Tuesday, July 28, 2015


After a two year gap, new GSP legislation was finally passed and signed by the President. 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. The newly signed legislation will extend the GSP benefits through December 31, 2017.

Greece Crisis: packers in Greece are operating and planning to export despite the financial crisis. Ironically, when Greek packers were in town for the fancy food show in NYC, they were forced to use cash as Greek credit cards shut down after the Greek emergency banking measure’s daily EUR60 currency withdrawal limit was reached.

CURRENCY: even with the Greek turmoil in Europe, the dollar/euro rate has been relatively stable over the past month.

TUNA: The Western Pacific FAD ban began on July 1st and will last through October. Skipjack prices have been firming from a low of $1000-1100/mton earlier this year to July trades made at $1380-1450/mton. Two months ago, the fishermen publically stated their desire to drive prices over $1500, and now they are offering $1500-1600/mton for August arrival in Bangkok. Yellowfin was last at $1700/mton but has been following the upward trend of skipjack. Tongol, now out of season, is scarce until the season restarts in October. Albacore was steady at about $3100 for a while but raw material has recently jumped to about $3300/MT+, and shortages loom on large size fish used for solid packs.

PINEAPPLE: Thailand’s raw material shortage continues and pineapple is now trading at 12-13 baht/kg, the highest levels ever recorded since tracking began 70 years ago. In a normal year, raw material is 3-4.5 baht/kg. Drought linked to El Nino will further reduce output by delaying the upcoming winter crop by six to nine weeks. High prices are prompting farmers to harvest fruits early - before the nitrate fertilizers have been fully processed by the fruit – resulting in detinning. In response, Thai packers have been forced to severely reduce the quantities they can export of natural juice packs. Indonesia is falling far behind in shipments as Thailand’s shortfall increases demand for their production. Thai exports have so far plunged by almost 20% in the first half of this year.

OLIVES/OLIVE OIL: The new crop olive harvest was initially forecasted to run close to the average of 534,000 mtons, but scorching hot weather and firm olive oil pricing is causing unexpected problems. At this point, packers are forecasting that Hojiblancas, normally used for ripe table olives and olive oil production will be shorter than last year. Gordal, the variety sold as queen olives, are expected to be average in volume (after several short years). Manzanillas, are also expected to be about average in volume. Unfortunately, this seemingly decent crop will not necessarily mean better prices for olives as the current tight olive oil situation is bringing strong demand for raw material. At present, it is being reported only about 400,000 mtons of carryover olive oil stocks remain. Given monthly consumption estimated at 100,000 mtons, carryover stocks will run out before new crop is available in December, causing immense price pressure early in the harvest. Extra Virgin olive oil prices which remained below 3.00 euro/kg most of last year have been on a steady upward trend since the end 2014, and are currently up over 25% to 3.80 euro/kg. Given that Italian production dropped over 35% last season, Greek exports into Italy rose by 569% in the first quarter of this year. Forbes magazine has also reported that olive trees in Central America and Europe are being killed by a new strain of Xylella fastidiosa that is spread by the common spittle bug. Combined with a 20% decrease in global average yields over the past 50 years, many analysts predict spiraling costs for olives and olive oil in the coming years. Finally, California, which is expecting a crop possibly 40% below average is expected to make up the shortfall by importing from Spain.

MUSHROOMS: European countries (Holland, Spain and France) continue to be the main source of mushrooms for the US. The stronger dollar and more efficient growing & processing capabilities are making them more competitive than China. After a long respite from most Chinese packers, a couple of smaller packers are trying to make a come-back into the US market; however, higher costs and strong domestic Chinese demand is keeping their prices from being competitive here.

PEACHES: China’s crop has started and packers are reporting a normal crop so far. Fruit size is on the large side which is favorable, but is also increasing demand from the domestic bakery market. In Greece, early expectation was for a good crop until 40% of the early variety (Catherina) peaches have been deemed unsuitable for canning. After the first week of production, raw material is at euro 280/mton for class A peaches, a 15% increase over the amount paid for early and mid-season varieties last season. Packers have been assuring the trade that the on-going financial crisis in Greece will not affect their capability to supply, but this situation is causing problems for even the large companies. California's 2015 peach crop was set at 566,000 tons, representing an 8% decrease from last year and the smallest harvest in over a decade, according to USDA. The drop affected both the freestone and clingstone peach harvests.

CHERRIES: This year’s crop is being affected by bad weather, higher labor cost and strong market demand. In Oregon, a major growing area experienced frost before the trees went into dormancy, causing a drop of about 35% in output. In California, the crop is down 40% due to warmer winter temperatures and the severe drought. In Michigan, a spring frost in April damaged about 65% of the sweet cherry varieties. To make matters worse, processors are reporting a 40% shortage in labor. Some growers are leaving their orchards unattended as they are not able to staff pickers. Packing house labor throughout the Northwest is scarce, driving costs up and production down as there are not enough workers to staff a second shift.

TOMATOES: The California Tomato Growers Association (CTGA) has agreed with processors to price this season’s tomato crop at $80/ton. In 2014, the price was $83. In 2013, it was $70.5. In 2012, $69.4.

RAISINS: The report from the Raisin Administrative Committee shows shipments from the 2014/15 season are 6% behind last year.