providing participants with financial

assistance for establishing approved grasses, trees and shrubs on pasture and

rangeland that can continue to be grazed. More than 70 percent of these acres

are diverse native grasslands under threat of conversion, and more than 97

percent of the acres have a new, veteran or underserved farmer or rancher as a

primary producer. FSA continues to accept CRP Grasslands offers and will

conduct another ranking period later this year. Acres are ranked according to

current and future use, new and underserved producer involvement, maximum

grassland preservation, vegetative cover, pollinator habitat and various other

environmental factors.

Participants in CRP establish long-term, resource-conserving plant species, such

as approved grasses or trees (known as "covers") to control soil erosion,

improve water quality and develop wildlife habitat on marginally productive

agricultural lands. In return, FSA provides participants with rental payments and

cost-share assistance. Contract duration is between 10 and 15 years.

CRP is currently protecting more than 100,000 acres of bottomland hardwood

trees, nearly 300,000 acres of flood-plain wetlands, and 300,000 acres each for

duck nesting habitat and nearly 250,000 acres of upland bird habitat. In addition,

CRP is creating economic benefits that include at least $545 million per year in

recreation benefits and water quality benefits from reduced sedimentation of

$587 million per year.

Throughout the Obama Administration, USDA has generated thousands of

critical partnerships to conserve and protect our natural resources on working

landscapes, while enrolling a record number of acres in conservation programs.

Seventy-percent of the nation's land is owned and tended to privately, and

America's farmers, ranchers and landowners have willingly stepped up to

address the growing impacts of a changing climate. With USDA's support, they

work to implement voluntary practices that improve air and water quality,

prevent soil erosion and create and protect wildlife habitat.

Since 2009, USDA has invested more than $29 billion to help producers make

conservation improvements, working with as many as 500,000 farmers, ranchers

and landowners to protect land and water on over 400 million acres nationwide.

Zimbabwe’s agri market trends

Charles Dhewa,

knowledge management

specialist and Chief

Executive Officer of

Knowledge Transfer

Africa (Pvt), has taken a

look at the trends on

Zimbabwe's informal

agricultural markets, to

garner better knowledge

on how those in the

industry are responding to the El Nino-induced drought in the country.

Following reduced rainfall in December 2015 and January 2016, there has been

reduced planting of tomatoes. This has seen tomato prices in Mbare market

shooting to a maximum of $8 per 8kg wooden box from the normal $3-$4 as of

April 29, 2016.

However, farmers who planted tomatoes and other horticultural crops with late

January, February and March rains are expecting good quality products. On the

other hand, due to unpredictable weather forecasting, farmers have been

caught off-guard by late rains that came in March and April which have triggered

fungal diseases such as blight as well as fruit rot. This has also resulted in tomato

shortages in the market, driving up prices.

9

May 2016

MARKET NEWS

To satisfy demand, some traders have started importing tomatoes from South

Africa. Local production of cabbages and cucumbers has also been negatively

affected by the El Nino, leading to reduced planting. Regarding onions, it looks

like there have been fewer farmers willing to commit resources due to lack of

capital and other challenges.

Water situation and market implications

As a result of the El Nino phenomenon, much of Zimbabwe received below

normal rainfall this season. These shortages will be more notable in tomatoes

and leafy vegetables while cabbage supply will be normal until August.

September will see severe shortage of cabbages because leafy vegetables which

often fill the demand gap will start dwindling as water sources such as weirs and

wells run dry in most production areas.

Soybeans rise on tighter supply outlook, pull up wheat, corn

U.S. soybean futures resumed their rise on Thursday, trading near a 21-month

high set earlier this week after the United States Department of Agriculture

(USDA) forecast tighter global supplies than expected.

“Market focus is again back on

the USDA’s forecasts of tighter

U.S. and global soybean

inventories today which is

strongly supporting soybeans,”

said Frank Rijkers, agrifood

economist at ABN AMRO Bank.

“Corn and wheat are being

pulled up by spillover support

from soybeans despite both

grains facing a bearish outlook

with plentiful supplies.”

