Monday, January 23, 2006


DATE: Jan 23, 2006

-- U.S. ports are starting to charge a “Port Security Charge” on all containers.
-- The U.S. trade Representative published a list of items that could lose their duty free status under the rules of GSP (Greater System of Preferences). On the list are canned Clams from Thailand, and various dried fruits and nuts. Actual changes could go into effect on July 1, 2006.
-- Chinese New Year (Year of the Dog) starts in a few days. Most Asian companies are closed until early Feb.

Overall slight weakness in the dollar vs the euro as interest rates start to level off in the U.S.

In this post Christmas, pre-Chinese New Year period, fishing is relatively slow, and raw material pricing is firm. Packers are talking about levels going to over $900/mton, from only $730 a month ago. With no significant quantities of raw material trading hands now, most packers are hesitant to offer, or are offering at high prices. Albacore, on the other hand, is trading and it continues to firm, as has been the case throughout the end of 2005.

As explained last month, the mandarin packs in both China and Spain are considerably worse than first predicted. The crops in several large Chinese mandarin growing provinces are down 30-40%. Pricing is up about 20% from the recent new crop opening; significantly higher than both the so called “official government price” and last year’s levels. Packers are already claiming they will have difficulty fulfilling new pack contracts. While the situation is bad in China, the market leader, it’s even worse in Spain as packers there project 3.8 million kilos, vs 9 million in a normal year.

Graphs of world peach production and exports are posted at: .
Frost, late crops and strong internal demand are damaging the outlook for exports from Southern Hemisphere producers such as Argentina, Chile and South Africa. [Southern Hemisphere crops are opposite to the U.S. seasons – so just beginning now]. Of these countries, Argentina, which has the largest export business to the U.S., has announced opening prices that are $5 higher than those from Greece just six months ago. Overall, not many Southern Hemisphere peaches will make it to the U.S. this season (as was the case last year as well). To recap the Northern Hemisphere for 2005/06, in the U.S., this past crop came in 9% under last year’s, the second lowest in 20 years, and growers have already committed to pulling 4,000 acres of peach trees in a government financed program. [For 2006, one large packer, Signature Fruit announced they were not going to run one their two California factories]. Greece packed an amount similar to last year and the Greek packers have regained most of the market share lost in 2003 when their crop failed. A complete USDA crop analysis of the world market was just published at:

The mushroom market is firming from all major sources to the U.S., including China and India. In China, a poor crop coupled with strong demand is pushing up pricing. The U.S. is China’s largest export market with Jan-Sep 2005 exports of 33,000 mtons, up from 31,000 a year earlier. Russia however is the new Chinese export market that has pushed up overall demand. Last year, Russia was China’s second largest export market with 31,000 mtons - more than double the 15,000 taken the year prior. For Indian producers, 2005 saw pricing drop to its lowest level in years as low quality stocks were cleared out. India’s renewed focus on quality has pricing up substantially from last year.

See for a graph of olive oil raw material costs from April 2000 through December 2005. Several observations: (1) Pricing has increased significantly, especially over the past year. Extra virgin dipped slightly in November, but immediately returned to its highest levels. Overall, pricing is at all time highs. (2) The price spread between extra virgin and pure has narrowed dramatically as they are now virtually the same price. (3) Pomace has increased so much that it is now more expensive than extra virgin was just a few years ago. Of course, this graph applies to genuine olive oil - watch out for adulterated product circling in the market.

The large South American producers are not fulfilling contracts as production ran significantly short of expectations.

With tonnage from most significant producing countries including the U.S. down for 2005, the market is relatively firm. For tomato paste especially, things could change for the new season. U.S. producers are planning for a 14% rise in output, while China is planning to boost production by 60% from 2005’s poor results. Most Chinese raw material currently goes toward paste production.

USDA announced this month that the canker epidemic destroying Florida’s citrus industry is “ineradicable,” and therefore the government will stop compensating growers when they destroy infected trees. Expect expanding imports to fill in the gap.