Wednesday, April 29, 2009


The US Trade Representative has announced a last-minute, two week delay in the imposition of punitive 100% duties on the amended list of food products originating in the EU. This delay is based on a perception of progress in the most recent round of negotiations in these long-standing discussions related to EU trade restrictions on US beef containing hormones. Both sides seek a breakthrough in this politically-sensitive controversy that dates back to 1988. The increased-duty action was originally scheduled to go into effect on March 23, but delayed until April 23. This most recent two week delay pushes the proposed action to May 9. The food items subject to the 100% rate include Roquefort cheese, truffles, chocolate, jam, canned peaches, fruit juices and mineral waters. The detailed entry in the Federal Register can be found at

Over the past few weeks, the dollar has lost some of its recent gains achieved against the euro. It dipped as low as 1.35 in April, and has lately hovered in the 1.30 range - well ahead of the low of 1.60 in mid-2008 but weaker than the high of 1.25 hit in March (a lower value indicates a stronger dollar). To quote the leading European banks in their comments for the euro: “While it could be argued that the US has proved to be the epicenter of the economic crisis, the fact that they were first into the contraction but also have undertaken significant fiscal and monetary action to alleviate the ravages of the downturn should suggest that the US will emerge far ahead of the euro area where the response has been perceived to be far slower and less concentrated. The recognition of such a scenario should prove relatively USD supportive, at least until the market is far happier to discount a more durable global recovery.”

Single duty was once again a non-event as US Customs announced that once again the tuna quota (of 18,457,467 kilograms for 2009) was oversubscribed at the opening moment on January 2, 2009, and filled in less than one minute. No full containers will thus be entered at "the single duty" rate, but those entered in the first minute (at 12:00 noon, but before the clock hit 12:01 PM) will be charged a blended rate. All entries made at 12:01 PM and later will be charged double duty. Once again, the duty savings should be less than the bonded warehouse charges incurred in holding goods to make entry at exactly 12:00 noon. Raw material overseas continues its roller coaster ride of the past few months. The last report highlighted movement from $2,000 in 2008 to $900 in 2009, then back up to $1,300. Since reaching $1,300, the market fell to $1,100, then recently dipped down to $1,000 and even slightly lower. Packers however are afraid to commit at these low levels, for fear of not being able to cover fish if fishermen withdraw as they did last month. Yellowfin and tongol are staying relatively firm even as skipjack gyrates, and the spread on these light species versus skipjack has increased. Albacore pricing has actually increased lately, counterintuitive to the economic climate, but reflecting poor albacore catching. Several weeks ago, a new non-profit organization, the International Seafood Sustainability Foundation, was recently launched with the goal of undertaking science based initiatives to support the long term conservation and sustainable use of tuna stocks.

Two significant factors have lately been affecting the pineapple market, each pulling pricing in opposite directions: low demand coupled with a short crop. The lower demand is coming primarily from the Russian market, where the buoyant new demand that pushed up pricing in 2008 has dried up, resulting in pineapple export prices falling in early 2009. Conversely, the new upcoming crop is quite poor, and the rising cost of raw material is tugging these same prices upward. The dry spell affecting parts of Thailand is affecting pineapple. Recently, raw material reached 6.00-6.50 baht per kg and is expected to reach 7.00 baht/kg soon. Pineapple juice concentrate pricing has already begun to firm. The crop size is predicted to be about 10-15 % less than last year and is expected to start about 2-3 weeks later than usual (late April/early May) resulting in a short season. Recent political unrest in Bangkok has also led to some work disruption in several canneries last week.

Market is still soft and bargains are available, especially in lower grades. China is reporting a short crop (about 30% shorter than last year), however, it is also reported that the major factories have considerable inventories, as they fight with India to sell into a depressed worldwide market.

The Spanish artichoke crop is projected to be less abundant than last year due to reduced acreage, lower yield and unfavorable weather conditions. The Spanish crop was hit with frost late last year and recently, continued rains hampered harvesting efforts. Market uncertainties have also prompted farmers to reduce plantings. In Peru, predictions are that the industry will produce about 70% of its 2008 volume, partially because one of the largest producers shuttered its artichoke plant for lack of profitability. The remaining factories have decided to play it conservative and not increase acreage to make up for their missing competitor. In Chile, the crop is expected to be about the same as last year but it is too early to project the real outcome as its season will not commence until June.

The crop outlook in China appears good, with raw material costs expected to fall about 15% compared to 2008. Virtually all of China’s production goes to paste production. In the US, the outlook also looks good, and local demand is strong with 13.9 million short tons of processing tons contracted in the US this season, 8% more than 1999’s record and 14% more than last year. Interestingly, the US exported large quantities of paste last year, with total US exports rising from 129,431 mtons in 2007 to 336,522 mtons in 2008. Italy has still not announced hard figures but the firmer dollar already has pricing down from last season.