Chicago Board of Trade most active July soybeans rose 0.8 percent to $10.87-3/4

a bushel at 1019 GMT after falling on Wednesday on profit-taking. Most active

July corn climbed 0.9 percent to $3.81 a bushel.

Most active July wheat rose 0.8 percent to $4.62-3/4 a bushel. Both had also

dropped on Wednesday.

Soybeans hit their highest since July 2014 at $10.91-1/2 a bushel on Tuesday after

the USDA surprised the market with a lower-than-expected forecast of U.S. and

world soybean inventories.

Markets had previously been expecting larger stocks partly because of

expectations of bumper South American crops.

“Soybeans are facing a tighter global supply outlook than previously expected,

with rain seeming to have caused significant damage to the soybean crop in

Argentina where harvesting is now underway,” Rijkers said. “Rain damage to

Argentina’s crop could transfer export demand for soybeans to the United

States and other countries. Chinese soybean demand also remains robust.”

In China, Dalian soymeal jumped more than 5 percent after closing nearly 2

percent up on Wednesday. Dalian Soybeans gained 0.7 percent.

“Wheat and corn are rising despite the forecast of large inventories from the

USDA. I have doubts about whether the rises are sustainable, especially for

wheat because of the plentiful world supplies,” Rijkers said.

The USDA on Tuesday projected that U.S. inventories of both corn and wheat

would rise by the end of the 2016-17 marketing year to their highest levels since

the 1980s.

Unexpected recovery potato market

The old potato harvest can currently rejoice at good demand. “The cold weather

was good for export. We can get rid of a fair amount for high prices,” Jan

Westhoeve of the eponymous potato wholesaler’s from Ouddorp observes.

10

May 2016

MARKET NEWS

“Four weeks ago we bought potatoes for eight cents, right now that is already

ten cents more. I did not expect this market recovery either, or I would have had

more in stock. Selling prices vary between 22 and 27 cents.”

“We now have to look for potatoes, for stocks are becoming exhausted, but

fortunately we manage to find batches every day. Factories are currently not

rejecting anything, so the larger part is going to industry. But batches will always

remain available for consumption export until July. I think quality is still good.

For example, we received red-skinned potatoes that are hard as bullets and of

good quality.”

Westhoeve potatoes sells globally. “We are currently exporting many potatoes

and onions to eastern Europe. Many potatoes go to Hungary and Romania, and

the unmarketable sizes are mostly delivered to Poland. Additionally, every week

about ten containers go to the Caribbean area,” Westhoeve sums up.

“Contribution to speedy export is that import of, for example, Spanish potatoes

is still a bit disappointing. I expect good demand for the coming weeks, because,

traditionally, during Ramadan many potatoes are sold.”

Romain Cools, Belgapom

The possibilities of the export of consumption potatoes have been written and

talked about the entire season already. According to Romain Cools of Belgapom,

especially central Europe and the UK were often discussed. “The reality,

however, was slightly different. During the entire season there was some export

left and right, but certainly not of a nature to move the potato market. In fact,

the demand from industry and the delay of the new harvest mostly seemed to

trigger the market.”

“Currently some potatoes are exported to the UK each day for specific markets.

This mostly concerns strains such as Markies. Poland mostly appears to be

demanding Bintjes. Spain and Romania buy some extra, but smaller volumes.

Africa is also starting to buy some, but the prices on the Belgian market are

currently too high for them,” observes Cools.

Cools does not suppose that export will become the motor behind higher

market prices, as some suggest. “Perhaps export will continue to support the

market, but it is clear that market prices that are too high will also influence

certain export opportunities. But we must not forget that we are already

halfway through May.”

Malaysian palm oil production sharply lower due to drought

Palm oil production in Malaysia, the world's second ranked producers, is sharply

down year on year, in the wake of regional droughts.

Malaysian palm oil production was down 23% year on year in April, at 1.3m tonnes,

the Malaysian Palm Oil Board said.

The palm oil fruit crop is under pressure, after some very dry weather resulting

from the recent El Nino effect, which is associated with droughts in Malaysia and

11

May 2016

MARKET NEWS

Indonesia, from where most of the world's palm oil originates.

Falling stocks, but also exports

The fall in Malaysia production helped push palm oil stocks to their lowest level

since February 2015.

