FOOD IMPORT GROUP Market Flash
Website Home: www.foodimportgroup.com (201) 947-1000
Sunday, June 21, 2009
REMA FOODS IMPORT MARKET FLASH June 22, 2009
*** If attending the New York FANCY FOOD SHOW (June 28-30), please stop by our booth 1636. We’re showing under the name of our specialty foods company SOURCE ATLANTIQUE.
The House Energy and Commerce Committee approved The Food Safety Enhancement Act of 2009. Sponsored by Rep. John Dingell and Committee Chair Henry Waxman, the bill would give FDA more funding and several new authorities. It requires facilities to register annually with FDA, pay a $500 annual registration fee, and pay for FDA costs associated with reinspections and food recalls. FDA will be able to issue mandatory recalls for tainted food, and penalties have been increased to a maximum of $100,000.00 for individuals, and $500,000.00 for facilities. Importers meeting voluntary security guidelines will receive expedited processing by FDA. The bill requires high-risk facilities to be inspected at least once every six to 18 months, low-risk facilities to be inspected at least once every 18 months to three years and warehouses that store food to be inspected at least once every three to four years. Unique ID Numbers will be created for all food, drug, medical device facilities and importers. The bill's next step will be a vote by the full House of Representatives. If the bill passes in the House, it will then wait for the Senate to take action on its food safety bill. The bill introduced by Sen. Durbin continues to be the lead bill in the Senate. Once bills are passed in both the House and Senate, members from both bodies will work toward creating a compromise bill. There's no indication of when the Senate will act on the Durbin bill, so there's no way to give a timetable on when any legislation will pass.
A vast majority of the scientists polled at the ninth annual International Conference on Mercury as a Global Pollutant (ICMGP) said methyl mercury contamination in seafood is not a serious health threat to consumers, stating normal consumption of seafood does not pose a health risk to adults, children or developing fetuses and that the health benefits associated with omega-3 fatty acids and other nutrients in fish outweigh the potential risks of mercury exposure. They also concurred that carefully nuanced public health advisories about mercury in fish are more effective than point-of-purchase warning signs. David Martosko, director of research for the Washington, D.C. based Center for Consumer Freedom (CCF) noted "The good news about eating fish is finally drowning out the bad news. And we're hearing it from the real experts."
The Office of the U.S. Trade Representative has announced that the U.S. and the E.U. have reached a 3-4 year provisional agreement in the beef hormone dispute. Under the agreement, the U.S. would maintain existing 100% duty sanctions on the currently affected items, without revision, for a 3-year period. The new sanctions (on additional items such as Italian water, Greek peaches) that were scheduled to go into effect on May 9, 2009 have been cancelled. The products that were removed from the retaliation list on March 23 (such as French mustard) will not be affected and will remain without 100% duty. Under the agreement, both sides have decided that they will eliminate all sanctions during the 4th year.
A Customs employee recently discovered a typo in a 2007 duty reduction bill for capers, resulting in the re-imposition of duties on certain caper imports. It's expected that a corrective bill will be passed within the next few months. The retroactive aspect of the revised bill isn't expected to create any problems because it's simply bringing things in line with the measure's original intention. Once the corrected legislation is passed, importers will have to apply for refunds for any duties paid.
The US dollar has fallen 10% in just the past few months. Volatility remains high as the dollar hovers around 1.40 vs the euro. A graph of the dollar/euro tracked over the past year can be found at http://foodimportgroup.blogspot.com (inverted to show the strength of the dollar against the euro). Keep in mind that a change in currency will have a 100% direct relationship to the selling price in dollars; i.e. a $40 euro based item will go up $4 when the dollar weakens by 10%. According to one large international investment bank, investors have deserted the dollar “at least in part on the basis of a resumption of risk appetite as we have seen stocks rebound from the lows. The Dollar decline has also come in conjunction with a rebound in commodity prices, in part a function of an improving investor outlook, or also as a consequence of rising speculative interest and as an offset the decline in Dollar revenue flows. Moreover we have seen ongoing concerns as regards the long term reserve status of the USD, while the surprise decision by the Fed to move to a policy of quantitative easing in March also provided a rationale for a significant deterioration in US Dollar sentiment.”
