Google to buy Tesco’s customer analytics company?
US tech giant Google is reported to be considering a bid for Tesco’s customer analytics company Dunnhumby.

After the disastrous year that was 2014 for Tesco, when the retailer reported an annual loss of £6.4bn (€8.9bn), new chief executive, Dave Lewis, has been looking at every option as he tries to turn the business around.

In the aftermath of Tesco’s annual loss, the biggest in its near 100 year history, Lewis announced that he would be reviewing all costs in the business in a bid to clean up the balance sheet and reduce debts of more than £21.7bn.

The group quickly sold off its Blinkbox business, an online streaming service for movies, music and books, before it also offloaded Tesco Broadband.

At the same time, Lewis announced that he was appointing advisers to consider the options for selling Tesco’s customer analytics business, Dunnhumby.

In April 2015, Tesco cleared the way for the sale of Dunnhumby with up to 40 possible suitors, including private equity-led consortiums, showing an interest in the business. However, it is now believed that the US tech giant Google is on the verge of making a serious bid for the analytics company.

A longlist of 10 parties has been drawn up by Tesco, all of which will be invited to make a bid for Dunnhumby by the end of July.

Google is reported to be on this longlist and is in talks with British private equity group, Permira, about making a combined bid for Dunnhumby. Analysts estimate the business is worth up to £2bn (€2.8bn).

Big Data

Tesco acquired the Dunnhumby business in 2004 and it has been hugely successful for it, gathering and analysing data from almost 1bn shoppers around the world. The data is generated from Tesco's Clubcard loyalty scheme and is hugely valuable.

Major food and drinks companies like Coca-Cola, Unilever and Nestle, are all willing to pay Tesco for access to the data and the consumer insight and shopping habits it provides. In the UK alone, there are a staggering 56 million Clubcards in circulation.

Global report: stories from around the world
A weekly selection of global news stories that affect demand, supply and prices

Germany

German wheat production is set to fall to a 10-year low, with the recent spell of hot weather across Europe negatively impacting crop yields. German wheat production for 2018 is now pegged at 21.5m tonnes, which would be 12% down on last year.

China

The USDA has forecast that US soya bean exports for 2018/19 will fall 11% year on year to 55.5m tonnes, primarily as a result of falling market share in China after the Chinese government applied 25% tariffs on US soya beans.

Argentina

Argentinian milk production for the first five months of 2018 (Jan-May) stood at just over 3.7bn litres, which is almost 8% ahead of the same period last year. If milk production continues to expand at this pace, Argentina could see its annual milk supply break 10bn litres for the first time since 2015.

United States

The USDA has increased its forecast for US maize (corn) production in the 2018/19 season by almost 5m tonnes to hit 361.5m tonnes. This would still be short of the 371m tonnes produced in 2017 and the record 385m tonnes produced in 2016.

Tyson Foods issues profit warning as a result of trade tariffs
The largest meat company in the US has slashed its profit outlook, as oversupply and tariffs weigh on meat prices.

Tyson Foods, the largest meat company in the US, blamed the escalating global trade war as it issued a profit warning on Monday. The company said the current trade policy in the US, coupled with increased tariffs on US exports, had hit prices negatively, particularly for pork and chicken.

As a result, Tyson has reduced its profit outlook for 2018, revising its adjusted earnings guidance to $5.70 to $6 a share – down from its previous outlook of $6.55 to $6.70. Shares in Tyson have plunged more than 8% in trading on Monday, as markets take a dim view of the profit warning.

Import tariffs

Both China and Mexico, two of the largest export markets for US pork, have imposed import tariffs on US pork in recent months in retaliation to the 10% tariff that US President Donald Trump slapped on imports of steel and aluminium.

“The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein,” said chief executive of Tyson Foods Tom Hayes.

On top of rising trade tensions, meat prices in the US are under downward pressure as a result of significant oversupply in the market. Higher production of pork and beef has pushed prices of both meats down in the US, which in turn has had a negative impact on chicken prices.

Trump reverts to soya bean politics
US President Donald Trump has said he is back on track with the EU after this week’s meeting in Washington.

With the world teetering on the verge of an unprecedented trade war, an unlikely saviour has emerged to soothe simmering tensions between old allies Europe and the US. This saviour, of course, is none other than the humble soya bean, which has found itself the unlikely antidote to a trade spat created entirely by US President Donald Trump.

Following crunch talks held in Washington this week with European Commission President Jean-Claude Juncker, Trump announced that the EU had agreed to buy billions of dollars worth of extra US exports, primarily soya beans and natural gas.

“European Union representatives told me they would start buying soybeans from our great farmers immediately,” tweeted Trump.

The US President added that the EU and US, which have a $1tn bilateral trade relationship, had struck a deal to work towards zero trade barriers, which Trump proclaimed a “new phase” in EU-US relations.

“We had a big day, very big. We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods,” said Trump.

Soya bean politics

For Trump, highlighting the soya bean angle as a big win is a clear play to his voter base in rural America. US farmers have found themselves a soft target in the escalating global trade war we’ve seen kick off in 2018. Earlier this month, China, the world’s largest buyer of agricultural commodities, slapped 25% tariffs on imports of US products such as soya beans, maize corn and pork.

In a bid to spare US farmers some of the pain from these tariffs, the US President this week announced a $12bn package of direct supports, which will include direct payments to farmers producing commodities such as soya beans, maize, and wheat, as well as dairy and pig farmers.

However, when you look past the theatrics and the tweets, President Trump is trying to spare US farmers from a trade crisis he himself has largely created. Since taking office, Trump has been determined to shake up the global trade system he believes has served the US so poorly. The US President has done this, however, in the only way he seems to know how – by smashing a wrecking ball at it.

Trump started the global trade war when he first slapped 10% tariffs on imports of steel and aluminium from key allies such as Mexico, Canada and the EU. He followed this up by targeting $234bn worth of goods imported from China with tariffs, and has promised more unless China bends to more favourable trade terms for the US.

As such, Trump’s claim that this week’s deal with the EU to buy more soya beans from US farmers is a significant victory rings hollow. For the last number of years, China has continued to import higher and higher amounts of US soya beans, which has driven prices and allowed US farmers to plant record acreages of the protein crop.

But with Beijing imposing retaliatory tariffs on imports of US soya beans, Chinese importers have started to move away from the US and are now looking to South America, and countries like Brazil, as their preferential suppliers.

Instead of going to China from now on, US soya beans are likely to end being shipped to ports in Europe. And while Europe is a net importer of protein crops, its import needs will never match China’s seemingly unquenchable appetite for soya beans.

Europe’s hypocrisy

From a European perspective, any cooling in the recent tensions with the US is to be welcomed. Many viewed this week’s agreement between the EU and US as a significant victory for European President Jean-Claude Juncker, having secured a détente in the recent war of words.

However, many EU farmers will be left scratching their heads when they see the President of the European Commission agreeing to import billions of dollars worth of GM soya beans, a technology that European farmers are banned from using, just to appease President Trump.

The agreement will be even harder for European farmers to stomach following this week’s ruling by the European Court of Justice (ECJ) that gene-edited organisms should be subject to the same restrictions as conventional genetically modified organisms (GMOs).

This means that new plant breeding techniques (NPBT) such as Crispr Cas9 will be subject to the same obligations laid down by the GMO directive.