Malaysian inventories were down 4.5% month on month, at 1.80m tonnes. This is

a 17.5% fall from April last year.

The decline in stocks was faster than expected, with analysts forecasting a 3.5%

drop.

But weak exports slowed the decline in stocks. Exports stood at 1.16m tonnes,

down 12.8% from the previous month.

"It's positive to see the stockpiles shrinking," Ed Hugo, at VSA Capital,

suggesting that the data would add short term support to palm oil prices.

United Plantations production

slumps

Mr Hugo said the fall off was not

"so surprising," given the sharp

decline in production reported by

United Plantations on Monday.

United Plantations is seen as a

benchmark producer, so a 27.5%

year on year drop for April

suggested that serious damage

had been done to national

output.

The ramifications of El Nino on

palm oil production will continue

for at least the rest of the year, Mr Hugo said.

And if El Nino swings into La Nina, as many expect, the rains that could appear in

the region will not bring any immediate relief, and could even slow production

due to flooding, he noted.

Soyoil keeps cap

Still, Mr Hugo said that soyoil prices would continue to keep a cap on palm oil

prices.

"Soyoil oil is being favoured", he noted, and record imports of soybeans to China

are encouraging crushing there.

As Edward Hugo points out, demand for soybean meal, for use in animal feed,

remains "robust", so there is an incentive to continue processing soybeans.

And soyoil exports from Argentina are booming, after reforms by president

Mauricio Macri.

So despite some recent strength in soyoil, helped by a broad commodities boom

and Argentine soybean harvest disruptions, gains for palm oil are still being

limited.

Safety Alerts

Date Brand Name Product

Description

Reason/

Problem

Company

05/02/2016 Bybee's,Columbia

River Organics,

Northwest

Growers Select

and others

Frozen Organic

and Traditional

Fruits and

Vegetables

Listeria

monocytogenes

, CRF2016

CRF Frozen

Foods

05/02/2016 Giant Eagle Walnut Delight Undeclared Milk Giant Eagle

12

May 2016

MARKET NEWS

and Pecan Tassie

cookies

Allergen

05/03/2016 Market District Sunflower

Kernels

Listeria

monocytogenes

Giant Eagle

05/05/2016 Golden Gourmet Veggie Chips Undeclared Milk Bickel’s Snack

Foods

05/04/2016 Mountain Thins Mountain Thins

"Trail Mix"

Listeria

monocytogenes

Brown &

Haley

05/04/2016 Market District Sunflower

Kernels

Listeria

monocytogenes

Giant Eagle

05/04/2016 Bybee's,Columbia

River Organics,

Northwest

Growers Select

and others

Frozen Organic

and Traditional

Fruits and

Vegetables

Listeria

monocytogenes

, CRF2016

CRF Frozen

Foods

05/04/2016 Hickory Harvest,

IM Good, Sheetz,

and others

Sunflower

Kernels

Listeria

monocytogenes

Hickory

Harvest

Foods

05/04/2016 Southern Grove,

Natures Harvest,

Roundy and

others

Snacks

containing

sunflower

kernels

Listeria

monocytogenes

TreeHouse

Foods, Inc

05/03/2016 Frontera Frontera Undeclared Soy Frontera

Foods

05/03/2016 Market District Sunflower

Kernels

Listeria

monocytogenes

Giant Eagle

05/03/2016 Market District Sunflower

Kernels

Listeria

monocytogenes

Giant Eagle

05/03/2016 Blue Bell Rocky Road Ice

Cream

Undeclared

Allergens Soy

and Wheat

Blue Bell Ice

Cream

05/06/2016 Pulmuone Korean

Noodles

Undeclared Milk Pulmuone

Foods USA

05/06/2016 Watts Brothers

Farms, Trader

Joe’s

Frozen vegetable

products

Listeria

monocytogenes

, CRF2016

ConAgra

Foods

05/06/2016 Harris Teeter Frozen Organic

Corn and Frozen

Mixed

Vegetables

Listeria

monocytogenes

, CRF2016

Harris Teeter

05/06/2016 Dorothy Lynch

Home Style

Dressing

Dorothy Lynch

Home Style

Dressing

Bacteria

(lactobacillus)

Tasty

Toppings, Inc.

