REMA FOODS MARKET FLASH July 21, 2014
It appears that the much anticipated West Coast port strike might be averted even though no new contract has been signed yet. The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) announced a 72-hour break from negotiations a few days ago during which the parties agreed to extend the previous six-year contract which expired on June 30, 2014. It is reported that all ocean terminals in Los Angeles currently remain open but there is major congestion and delays due to the rush of containers brought in May/June coupled with a shortage of chassis.
Free trade talks between Thailand and the EU have been put on hold since the military Coup d'état on May 22.
The risks of being importer of record: FOODNEWS is reporting that an importer in the UAE claims to have been defrauded out of over $1 million. After paying the funds against a letter of credit to a supposed Chinese supplier of tomato paste, the importer, instead was delivered 53 containers of worthless stones.
CURRENCY: While the dollar had been relatively steady against the euro over the past couple of months, the past few days have brought some strengthening.
TUNA: The FAD (fish aggregating device) ban that began on July 1st along with poor catching have caused a significant spike in skipjack prices. Skipjack that had reached a low of around $1150/MT months ago has now reportedly jumped to $1850/MT in Thailand. Yellowfin is following the trend and has leapt from $1600/MT to about $ 2600/MT. Albacore is now being quoted at $3150/MT, up from $2550/MT. Most packers are experiencing resistance in the market given the rapid escalation in price. Meanwhile in European news, the Philippines is close to gaining zero duty access for their tuna exports to the EU.
PINEAPPLE: Thailand’s summer crop is 30-40% short with raw material pricing reaching close to double of last year’s - from a normal level of 3.50 baht/kg to about 7.50-8.00 baht/kg now. Most packers were reportedly running only 3 days per week because of the lack of raw material. While at one point during the season raw material deliveries spiked, it was not enough to cover the shortfall created early in the season. Indonesia’s crop is reported to be better; however, they are also falling behind in shipments as buyers try to cover their needs. The shortage is especially apparent with higher grades as only 25-35% of the fruit arriving at Thai factories now can qualify for choice grade.
OLIVE OIL: After initial weakness, there has been some increase in olive oil pricing over the past two weeks amidst expectations that the next crop will not be as good as the past season. This is purely speculation at this point and it remains to be seen how the crop will eventually turn out.
WATERCHESTNUTS: There is an extreme shortage on waterchestnuts as most packers have ended their packing season early due to limited raw material availability. The new season isn't expected to start until November.
ARTICHOKES: Spain had a good but short season and is reportedly sold out. In Peru, most packers decided to decrease their plantation acreage this season after last year when the Peruvians, due to their rising costs, were not competitive with Spain. In Egypt, most packers have reportedly committed most of their crop - new crop won't come until January.
PEPPERS: Spain is about to start its crop, which is reported to be normal. Turkey’s crop is also expected to be normal. On the other hand Peru is expecting the possibility that El Nino (this refers to a band of warm ocean water temperatures that periodically develop off the Pacific coast of South America) will affect their crop and most packers are predicting a 10-30% decrease in output.
PEACHES: Chinese and Greek peach production seasons are underway and both countries are reporting a good crop. Opening prices are about 5-10% lower than last year’s crop prices. California however is projecting for 2014 to pack 12.8 million cases, 5% less than the 13.5 million packed last year. Imports this year are at record levels and up 23% from last year. Imports from China made up the largest share and are up 43% from last year.
CHERRIES: Cold weather in Michigan is expected to cause USA tart cherry production to fall about 10% this year.
TOMATOES: According to the California League of Food Processors, the June stock level is down 23% compared to this same time last year.
MUSHROOMS: Two European mushroom plants (one French, one Dutch) were fined $43 million for price fixing in the European market.
DESICCATED COCONUT: Given the super typhoon that hit the Philippines last November, a recent accidental explosion at one of the large plants (killing a worker), the threat of El Nino, and the surging demand for coconut derivatives such as coconut water, the market is understandably short and prices remain firm.