Skipjack is firm at $1350-1400/mton with packers expecting further tightening because of the upcoming fishing bans and the rising cost of fuel (the single largest cost component in fishing, crude oil has gone from $41/barrel in January to $69 now). Fishermen are speculating that between $1500 and $1800/mton will be reached by the fall. Due to the uncertainty in raw material costs and the difficult financial environment, packers are generally quoting only for prompt shipment. Yellowfin has been tracking skipjack and is currently trading around $1720/mton. Albacore, at $2850/mton, continues to be short. The current economic climate has not led to any decrease in albacore demand (demand has actually increased in many parts of the country), while raw material was very tight over the past few months. Over the past month, vessels operating in the Western Pacific Ocean reported poor catching of about 1-1.5 mtons/day. Catching in the Indian Ocean near Mauritius was also poor at about 1mton/day size average 12-13 kg which means yield is low. In the Atlantic Ocean, only about 10-15 boats are operating. With Japanese Summer Albacore, the season has started late this year and so far the daily catching is only about 250 mtons/day. There's 2nd season of Japanese summer albacore in July/Aug caught by purseine net boats in the North Pacific Ocean but size is expected to be small with high oil content; most only suitable for retail packs.
PINEAPPLE and TROPICAL FRUIT SALAD
The Thai summer crop ended about one month earlier than forecasted, pushing raw material prices up to 6.0 baht/kg. The recently concluded season peaked later than usual and the volume during the peak was lower than usual. Total first quarter 2009 Thai worldwide exports of pineapple have dropped about 30% compared to last year; however, their exports to the US have remained relatively stable, with other countries like Russia showing most of the decline. The industry is carefully watching weather patterns as a possible El Nino weather event could cut global fruit supply from 17.8 to 15.0 million mtons. Meanwhile in China, the crop has started - raw material deliveries are still low and canning factories are competing with the strong fresh market requirement.
China’s crop season has ended and is reported to be about 30-40% short, with China’s first quarter exports running 53% lower than last year. Nevertheless, competition between the five anti-dumping approved packers for the USA is fierce and pricing has fallen as a result. India is supplying steadily; however both countries are being severely hurt by the current low prices and expectations are that the bottom has been reached. Separately, straw mushrooms have been quite short of late, mainly due to the crop failure in Vietnam and China. Relief is not expected until the end of the year.
Market has been quite stable (fluctuations are coming mainly from the euro/dollar exchange rate); however, as raw material prices have reached levels comparable to prices of 10 years ago, there is some pressure for prices to go up. The EU, in an effort to artificially firm the market, has proposed to temporarily buy some 110,000 tons of oil from farmers. This provides cash to the farmers without them having to resort to selling at low prices. The farmers are able to withdraw from these stocks at any time for a small fee. It still remains to be seen if this endeavor will be effective. So far, the flower season is reported to be good.
Significant consolidation is occurring in Spain as COFRUSA, a private Spanish fruit and vegetable packer, has acquired Halcon-Conservas Fernandez. The new company COFRUSA-HALCON will be the largest packer in Spain with 3 plants there and 1 in Peru. Spain has managed to gain back some of the quantities it had lost to Peru and Chile in the past years. Peru and Chile’s previous crops were a bit short, providing an opening for Spanish artichokes, especially when the dollar was firm last year. The recent fall in the dollar is making things more difficult again for the Spaniards.
The global tomato crop is reported to be slightly lower than earlier forecasts. Revised forecast is now at 39.2-39.9 million tons (down from 41.2 million tons). The lower estimate is mainly due to California’s adjusted forecast (from an original 12.1 million tons to about 11.3). Italy’s forecast remains the same at 5.0 million tones. China is projecting a bumper crop of 7.7 million tons, going almost entirely towards paste production. The chapter 11 filing of U.S. based S.K. Foods (resulting from large scale bribery of its buyers) and the early total decoupling (subsidy change) in Italy have left many processors shaken.
Packers in Spain and Greece are expecting a good crop this season; however, low demand and high carry-over inventories are worrisome, and packers are planning to cut production as a result. China has just started its season and this year’s output is estimated to be about 2% higher than last year. As China becomes more experienced in managing their farms, yields are improving and output is increasing, despite reduced acreage. Opening prices are expected to be slightly lower than last year.