05/05/2016 Pita Pal Salads Listeria

monocytogenes

, CRF2016

Pita Pal

Foods, LP

05/05/2016 Dakota Style Sunflower

kernels

Listeria

monocytogenes

Dakota Style

Foods, Inc.

05/05/2016 Creative Snacks

Co., Heart Smart

Mix, The Fresh

Market, Plentiful

Planet, and

others

Sunflower Seed

Products bulk

and packaged

Listeria

monocytogenes

Creative

Snacks Co.

05/05/2016 Millville Schulze and

Burch Biscuit

Co

Listeria

monocytogenes

Schulze and

Burch Biscuit

Co.

13

May 2016

MARKET NEWS

05/05/2016 Publix Wheatberry

Salad Containing

Sunflower

Kernels

Listeria

monocytogenes

Publix

Supermarkets

Inc.

05/05/2016 Watts Brothers

Farms, Trader

Joe's

Frozen vegetable

products

Listeria

monocytogenes

, CRF2016

ConAgra

Foods

05/10/2016 Frontier Co-op Organic Hojicha

Tea

Salmonella Frontier

Co-op

05/10/2016 Publix Cranberry nut

and seed mix

Listeria

monocytogenes

Publix Super

Markets

05/09/2016 Natural

Directions

Organic Mixed

Vegetables and

Organic Green

Peas

Listeria

monocytogenes

, CRF2016

NORPAC

Foods, Inc.

05/09/2016 Uncle Bucks Sweet & Salty

Trail Mix

Listeria

monocytogenes

Rucker’s

Wholesale

and Service

Co.

05/09/2016 Let's Talk Health "Energizer Drink

Mix," Agua Vitae

Liquid

Multi-Vitamin,

Agua Vitae Kids

Liquid

Multi-Vitamin

and Tox-Elim

Undeclared milk

and soy

Let's Talk

Health, Inc.

05/09/2016 Kroger Broccoli Raisin

Salad

Listeria

monocytogenes

The Kroger

Co.

05/09/2016 Dollywood Sweet & Salty

Trail Mix

Listeria

monocytogenes

Rucker's

Makin' Batch

Candies, Inc.

05/07/2016 Kroger, P$$T Frozen

Vegetables

Listeria

monocytogenes

(CRF2016)

The Pictsweet

Company

05/07/2016 Kroger, P$$T Frozen

Vegetables

Listeria

monocytogenes

, CRF2016

The Pictsweet

Company

05/06/2016 Central Market

Organic, HEB,

Sweetfrost and

Woodstock

Vegetable

Products

Containing

Organic Peas

Listeria

monocytogenes

, CRF2016

Twin City

Foods, Inc

05/18/2016 Amino Gold Supplements Undeclared milk Ultimate

Nutrition

05/17/2016 Tai Pei, Trader

Joe's, Hy-Vee,

more

Frozen foods Listeria

monocytogenes

, CRF2016

Ajinomoto

Windsor, Inc.

05/16/2016 Stahlbush IQF Green

Beans

Listeria

monocytogenes

Stahlbush

Island Farms,

Inc.

05/13/2016 Fresh Attractions,

1897, Ciao,

Farmers Market,

more

Trail Mix Listeria

monocytogenes

HMSHost

05/13/2016 The Farmers

Market

Chopped Asian

Salad Kit

Undeclared

Almonds, Soy

and Wheat

Fresh Express

05/13/2016 Dr. Praeger's,

Ungar's and

more

Frozen food

items

Listeria

monocytogenes

(CRF2016)

Dr. Praeger's

Sensible

Foods, Inc.

14

May 2016

MARKET NEWS

05/13/2016 Productos Del

Campo Castillo

Habanero

Peppers

Salmonella Montero

Farms

05/12/2016 Piggly Wiggly Yellow Cut

Corn

Listeria

monocytogenes

, CRF2016

McCall Farms

Inc.

