Wednesday, February 12, 2014


As of this moment, there’s a good possibility of a July west coast dock strike.  The labor contract agreed to in 2008 between the ILWU (West Coast Long Shoremen) and PMA (Pacific Maritime Association) is set to expire on July 1, 2014. The key issues are:  1) New “super” alliances and their impact on terminal use and related labor.  2) Automation Jurisdiction  3) Impact of the Affordable Health Care Act:  The potential increase of healthcare expense will undoubtedly take the lead in the discussion and may likely be the hurdle to cause a labor action by one or both sides. As reported by the PMA, the average earnings for workers who logged 2000+ hours in 2012 were:   General Longshoremen: $132,046,  Marine Clerks: $149,800.

Still no progress on GSP renewal and the Miscellaneous Tariff Bill.  The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 123 designated beneficiary countries and territories.   GSP, which expired July 31, is a program with lots of Congressional support, so it’s still expected to be renewed.  As for the MTB, this is a huge bill containing duty reductions/eliminations for thousands of items.

Food Safety Modernization Act:  A judge has mandated that final rules be published by June 30, 2015. Once the final rules are published, implementation will be phased in over one to two years.  FDA published recently a proposed a rule that would require certain shippers, receivers and carriers who transport food by motor or rail vehicles to take steps to prevent the contamination of human and animal food during transportation. Part of the implementation of the Sanitary Food Transportation Act of 2005, the proposal marks the seventh and final major rule in the FSMA framework aimed at building preventive measures across the food system.

CURRENCY:  Dollar has been stable against the euro hovering at 1.36-1.37 for the past few weeks.  On the other hand, the Thai baht is about 15% lower (now at 32.87) compared to its strongest level earlier last year.   The Turkish lira has also weakened considerably against the dollar, falling 35% over the past year.

TUNA:  Skipjack pricing has continued its weakening trend, with raw material prices now reported at $1300-1350/mton.  While demand is now picking up, for the first time in many years fishermen are starting to complain about break-even fishing costs and looking to keep boats in port.  Yellowfin remains relatively unchanged at 2,400/mton, much higher than skipjack.   Albacore is starting to firm.

PINEAPPLE:  The Thai winter crop, which started late, is now running quite short.  Total deliveries around this time normally reach about 7,000 to 8,000 mtons daily. Currently, deliveries are peaking at only 4,500 mtons per day.  This situation has pushed raw material to an all-time record high of 7.00 – 7.30 baht/kg vs. a normal level of around 4.00 – 4.50 baht/kg.  The situation is further affected by the shortage of pineapple supply in the Philippines, prompting Dole and Del Monte to source more of their needs from Thailand.

PEACHES:  President Obama’s visit last week to California highlighted the drought conditions there which are expected this year to be the driest on record.  Just recently, the Sacramento area went without rain for 52 days, breaking the previous record of 44 days set during the drought in 1976.

MANDARINS:  Post Chinese New Year (Jan 31), this year’s production has reached its end. Most packers are saying they will not resume packing upon return from the holidays.  Due to the significant carry-over quantities from last year’s crop, factories were not eager to pack at the beginning of the crop.  However, as it became apparent that there is a shortage in raw material for new pack, prices increased sharply.   Current offering levels are about 30% higher than the ending price of last year’s crop just a few months ago.

MUSHROOMS:  The situation has been relatively stable, with European suppliers continuing to dominate the market.  Imports from China in 2013 were down 80% compared to 2012.

TOMATOES:  Even though expected quantities are strong, the California tomato industry set the 2014 raw material price at $83.0/ton, 18% higher than the 2013 price of $70.50/ton.  In 2012, the price was $69.4/ton.  The Northern Italian industry has raised its 2014 raw material price to $124/mton, up $6/mton from last season (as this is metric ton, the equivalent for a US short ton would be $112.70/ton).