Tuesday, May 31, 2005

REMA FOODS IMPORT MARKET FLASH

REMA FOODS IMPORT MARKET FLASH Tel: 201-947-1000
DATE: May 31, 2005

TRADE/POLITICS
Unfortunately, the upcoming Central American and Dominican Republic Free Trade Agreement is getting caught up in the current anti-trade and protectionist climate caused primarily by our increasing US trade deficit with China.

CURRENCY UPDATE
Congress threatened to impose trade restrictions against China, for that government’s refusal to allow the yuan to float against the dollar. If freed from its narrow trading range, the yuan would certainly appreciate in value (it’s being artificially held down), causing prices of Chinese products to increase. However, even if China cooperated, it’s not expected that they will allow the yuan to appreciate by more that a few percent.

TUNA
After climbing strongly over the past few months, skipjack and yellowfin raw material costs appear to be leveling off, with packers trying to bid the cost down. Tongol on the other hand is very hard to come by, while albacore remains relatively steady.

PINEAPPLE, TROPICAL FRUIT SALAD
Drought is still expected to cut significantly into the Thai summer crop, while all indications point to a normal winter crop.

OLIVE OIL
No relief in sight as olive oil pricing remains at very high levels, especially higher quality Italian oils.

TOMATOES
Higher ocean freight costs have a significant percentage impact on a relatively low cost item like tomatoes. Freight rates on tomatoes from Italy have increased three times already this season, up $700 from early in the season, and additional increases are still expected. For 2005, Italian field pricing has not yet been set as farmers and packers continue to negotiate. The initial planting has passed without incident.

PEACHES
Better times may be ahead this summer for imported peach buyers. After experiencing a disastrous crop failure in 2003, Greek packers went into 2004 with no carryover stock. As such, they could do no better than refill the pipeline even though the 2004’s crop was good. A good crop for 2005 could finally return Greece to a competitive export condition. Furthermore, the dollar has this year strengthened against the euro, and the weak 2003 market gave Chinese packers the incentive needed to beef up their production. 2005 could be the first year where Greece and China export good crops. In the meantime, California issued its 2005 production estimate showing a slight drop of 3% (quantity) compared to last season.

CANNED BEEF
After touring factories a couple of months ago, a USDA inspection found issues at several large plants, and the Brazilian government followed up by suspending the export licenses for all 28 companies licensed to export processed beef. Needless to say, the market is very firm.

ARTICHOKES and PEPPERS/PIMENTOS
Even with a worse crop than last year, Spanish packers are trying to lower costs so as not to lose market share to Southern hemisphere countries such as Chile and Peru.

ASPARAGUS
It appears the Chinese asparagus crop has survived a lengthy cold spell that farmers originally thought would wipe out this year’s harvest. Since late April, the weather in the Shanxi and Shandog growing regions have improved significantly. Still, the harvesting didn’t begin until late May, instead of the usual early April.