05/11/2016 Whole Foods

Market

Korean BBQ

Sauce

Undeclared

peanuts and

tree nuts

(coconut)

Whole Foods

Market

05/10/2016 Nature's Promise,

Woodstock,

Market Basket,

Woodfield Farms

Walnuts and

walnut-containin

g products

Listeria

monocytogenes

United

Natural

Trading LLC

dba

Woodstock

Farms

Manufacturin

g

05/24/2016 C. J. Dannemiller

Co.

Sunflower

kernels

Listeria

monocytogenes

C. J.

Dannemiller

Co.

05/24/2016 E.S. Foods Products

containing

sunflower

kernels

Listeria

monocytogenes

E.S. Foods

05/24/2016 Backroad

Country

Cranberry Nut

Delight Mix,

Honey Island

Crunch Mix,

Peanut Butter

Pretzels, Walnuts

Halves & Pieces

Listeria

monocytogenes

Troyer Cheese

Inc.

05/22/2016 Hy-Vee Trail mix

products

Listeria

monocytogenes

Hy-Vee, Inc.

05/21/2016 Albertsons-Safew

ay, Bashas, more

Oriental Salad

with sesame

ginger dressing

Listeria

monocytogenes

Papa John's

Salad and

Produce, Inc.

05/20/2016 Dakota Style Sunflower

kernels

Listeria

monocytogenes

Dakota Style

Foods, Inc.

05/20/2016 Hickory Harvest,

Big Y, Amish

Farms, more

Products

containing

sunflower

kernels

Listeria

monocytogenes

Hickory

Harvest

Foods

05/19/2016 Southern Grove,

Naturally Select,

more

Sunflower seeds,

kernels, trail mix

products

Listeria

monocytogenes

TreeHouse

Foods, Inc.

05/19/2016 The Caramel

Factory

Candies,

chocolates and

baked goods

Undeclared

milk, eggs,

peanuts, tree

nuts, soy,

and/or wheat

The Caramel

Factory, LLC

05/18/2016 Sunrich Naturals

and Planters

Sunflower kernel

products

Listeria

monocytogenes

SunOpta

Enterprise News

US Foods to acquire Freshway Foods

US Foods announced it has agreed to acquire Freshway Foods, a fresh fruit and

vegetable processor, repacker and distributor serving customers throughout the

eastern half of the United States.

15

May 2016

MARKET NEWS

Established in 1988, Freshway Foods is owned by brothers Phil and Frank Gilardi

and is based in Sidney, Ohio. The company has built a strong reputation for

providing value-added fresh cut produce that includes the cutting, cleaning,

chopping and packaging of raw produce resulting in a product that can be

customized to meet any customer’s preferences and delivered ready for

immediate use. In addition, Freshway Foods has established a robust

farm-to-fork food safety approach that ensures food safety compliance from the

grower through consumption.

US Foods will be keeping the Freshway Foods building open and is pleased to

welcome its employees to US Foods.

“We are very excited about this new partnership with US Foods,” said Phil

Gilardi and Frank Gilardi, the two owners of Freshway Foods. “Since we started

this business, our success has been built upon our commitment to our associates

and our customers and we are looking forward to the next chapter for Freshway

Foods as part of a well established and reputable company like US Foods.”

The transaction is expected to close on June 10, 2016. Terms of the transaction

were not disclosed.

Cargill and Jollibee Foods to build poultry processing plant in Philippines

Cargill Philippines has signed an agreement with Jollibee Foods Corporation (JFC)

to form a joint venture to build and operate a poultry processing plant in Santo

Tomas, Batangas, the Philippines.

Cargill Philippines is a fully owned unit of Cargill, while JFC is a food service

company,

Cargill will have a 70% stake in the Cargill Joy Poultry Meats Production joint

venture (JV), while JFC will hold a 30% interest.

The development, management and operations of this facility will be overseen

by Cargill.

The JV is expected to create around 1,000 full-time jobs.

JFC chief executive officer Ernesto Tanmantiong said: "We partnered with Cargill

to deliver high-quality chicken products through Cargill's technology and quality

standards.

"The facility will provide JFC with dressed and marinated chicken to augment the

chicken supply requirements of the growing needs of JFC brands. This

partnership will meaningfully benefit our customers, our operations, as well as

the overall Philippine food industry.

