Monday, September 29, 2014

REMA FOODS MARKET FLASH September 28, 2014

TRADE/POLITICS:
According to Federal Maritime Commission Port Chairman Mario Cordero, congestion is still an ongoing issue in the West Coast because of high cargo volume, chassis shortages, driver shortages and port construction.  These issues have caused longer delivery times and increased expenses.  Furthermore, last week a fire caused the temporary closing and evacuation of the ports of Los Angeles and Long Beach.
This month USFDA proposed changes to four Food Safety and Modernization Act (FSMA) rules proposed in 2013: Produce Safety, Preventive Controls for Human Food, Preventive Controls for Animal Food, and Foreign Supplier Verification Programs.  FDA says the proposed changes make the original proposals more flexible, practical and targeted and are based on input received during the initial comment period.
CURRENCY:  Due to the weak economy in Europe, the dollar firmed against the euro and recently reached 1.269, its highest level so far this year.
TUNA:  Skipjack raw material reached a peak of about $1850/mtons a few months ago in the lead-up to this year’s FAD ban period (July-October), but due to low demand and good catches, it fell to about $1600/mtons once the ban period was underway.  Now as the FAD ban period comes to a close, with strong catching and weak demand, skipjack recently fell to below $1300/mtons. While still higher than the lowest levels of early 2014 ($1150), it’s capped a year of tremendous volatility.  For the first time, a second FAD ban period will be implemented from January to February 2015.  It remains to be seen how this will affect prices.  Yellowfin is following suit, from a high of $2200/mtons to currently below $2000/mtons.  Albacore which was holding firm at $3200 seems likely to soften a bit too.  Tongol, mainly a local Far East fish, remains stable in the off season.  The Philippines will be granted GSP+ status in Europe which will give Philippine packers duty free access to the EU on many items including tuna.  In Canada, the duty on tuna imports from virtually all countries will be doubling on Jan 1, 2015 from 3.5% to 7%.
PEACHES:  Another complicated year for peaches is unfolding.  California is reporting the smallest crop in 50 years at 12.3 million cases (a 12% decrease from last year’s 14 million cases).  Greece initially expected a great crop this year, but hailstorms and heavy thunderstorms during the crop season led to fruits falling off the trees prematurely. The total Greek crop will come in at 11.5 million cases, down from 13.5 million cases last year.   In China, the crop appears to be normal although fruit sizes were reportedly on the smaller side.
PINEAPPLE:  Thai packers are calling the recently completed summer crop the worst ever after the previous years’ lower prices discouraged farmers from planting.  This coupled with flooding late last year and lower than average temperatures during the first half of the year resulted in low raw material output.  Raw material normally at 4 baht/kg soared to 8.5 baht/kg.  The upcoming winter crop is not expected to alleviate the situation much as most packers have numerous back orders to fill.  Indonesia reported a normal summer crop and is expecting the same for the winter crop, but overall volumes are relatively small given the worldwide shortage.  In a telling sign of the price pressures in the market, the cost of pineapple juice concentrate has climbed by about 50% this year.
OLIVES:  Spain’s crop is underway and they are reporting an estimated production of 517,000 mtons for the upcoming olive crop which is slightly lower than the 5 year average crop of 534,000 mtons.  Queens, which were very short last season at 11,000 mtons (vs average of 32,000 mtons) are expected to recover a little bit and are forecasted to reach 24,000 mtons.  Manzanillas are forecasted to reach 189,000 mtons, which is almost 18% better than average (160,000 mtons); however, olive oil producers are pushing up the price.   Hojiblancas (usually used for ripe olives) are expected to close with 231,000 mtons, about 7% worse than average.  Effective January 1, 2015, the duty on Moroccan olives declines to zero for imports into the USA, completing a 10 year stepped duty reduction since the US-Morocco free trade agreement was signed in 2006.  Here in the USA, the 2014 California table olive forecast is for only 50,000 tons, down 45% from last year’s crop of 91,000 tons.  The causes for the severe shortfall were an initial December freeze, a second freeze during the bloom, and lack of water.  Some growers are claiming they might not even harvest this season due to a lack of sufficient production and/or lack of labor.
OLIVE OIL:  The upcoming crop in Spain is expected to be down from 2013, where they had a record crop of 1.5 M tons (vs average of 1.1 M tons).  This lower crop is mainly due to the dry weather during the flowering period.  Prices of olive oil have firmed up in the past few months amidst speculation from Spanish farmers.  Spain accounts for about 80% of total olive oil production, including much of which is shipped to Italy.  Smaller olive producing countries like Greece, Tunisia and Turkey are reportedly expecting normal crops.
BAMBOO SHOOTS: The new crop of bamboo shoots in Guangdong and Fujian provinces in Southern China started in July. The harvest is normal due to sufficient rainfall in the spring.  The market price of canned bamboo shoots remains similar to last year.
PEPPERONCINI:  In Turkey, the recently concluded crop ended up short, despite early forecasts indicating a good crop. Lack of rain is the main reason for the shortage.  Other producing countries such as Egypt and Greece are still reporting normal crops. 
TOMATOES:  Heavy rains and lower temperature during the harvest season have affected Italy’s tomato crop, delaying the start of production by a few weeks. It is being reported that the fruit quality was also affected with a lower average brix content of 4.61 vs the three year average of 5.03.  Packers are reporting that the lower quality fruit is resulting in a 10% decrease in yield.  In the South of Italy, the producer’s association issued a statement claiming harvest losses in the main growing region of Puglia will reach 30%.  On the other hand, Spain, Greece and Portugal are experiencing excellent seasons this year, but overall outputs there are not significant enough to have an impact in the US market.
RAISINS: This year’s California raisin-type variety grape forecast is 1.95 million tons, down 13% from the 2013 final production, according to the California Department of Food and Agriculture.  The crop struggled with hail in the spring and lack of water.  In Chile, this year’s raisin production is forecasted to decrease due to a heavy frost last September 2013, but 2014/2015 raisin output should increase as grape production is expected to recuperate.
MUSHROOMS:  The US Dept of Commerce published a notice stating that a decision by the US Court of International Trade is “not in harmony” with Commerce’s amended final determination in the antidumping duty review of certain preserved mushrooms from China covering the period February 1, 2009 through January 31, 2010.  As a result, the weighted-average dumping margins for that period have been adjusted retroactively to between 5.76% up to 74.14% depending on the manufacturer.
WATERCHESTNUTS remain short due to limited raw material. Chinese packers are awaiting new crop in November.