Market Report October
The market in general
The season in the Northern Hemisphere is drawing to a close and the results are in: In spite of Corona virus and the serious problems it has caused, harvests were successful for the most part and supplies have been secured. The level of creativity and flexibility, and the speed at which all those involved are handling the corona virus challenges in the global supply chain is impressive. This has been witnessed across the board, be it in the source country in fields and factories, transport and logistics, distribution, local production or in sales. In combination with timely and adequate stock management, this has created stability and trust in the market in view of the difficult months that probably lie ahead in the global pandemic crisis.
Market infos and recommendations
Once again, the price of skipjack in Bangkok has fallen as fast as it had previously risen. Peaking at $1,600/ton at the end of August, prices are now just below $1,300/ton. And all this despite consistently poor catches, due in part to the recently ended three-month FAD ban. There is a lack of demand, which is also reflected in the very inexpensive supply of processed tuna products compared to raw fish prices. It is a buyer’s market. Manta is following this trend by necessity. We recommend promptly covering your needs at least up until and including the second quarter of next year. The market often starts to turn at the end of the year and then stays firm at the start of the year. In view of the rising demand for MSC-certified catches, we recommend that you do not wait.
Although a good result is expected on the global level (approx. 38.2 million tons following 37.4 million tons in 2019), there will be approx. 0.5 million tons less than expected in the key countries of origin of Italy, Spain and Portugal. Poor weather during the harvest months and low yields (50% less than the previous year in Andalusia) are to blame. This is reflected in cleared stocks from the previous year and continuing very strong demand. The upward trend in prices continues, there will be little availability after the season, and China (5.5 million tons) and California (10.3 million tons) will not be able to step in. Supplies up until autumn 2021 need to be secured now! The result for dried tomatoes from Turkey allowed for a good final, with a good supply of frozen semi-dried tomatoes. However, an EU tariff quota will not be available again until January.
The harvest in Turkey will continue until the first frost. Due to weak demand from the GM market, less crops were grown and the weather in July resulted in losses. All in all, however, the supply is adequate and the market is balanced. In addition to the strains caused by the corona virus, for example due to a lack of seasonal workers and poor productivity in factories, farmers and producers are having to deal with steep price increases for all importdependent operating costs. The Turkish lira has lost about a third of its value against the Euro within one year. However, this is in turn offset by the Euro purchasing currency, with the price level now evening out in line with the previous year. We now have organic pepper stripes and dices in stock from the latest harvest.
There are still some in stock but they will soon sell out. With regards to the new season, there has been a sharp decrease in cultivation in South Africa and the harvest will begin there in December. Due to the preventive measures taken against corona virus, e. g. social distancing, the number of employees must be greatly reduced, which will delay manual core removal in factories. Now is the time to consider the follow-up supply for 2021.
Supplies from Peru remain strong, and organic jalapeños (red/green, rings/dices) are now available from Turkey.
There is strong demand and it has been already sold out in Europe. Thailand will be back from February onwards and we must wait and see if it will be competitive again. Supplies from South West China are sound in terms of quality and quantity. The same is true for baby corn from Vietnam.
There was a much smaller harvest in the main country of origin, Morocco, and in Turkey fewer raw material is arriving from Central Asia (Kyrgyzstan, Turkmenistan and Uzbekistan). Due to weather conditions, picking was delayed and there was a lack of harvest workers. Small calibres (nonpareille and surfine) in particular are in short supply. Prices have risen and will continue to rise. We offer a wide range of capers, including pastes which follow individual recipes and some products certified as organic. Cover your needs now as it will get tight.
High expectations in Spain must now be lowered, as there has been a lack of rain after a very hot summer. Prices from there will be available by the end of November, followed by Italy, Greece and Morocco with some delay. The demand for organic olives continues to grow and Greece is anticipating higher prices for organic Kalamata/Kalamon olives. We would be happy to advise you on the season now beginning.
Processing will begin in South West India in November. At the moment we are expecting a stable supply, however bottlenecks in the harvest are anticipated also in this country due to the corona virus. We have made provisions and, as an alternative to canisters, we are now also offering poly bags (2 x 10 kg/kt) with just a small amount of brine to be disposed of.
First came the plague of locusts, then a catastrophic flood; North East Africa is suffering greatly. Ethiopia, the main country of origin for sesame seeds, has been hit particularly badly. Losses in excess of 30% are expected for the harvest now getting under way. Losses are also expected in growing regions in India due to heavy rain, which means that an overall strained supply is to be anticipated. Higher prices for tahini can be expected at a time when global demand is rising. This is already the case for organic products. Please discuss your needs with us now.
Frozen mushrooms, shiitake, black fungus and nameko:
The harvest will begin in China in November. The forecasts are good and prices are about as low as they were in the previous year. However, the notable increase in sea freight is being felt.
The supply of raw goods in Thailand continues to be extremely weak with record prices. The winter harvest is off to a slow start, and many factories remain closed or have closed again due to a lack of raw goods. In the upcoming months, output will remain at no more than 50% of the normal rate. It cannot be compensated by other countries of origin, such as the Philippines, Indonesia, Vietnam and Kenya. The time between seedling and harvest-ready fruit is 18 months, so relief can only be expected around the middle of next year. Until then it is important to secure supplies, and we have takenprecautions for this where possible.
Spain is expecting a good harvest with a strong supply of satsumas for the production of canned goods, which will get under way in November. Following a record harvest in 2018/19, the supply of satsumas in particular was considerably lower in 2019/20 and the prices from Spain extremely high. This is now expected to level out, due in part to the positive forecasts made by China. Please watch out for the quality of the remaining stocks that they are offering An average harvest is expected from Turkey. Please discuss your needs with us in the next few weeks.
Both the yield and quality from this year’s harvest in Turkey fall short of the particularly good results seen in 2019. The steep drop in the Turkish lira will allow for low prices, but good quality products will sell out quickly, so we recommend that you cover your needs now.
Sincerely,HENRY LAMOTTE FOOD GMBH (issued October 16th, 2020)
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