"We will continue to maintain our strong relationship with key chicken suppliers

in the country and look forward to sustained long-term supply arrangements

with them as our businesses grow together."

Cargill Joy Poultry Meats Production managing director Paul Fullbright said:

"Cargill is making additional investments in the Philippines to participate in the

robust growth of its consumer sector. Cargill can contribute in further enhancing

the quality of products of JFC brands for its customers at very competitive costs

and raise the assurance of its chicken supply.

"As in many other parts of the world where we do

business, Cargill can also contribute in

improving the system of hygiene, food

safety, and quality by operating a

world-class facility and by setting high level of

partnership ?with the poultry growers and

farmers. We look forward to a very productive

poultry processing venture in the Philippines and

with JFC."

JFC will invest PHP244.9m ($5.2m) for the 30% stake, as

well as PHP15.2m ($320,000) for a 30% interest in Cargill Joy

Poultry Realty, from which the JV will take the land on lease to set up the facility.

16

May 2016

MARKET NEWS

InnovAsian Cuisine issues voluntary recall of its Frozen Chicken Fried

Rice products

InnovAsian Cuisine Enterprises is voluntarily recalling its Not-Ready-to-Eat Frozen

Chicken Fried Rice products because they contain frozen vegetables that have

the potential to be contaminated with Listeria monocytogenes.

This voluntary recall results from an earlier recall by CRF Frozen Foods of Pasco,

Washington. CRF Frozen Foods voluntarily recalled fifteen frozen vegetable

items, including frozen peas supplied for use in InnovAsian's Chicken Fried Rice

products. As a precautionary measure, InnovAsian is recalling the products

identified below, which contain frozen peas supplied by CRF Frozen Foods.

No illnesses have been reported as a result of consuming these InnovAsian

products. The products identified in this recall are frozen, not ready-to-eat.

Cooking at proper temperatures eliminates food safety risk. However,

InnovAsian is committed to food quality and food safety and has chosen to

voluntarily recall these products from the marketplace immediately.

The voluntary recall is limited to the product codes listed below. Please see the

grid below to reference where to locate product UPC code and best by date for

each product. No other product codes, sizes or varieties of InnovAsian products

are affected by this recall.

InnovAsian is working diligently with its retail customers to ensure the affected

products are removed from store shelves and from distribution.

Sugar shortage forces Coca-Cola Femsa to stop production in Venezuela

Coca-Cola Femsa SAB, the Venezuelan bottler of Coca-Cola, has stopped the

production of the sugar-sweetened beverages due to sugar shortage in the

country.

Venezuela is currently experiencing a deep recession, with severe food

shortages, frequent power cuts and high inflation resulting in looting and

demonstrations.

The company's spokeswoman Kerry Tressler told The Guardian in an email that

the production of sugar-sweetened drinks has been halted, however, output of

diet drinks such as Coca-Cola Light and other zero-sugar beverages is continuing.

Tressler said: "Sugar suppliers in Venezuela have informed us that they will

temporarily cease operations due to a lack of raw materials."

Price controls and rising production costs has been weighing on the sugarcane

production in Venezuela, apart from difficulties in getting fertiliser.

The problems have compelled several small farmers to start producing other

crops which are not price controlled and generate higher income, reported The

BBC.

According to USDA estimates, Venezuela'sugarcane production is expected to

fall by 450,000 tons to 430,000 tons in 2016-17 compared to the output in the

17

May 2016

MARKET NEWS

previous 12 months.

Coca-Cola Femsa SAB, which operates four plants in Venezuela, gets around 7%

of its income from the country. It is a joint venture between Coca-Cola and

Mexico's Femsa, reported Reuters.

In February this year, Coca-Cola Femsa announced plans to invest around $800m

to expand its operations in Philippines over the next four years. The immediate

plans included purchase of two extra polyethylene terephthalate (PET) lines and

two tetra pack lines for $170m in 2016.

Wal-Mart vs. Amazon in FMCG and food in new online battle

While online grocery

shopping is just growing in

Australia, it is the focus of a

new global war between

two of America’s global

biggest retailers.

Both Amazon and

Wal-Mart have recently

made news regarding the

expansion of online

shopping services.

