The Friday Report: March 15th, 2019

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

Record Soy Exports in Brazil and Canada Result of U.S. Trade War with China

Increased tariffs on Chinese imports have had a significant effect on the American agricultural industry.  Orders for some crops can readily be filled by countries with mature, competitive agricultural industries.  Take, for example, soy.  Last year, Brazil was the winner in the U.S.-China trade war.  China, the biggest buyer of American soybeans in recent years turned to Brazil to fill soybean orders.  U.S. soybean prices dropped and the Brazilian crop was sold at a premium.  Last year’s hot new crop in some of Canada’s prairies may be in for a change, however.  Canadian soybean acres appear ready for their second straight year of decline.  Canadian farmers have expressed concerns about continued pricing drops if China and the U.S. are able to commit to a trade deal.

Canada, the fifth-largest global exporter had seen soybean acres double over the past decade.  With the U.S.-China trade debacle, Canadian soybean growers were able to gobble up a larger piece of the global market.  Canadian soybean exports to China tripled in November 2018, an all-time high.

But the winds of change are blowing in 2019.  China is working to reduce its use of soybeans.  African swine fever has been spreading, resulting in culling of swine herds and reducing the need for soybeans in livestock feed.  Weather challenges for the past two seasons have reduced soybean yields.  Now Canadian farmers are able to get heftier returns per acre by planting canola.

Adidas Growth Limited by Supply Chain Shortages

Recognized for its technologically advanced manufacturing, Adidas relies on two automated “superfactories” in Germany and Atlanta Georgia.  These factories produce only a small fraction of the goods Adidas sells.  Nearly 100 percent of Adidas products that are manufactured, 71 percent from Asia alone, are outsourced.  In 2018, Adidas experienced double-digit sales growth in North America, Greater China and e-commerce markets.

Supply chain shortages, attributed to Asian suppliers are anticipated to hamper Adidas growth in 2019.  A rebound in supply is expected in the second half of the year.  Adidas attributes this to higher sales volume in 2018.  CEO Kasper Rorsted explained that Adidas failed to respond quickly enough to the demand signal, causing supply shortages.

Merck Partners with Iktos for Generative Artificial Intelligence (AI) Technology

Merck recently announced a collaboration agreement with Iktos for use of its generative modeling AI technology.  The AI technology will be used to help facilitate rapid, cost effective discovery and development of new compounds.

Artificial intelligence is now being used in biopharmaceutical research and development efforts due to its precision and speed.  Merck is driving continued transformative approaches to research and development using machine learning and artificial intelligence.

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