Sunday, January 30, 2022

"China’s Growing Fondness for Bread Will Help Boost Wheat Imports"

From Bloomberg via Yahoo Finance, January 18:

China will keep scooping up more and more global wheat supplies after record imports last year, with changing diets in an increasingly affluent society set to be a key driver of future demand.

Overseas purchases jumped 17% to about 9.8 million tons in 2021, customs data show. Increased use of wheat for animal feed because of high domestic corn prices and a difficult harvest played a major role in pushing up imports.

But the impact of rising wealth on people’s diets is also boosting demand for the grain, a core ingredient in everything from bread to noodles, dumpling skins, biscuits and pastries. Growth in consumption has accelerated in recent years as China adopts more western-style eating habits, and food use will be the leading driver of wheat demand, according to Sitonia Consulting.

“We’re still expecting China’s 2022 imports to be large,” said Darin Friedrichs, co-founder and market research director of Sitonia, a China-based agricultural information service provider. “Domestic prices remain high due to increased use of wheat in animal feed and structural trends in consumers’ eating habits.”....


Hey, it happened with chocolate.

February 14, 2014
"World's Sweet Tooth Heats Up Cocoa" 

Damn it , damn it, damn it.

Three years ago seeing stories like "Chocolate replica of the Great Wall of China" I thought doing some sort of chocolate thing in China might be profitable. Chocolate worked out okay for Mr. Buffett.*
But during the due diligence the consultants said the Europeans, particularly Barry Callebaut and Lindt (formally Chocoladefabriken Lindt & Sprüngli, yummy eh?) had already made great strides in Asia.

So I let it rest but kept peeking at this picture of the dark goddess replacing terra cotta from an exhibition that drew a half-million chocoholics:

And thinking there might still be time.

Then in 2013 we read that the 30,000 sq. meter Chocolate Happy Land theme park has opened and by now I'm pretty sure that, yes, there is a freaking appetite for chocolate in China and where are those two clowns who warned about Barry freaking Callebaut? I mean come on, They have white chocolate:

And milk chocolate (on a dark chocolate plinth):
These people are in the grips of chocolate madness.
And I'm not moving any product.
From the Wall Street Journal:

Growing Demand From Emerging Markets Is Pushing Up Prices for Key Ingredient in Chocolate
Hoard that Valentine's Day candy now, because chocolate prices are poised to head higher.
Demand for the treat is soaring, especially in emerging markets where customers are getting wealthier. And farmers around the world are struggling to produce enough cocoa to keep the chocolate flowing.
That has driven prices of cocoa up 9% this year, to levels not reached since 2011.

The International Cocoa Organization predicts demand will outstrip production for the next five years, the longest shortfall since the trade group began publishing data in 1960. That likely means higher chocolate prices for years to come.

Already, the rising costs are making the leap from the futures market to the candy aisle. Last year, the average retail price of chocolate in the U.S. rose 2.8%, faster than the rate of inflation more broadly, according to market-research firm IRI. 

"We are looking at a situation where elevated cocoa prices are going to be much more the norm," said Sterling Smith, a futures specialist at Citigroup C -0.71% in Chicago. "You can't ramp up cocoa production like you can ramp up corn production," where devoting additional acreage to the fast-growing crop quickly raises output.
"That means chocolate and cocoa-based items are inherently going to become more expensive," Mr. Smith said.

Barring a last-minute reprieve, chocolate makers such as Mars Inc., maker of M&M's and Snickers, and Nestlé SA, which sells Butterfinger and Crunch bars, face some hard choices. They will likely either boost retail prices to cover the added costs, shrink the size of candy bars or seek substitutes for cocoa.
On Thursday, U.S. cocoa futures settled at $2,958 a ton, a 29-month high.

At these levels, chocolate makers could be forced to raise prices or cut back on how much cocoa they use, analysts say.

"Definitely $3,000 a ton will be a wake-up call.…Traders and manufacturers will start to react at that level," said Edward George, a commodities analyst at Ecobank in London. 

Mars, Nestlé and Mondelēz International Inc., which owns Cadbury, declined to comment on how they might adjust to higher cocoa prices....MORE
Warren calls See's the 'prototype dream business'. Buffett's total cash into See's Candy was $25mil. He's pulled $1.35 billion cash out. The $1.35 bil. allowed him to go buy other stuff which kicks off cash. Living La Vida Cocoa.
And damn it, a founding member of the Chinese Chocolate Cartel has this sweet ride:
TO GO WITH  Asia-food-China-Switzerland-Belgium-luxury-chocolate,FEATURE BY CAROL HUANGThis picture taken on January 18, 2013 shows people admiring a chocolate-made classic car at the Chocolate Happy Land in Shanghai.  A chocolate replica of Michaelangelo's David and the Eiffel Tower is wowing visitors at Chocolate Happy Land, while across town Chocolate Wonderland boasts a candy-filled lover's lane and fashion show.  CHINA OUT   AFP PHOTO

Very related:
Living La Vida Cocoa: Warren Buffett, Berkshire Hathaway and the Chocolate Wars (BRK.A; BRK.B; CBY; KFT; HSY)