On June 10th the European Commission has approved PGI (Protected Geographical Indication) regulation for ACETO BALSAMICO DI MODENA. This specifies that only balsamic vinegar produced from the Modena region may be legally called Balsamic Vinegar of Modena.
PASTEURIZED CRABMEAT (refrigerated)
After years of steady prices, the blue-swimming crab industry experienced one of its most volatile seasons ever in 2008. Prices rose steadily through the peak-crab consuming summer months but then dropped drastically as reduced demand and the recession took hold in the third and fourth quarters. Foodservice companies report that a large percentage of their restaurant accounts are now buying more economical grades such as claw, backfin and special, and blending these grades to reduce plate costs. Early demand in 2009 is still less than in 2008.
Overall Black tiger import figures for January were mixed. Imports from India were up 19.1%, while imports from Vietnam and Indonesia were down 37.5% and 1.1%, respectively. Tightening tiger supplies are driving up prices and demand remains high. Availability of 21/25 count and smaller shrimp are reported to be thinly supplied. Raw shrimp arrivals in India are very low particularly on larger sizes like 8/12 to 26/30. Most of the farmers now prefer to harvest smaller sizes especially 31/40 and lower as they find the prices attractive and do not want to wait for the shrimp to grow larger. Other factors like the recent strengthening of the rupee has also increased the cost significantly. Vannamei shrimp supply in Thailand has been picking up over the past week and demand is steady. Increase in supply has resulted in a drop in price mainly on mid sizes (31/40 HLSO equivalent). Indonesia's shrimp production and exports will likely fall this year with virus attacking the country's largest shrimp production centers. Virus has attacked 62,100 hectares of shrimp farms in Lampung, which contributes 40% to the country's shrimp production.
The first quarter of 2009 was marked by declining production in Chile. During that period, the ISA disease forced the world’s largest farmed salmon producer, Marine Harvest, to halve its number of active sites in Chile, which cut its output there by over 50%. Norwegian salmon exports reached a record $721.7 million in the first quarter of 2009, up 18.7% from the same period in 2008. Norway will grant 65 new salmon farming licenses this year, but even the increased production from these farms won’t be able to save the global industry from a reduced supply and prices have begun to rise worldwide.
Chinese tilapia production is expected to return to pre-2008 levels this year according to multiple sources. Global tilapia production fell 13% in 2008, to 2.06 million metric tons caused primarily by the severe winter weather in southern China. Although production levels will be on the rise, the sourcing of product may not be as easy as it was in years past due to increased competition. Mexico and Russia, which account for 30 percent of total Chinese tilapia exports, are purchasing more fish and other European countries are also beginning to purchase more tilapia. Additionally, more tilapia is staying in China, where the economy has grown tenfold in the past 30 years.
Production of Channel Catfish in China is done for the year and the harvest will resume in late August. Supplies in cold storage are meeting market demand. Prices are steady.
Domestic landings have been close to zero in the month of May. Overseas, China began its fishing closure at the beginning of May; India is between seasons but should begin to see product soon while Thailand and Peru have been producing limited quantities. Here in the U.S. the inshore trap and trawl fishery has begun as the sea temperatures recently reached 52F. This fishery produces an intense flurry of activity focused mostly on the whole "dirty" squid. This is a premium large sized squid that is frozen whole and sold here in the U.S. and overseas. In these catches we also see some smaller 4"- 6" which is processed into cleaned squid.
Feedback from vessels fishing from Long Island, NY to Virginia are reporting large amounts of small scallops and seed (small, dime size). Nobody has seen this amount of small scallops in years. With only 37 open area days this year, many boats will be done fishing open areas before Labor Day. This means the small scallop population will grow undisturbed all fall, winter and early spring. With the boats catching 2500 to 2700 lbs per day in the mid Atlantic areas, very few are working on the Georges Bank open areas. The landings continue to be 70% 10/20's, 15% U/10's and 15% 20/30's from both closed and open areas. This trend is expected to continue for the next couple of months. After the 4th of July holiday, a decline in landings will occur and prices should begin to increase.