Corona Capital from Breakingviews: Some U.S. food producers are closing plants, leading to fears of shortages, while others are dumping excess supply even as demand for delivered groceries soars
TRUMP MAY PAY FOR MEXICO’S OIL-PRODUCTION WALL. Mexico’s president, Andres Manuel Lopez Obrador, known as AMLO, scored a short-term win in the weekend’s production-cutting deal between the Organization of the Petroleum Exporting Countries and others. The cartel wanted the Latin American nation to cut 400,000 barrels a day, according to AMLO, around 23% of current output, later reducing the demand to 350,000 bpd.
Trump said the United States would help cut the additional production, and suggested that Mexico will somehow pay back the favor later. AMLO may have taken a page from Trump’s “The Art of the Deal,” but his decision to put the heavily indebted state-owned energy company Pemex at the heart of his economic growth agenda is still a lousy idea.
FOOD MAKERS GO FROM FEAST TO FAMINE. Covid-19 has brought disruption for companies that keep Americans fed, but with widely different results. Consider the effect on meat supply as the disease ravages workforces. Cargill and Smithfield Foods are among those that have closed plants, leading to fear of shortages.
In other sectors, there’s too much supply. Milk demand has fallen so much that the U.S. Department of Agriculture loosened dumping rules. One problem is the large amount that usually goes to schools. Florida farmers are worried labor shortages will mean that fruit and vegetables go unpicked this summer.
The idea of food going spare seems absurd when demand for delivered groceries has even outstripped Amazon.com’s capabilities, and millions of families are struggling to make ends meet. Covid-19 has shown a new problem: It’s not how much of a product is made, but where it is that counts. Reuters Breakingviews is the world's leading source of agenda-setting financial insight.
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