Thursday, February 28, 2008

CBOT Soybean Oil Weekly Averages (2006-2008)


FDA is considering opening satellite offices in U.S. embassies overseas as part of its effort to improve the safety of food, medicine and other products exported to the U.S. The agency's commissioner, Dr. Andrew von Eschenbach, noted five regions where FDA inspectors and technical advisers could be staffed: China, India, Europe, Central and South America, and the Middle East. To quote the commissioner, FDA will have “boots on the ground” overseas.

With the Andean Trade Preferences Act (ATPA) set to expire at midnight on February 29, the House of Representatives yesterday approved a 10-month extension. In the Senate however, a positive vote is still not a sure thing as a “super majority” is needed (60 votes) and some Senators are vehemently opposed to Bolivia and Ecuador’s inclusion. ATPA affects imports from Bolivia, Colombia, Ecuador and Peru (although Peru is also covered by their Free Trade Agreement with the U.S.). Hopefully the Senate approves the bill today or tomorrow so the President can sign it into law before expiration.

The dollar has crashed again - this time to 151.3 against the euro – an all time record low, and a 5% drop since December. The inflationary pressure of the record weak dollar is complicating Federal Reserve Chairman Ben Bernanke’s management of the economy, as was evident in his Congressional hearing yesterday.

With Chinese New Year coming to an end and fishing boats returning to the sea, skipjack raw material is trading down a bit to $1450/mton (isn’t it amazing that $1450 is actually starting to sound good). Fishing in the Western Pacific, which represents 50% of the world catch, has started to improve while the Indian Ocean catch is still poor. Albacore is steady at about $2300/mton. Interestingly, the high price of light tuna coupled with the relatively low price of albacore has affected imports just as one would expect: for 2007, imported canned light tuna tonnage was down 9.6%, while canned albacore imports were up 12.8%. The retail market in general remains in disarray with the brands battling for market share as Del Monte tries to sell its StarKist division.

In a sign of the changing pineapple industry, after the two remaining pineapple canneries in South Africa merged last year, they’ve now officially stopped producing pineapple and/or juice. In the Far East, packers are still hoping for an improved summer crop, after a disappointing winter season.

Just a few weeks ago, all the stars seemed aligned for an excellent Chinese mushroom crop. Now, after a devastating freeze has hit the southern part of China, packers believe output may actually fall 30%. Packers are withdrawn; a better picture of the situation should be apparent by mid March.

Chinese peach exports to the US more than doubled in 2007, growing from 20,390 to 46,876 mtons (and this is up from only 8,633 mtons just a few years ago). Chinese exports to Thailand increased eleven-fold, with almost all those peaches going towards plastic fruit cup production – which ultimately heads mainly to the U.S. Overall Chinese peach exports worldwide increased from 92,529 mton in 2006 to 148,473 in 2007. In the U.S., the International Trade Commission released a report finding that, based on market share analysis, the domestic U.S. deciduous canning industry is losing its edge to international producers.

Pricing in both China and Peru is up considerably with new pack, while strong demand continues to boost trade. Peruvian packers have increased their total exports over the past few years from 35,867 to 50,628 mtons, while exports to the U.S. more than doubled in that same period. By contrast, exports from the U.S. are down to only 459 tons last year, compared to 3,660 tons ten years ago.

In California, processors are offering farmers 11% more for their tomatoes ($70 vs $63/ton), but farmers complaining about water restrictions say it’s too little, too late. In China, figures are in for 2007, and China has claimed the crown of the world’s largest exporter of tomato paste at 850,285 mtons, an increase of 34% from 2006. Production is expected to increase 10% in 2008.

The dash to find alternative fuel sources has severely affected the oil market and Canola & Soybean pricing remains on fire. In Europe, market for olive oil is uncertain with some rumors speculating that Spain has ended up with a shorter than expected crop: 1.1 million tons vs.1.35 originally projected. Pomace continues to tighten, as more efficient refineries continue to leave less oil byproduct needed for pomace production.

An extremely hot summer in Peru is hurting the upcoming harvest in the Southern part of the country. On the other hand, Spain is reporting a better than normal crop with good fruit quality; however, the euro/dollar exchange rate is negating any possible price advantage for Spain. Other emerging sources of artichokes to be watched this year: China, Morocco and even Egypt

After prices tripled a year ago, packers were pleasantly surprised to see sales hold up throughout the year.

Friday, February 01, 2008

CBOT Soybean Oil Weekly Averages (2006-2008)