The impending possibility of a 100% duty on European peaches has some Greek packers worried. They reportedly have large inventories and might be cut off from the US market with the new crop season just 3 to 4 months away. If this unfolds, prices in Europe could fall leaving China less competitive in Europe, and allowing them more product to sell in the US. Much rests on the US government’s negotiation which, based on the continual deadline extension, could likely result in no additional duty being imposed after all.

Prices have dropped lately due to low demand and carry-over inventories. The Chinese crop situation is normal and weather is favorable.

Argentina is attempting to keep prices high, despite the reported good crop situation and reduced consumption. It is projected that they will process about 950,000 mtons this year (up from 650,000 mtons in 2008). Last year, prices reached record highs due to shortage of raw material. This has prompted some to discontinue use or to substitute with other juices. Italian and Spanish producers are likewise holding prices similar to last year’s level.

The saffron crop is reported to be about 80-85% short. The price of “real” saffron has gone up by more than 100%. With pricing climbing so far, so quickly, the profit potential is great for those trading in adulterated product (saffron mixed with other vegetable elements) but the typical saffron buyer will not find any value in such poor quality.

Poor weather conditions in Thailand, Indonesia, Vietnam and the Philippines have caused poor landings and smaller crab sizes. Continued weak demand in the U.S. market has kept pricing significantly below those needed overseas to replace the product.

SHRIMP (frozen)
Vannamei white shrimp demand is spotty but tight shrimp supply is causing prices to climb. Supply will continue to be tight for the next few months with supply not anticipated to improve until June. Black Tiger raw material prices overseas have shot up considerably over January prices due to short supply as the season comes to an end. Market prices in the US are being held in check only by weak demand.

SALMON (frozen)
The spread of ISA disease continues to worsen in Chile and supplies of both fresh and frozen Chilean fish are short. January inventories were down 61% from the same point last year. Farmed Atlantic salmon reach a mature weight of 4.5 kg after 18-20 months, meaning the early harvesting of 2008 inventories and the small 2009 seeding volumes will cause a collapse in production volumes that will last until mid-2010 at the earliest. Industry experts predict a production drop in 2009 of 50% from 2007 levels, to approximately 220,000 mtons, followed by an even more severe drop to 100,000 mtons in 2010. Pricing is understandably firm.

TILAPIA (frozen)
Chinese farmers harvesting fish early in fear of a reoccurrence of last years freeze has created an increase in smaller fillets in the market and a shortage of larger fillets. The closing of Chinese processing factories in observance of the Chinese New Year holiday also contributed to the shorter supply. The market remains firm for higher quality product and supply of all sizes should improve as the year progresses. Demand for tilapia continues to grow and the American Tilapia Association reports that production is expected to reach 3 million metric tons worldwide by 2010, compared to 2.6 million metric tons in 2007.

CATFISH (frozen)
Production of Channel Catfish in China is nearly done for the year and the harvest will resume in late August. Supplies in cold storage are ample to meet market demand. Channel catfish imported into the U.S. totaled over 23 million pounds in 2008 which represented an increase of 32% over 2007. Prices are steady with good availability and no interruptions expected in supply.

Domestic catching remains steady and although the sizing has been small, larger sizes are anticipated. Indications of the size of traditional inshore spring run will be more evident come the middle of April. Overseas, the Peruvian season remains quiet, with relatively low production. Production in India will begin in late spring/early summer while Chinese production remains steady.

SCALLOPS (frozen)
There has been much fishing activity since March 1st when the 2009 fishing year started. Over 66% of the fleet has made at least 3 closed area trips out of the 5 allowed this year. Many boats only have 2 closed area trips remaining and 35 open area fishing days. This strong fishing effort will continue with 90% of the fleet having done 4 closed area trips and one third of the 35 open days done by June 15th. On June 15, most boats will converge on closed area # 2 to make the 1 trip allowed. After this 1 trip in closed area 2, the boats will finish their open area days. By early to mid-August, 75% of the fleet will be finished with the closed area and open days for 2009. Landings to date have been mostly 20% U/10's and U/12's and 80% 10/20 count. These sizes have been caught in closed areas. Once the closed area trips are finished, we will see less big ones landed and the majority size will be 10/20's and 20/30's caught from open area days. Prices to the boats for their catch are basically .50 less than last year at this time. The economy has had some influence, but many buyers have not stepped in yet to make their frozen purchases for the year. Without this segment of large volume buyers stepping into the market, there have been days where there are 100,000 to 150,000 lbs of scallops on the auction and the trips have struggled to be sold. On these days the prices have been lower. On other days with fewer landings, the prices have been higher. U/10's & U/12’s have been $7.85 to $8.50 and 10/20's & 20/30’s have been $6.15 to $6.50. Prices will likely not get lower. When the buying increases for all during the late spring and then summer, and the large volume guys step in, prices will rise on the remaining/diminishing volume available.