According to the Wall Street Journal.

Amazon, will soon be selling its own private label goods, including perishable

food. The private labels are expected sell everything from nappies to nuts,

coffee and vitamins.

The retailer is yet to confirm the move so information regarding shipping times,

how products will be packaged and what type of price points products will be

sold at is unknown.

Wal-Mart steps up online offerings

America’s retail giant Wal-Mart has its own plans to expand online sales

irrespective of the new FMCG offerings from its online competitor Amazon.

Wal-Mart plans to grow its customer base with a new subscription service called

‘ShippingPass’. The service allows US shopper to pay a US $49 fee for a year’s

worth of unlimited 2-day shipping of Walmart products.

Some US commentators have already described the service as a direct attempt

to compete with Amazon’s ‘Prime’ service which gives its customers 2-day

unlimited shipping. Amazon’s service is more costly, priced at US$99 for a one

year subscription, but it also provides extras such as access to movies, TV shows

and ad-free music streaming.

At the same time, Walmart has also expanded its ‘Walmart Pay’ technology into

two new states, Texas and Arkansas. Walmart Pay lets customers pay for

products through a Walmart app instead of using cash or card.

Fonterra launches global food service brand Anchor Food Professionals

New Zealand-based Fonterra has introduced Anchor Food Professionals, a new

global food service brand that will help it access opportunities in this segment.

Fonterra foodservice director Grant Watson said: "We work alongside our

customers to bring business and product solutions that answer questions such

as improving profitability and reducing waste.

"We're helping businesses with all aspects of their operations, from

front-of-house presentation, and pricing and promotion, to enhancing yield and

taste and delivering exciting new menu options."

Fonterra aims to increase its foodservice business to be $5bn by 2023 by taking

this new model into North and South America.

Anchor Food Professionals will initially begin with China.

18

May 2016

MARKET NEWS

Watson added: "We're seeing massive growth worldwide due to the changes in

people's diets and daily lives.

"More and more people are grabbing food on the go or dining out, Anchor Food

Professionals will help our customers keep up with this growth. Our aim is to

grow at two to three times the market."

In China, the dairy cooperative has a market share ranging between 40% and 80%,

depending on the product segment.

It estimates that half of all pizzas in China have its cheese on top and more than

50% bakery chains in the country use its dairy products.

HMSHost Recalls Multiple Brands of Cape Cod Cranberry Trail Mix

Because of Possible Health Risk

HMSHost of Bethesda,

Maryland is recalling multiple

brands of trail mix, because

they have the potential to be

contaminated with Listeria

monocytogenes, an organism

which can cause serious and

sometimes fatal infections in

young children, frail or elderly

people, and others with

weakened immune systems.

Although healthy individuals may suffer only short-term symptoms such as high

fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, Listeria

infection can cause miscarriages and stillbirths among pregnant women.

The Cape Cod Cranberry Trail Mix, 7 oz., was sold under the brand names Fresh

Attractions, 1897, Ciao, Farmers Market, Grounded In, La Tapenade, Marche,

MKT, Pronto, PZA, The Local, and Urban Market in stores in the following

markets: Arizona, California, Florida, Illinois, Massachusetts, Missouri, New

Jersey, New York, Pennsylvania, Texas, and West Virginia.

The trail mix has a UPC code of 2050000142000 and a use by date from 4/5/16 to

9/17/16.

HMSHost was recently notified by one of its snack manufacturers, Woodstock

Farms Manufacturing, that during their routine testing, the presence of Listeria

monocytogenes was revealed in two lots of walnuts used in one of its trail mixes.

To take every precaution, HMSHost has removed this product from stores and is

initiating a recall of its 7 oz. Cape Cod Cranberry Trail Mix.

The manufacturer has reported that there are no known illnesses to date from

the ingredient in question; however, we ask that you do not consume this

product. Consumers who wish to receive a refund for unused portions may

return it to the store for a full refund or contact customerservice@hmshost.com

or call 1-877-672-7467. Our phone lines are manned 24 hours a day 7 days a week.

MARKET NEWS - REPLY

If you have any views or comments on the articles in the marketing news please feel

free to contact us on the following email address: sales.china@mxns.com