R.M. Curtis Edible Nuts, Dried Fruit and Seeds Market Report: March / April 2010
Edible Nuts
Almonds:
Almond prices have largely stabilised since our last report although most eyes as far as California is concerned, are focused on the mid May and first so-called “objective” estimate, which will form the start of the shape of thoughts and prices to come, on the developing new crop.
To date, most agree that the all-important bloom was not great but not that bad. Rains and below average “bee activity” will not have combined to produce an optimal bloom and pollination, but that said, there is a huge planted acreage out there and across a large total area, and the problems were not reported across the entire State. As always, the Valley reports some poor orchards and some fine, so although conditions were not ideal, they were not sufficiently bad to be considered a major problem – although the key these days is really whether the exponential global growth in demand will continue and if so, we really could do on-going, with as few supply issues as possible.
Comment: The Spanish crop and bloom was conversely affected by the snows during bloom, so Spain
confidently predicts a much smaller new crop. Spanish prices are already well up and this is likely to continue in the medium to longer term.
From California, and as usual, the pricing on-going will be determined by the usual combined forces of currency, new crop estimates and the monthly domestic and export shipment figures which are the key indicators to demand and remaining supply.
For now at least, it seems that the major industry demand has already been placed or covered up to new crop – so although it is unlikely that major additional and/or so far unknown buying interest will further materialise, it is the existing cover that has already been done which is the problem and even if the total monthly shipments “only” match the figures from last year for the same periods on-going, it still means that there will be only a small carry over by the end of the season and a steadily and worryingly diminishing supply of uncommitted current crop to consider.
Hazels:
The weather presented an unexpected problem to this overall complex assessment when in early April, the cold weather across much of Turkey (and as reported elsewhere in this report in “Sultanas” and “Apricots”) deposited snow and frost across a wide area of the Black Sea growing region.
This immediately resulted in firmer prices as the prospects for the much needed larger new crop, suddenly shrank overnight.
As usual, this news might end up not being as bad as first reported, although undoubtedly the new crop has been adversely affected to some extent, at least.
Comment: what remains key, is the extent to which the Turkish government might either try to start to sell off its stocks of current and old crop and similarly, the extent to which they are able to buy in to the new crop in order to further monopolise and control pricing into 2011.
Just recently, the TMO announced that they would be sellers of some of their 2008 crop stock, although at uncompetitive high levels and with doubts whether the quality might not be questionable (high rancidity and prevalence of shrivelled kernels).
As a result, the market was unaffected by this offer although if the TMO drop their intended selling price, then this might help ease supply despite the concerns over the quality.
What cannot be argued though is that if the new crop does end up OK and if the Turkish Government fails to raise sufficient funding to buy sufficient quantities in what could still be a better crop year than this present one, then prices are undoubtedly overpriced both historically and comparatively and we would still hold out to see some potential pricing respite into the last quarter ’10.
Walnuts:
With walnut prices presently trading at levels virtually double their “usual” historical average, with no new crop respite until end 2010, it is hard to see how prices can weaken without a substantial new season supply refilling the empty warehouses.
Although there have been some sporadic offers of limited quantities from Eastern Europe, the fundamental lack of Chinese material this season set against their own step increase in domestic consumption being directed towards India and California (and Eastern Europe), has resulted in these exponential price increases.
Comment: with other tree nuts markets in Pecans and Hazels also trading at unusually high levels, this has partly obscured the real horror of walnuts themselves trading at such spectacularly higher levels.
However, unless there is a Dollar collapse which will convert to lower UK prices, the main problem remains the lack of physical supply largely over the next 6-7 months (Indian new crop occasionally creeps in towards the end of November) and with seasonal increases in global demand increasing from August-October for Ramadan and Christmas manufacturing, there is every chance of further increases before any potential price correction.
Cashews
Although by now it seems clear that the Vietnamese new crop has been to some extent reduced by the unusually hot pre-harvest weather conditions, the latest reports suggest that the damage is not severe and with the Indian new crop appearing to be in good shape, and following a decent crop in Brazil late 2009, it seems that supply for 2010 should be a match to demand and this will hopefully result in the recent price increases stabilising and hopefully easing in the coming weeks.
Comment: one change that we might consider on-going is the fact that even at the present above average pricing levels, we are still seeing Cashews trading significantly lower than many of the other tree nut markets.
Pecans, Pistachios, Hazels and Almonds are all higher to varying degrees and with Brazilnut pricing hot on their heels, Cashews are starting to look better value comparatively rather than historically and this might result in increased demand into the remainder of 2010.
Pecans:
This is fast becoming the proverbial slow motion car crash as the reality is dawning ongoing, that the amounts already sold of this reduced U.S. crop set against the distance remaining between now and new crop, just don’t stack up.
Offers for prompt shipment are about as much as origin sellers are willing to make while fears over the long-term availability and/or existence of Halves and Medium Pieces specifically, are pushing these offers ever higher.
While many buyers had hoped that this trend would run out of steam at some earlier point, the fact that it has not has finally prodded some domestic and international demand from buyers who reason that there can now only be limited respite:
Comment: the South African crop comes in from June availability, and although this is only a small crop and largely make little dent in demand overall, might offer some brief respite before that stock is cleared out. The fact that South Africa has already pre-sold plenty of inshell to China and has already taken orders from existing buyers doesn’t especially help this argument.
Second, in June, there is the first provisional U.S. new crop estimate.
It is way too early to be an accurate indicator but it does set the trend and should the news look particularly optimistic (despite the fact that the 2010/11 crop should at least be the “off year”) then this might encourage some sense of lost positivity.
The problem though is that stocks are running down now, and that is no exaggeration.
Pistachios:
Quite simply, this market is another good example of where steamingly strong prices should have lost its demand somewhere in the ascent, but even though prices have crashed through the historical highs and left the other tree nut markets somewhere behind (fortunately), prices have continued to rise and look strongly likely to remain difficult until October – when both U.S. and Iranian new crops will hopefully deliver better supply and at least a return of pricing back towards orbit from beyond.
Comment: prices are presently trading and trading beyond levels which are double their “normal” traded range. 2010 has been a year where these historical ranges have been re-written across many of the commodities in our range and seemingly with no short term relief. If anything on Pistachios, with demand from the Middle East and Ramadan likely to see demand step up further from July-September, then the sting in the tail end of the current crop could be even more painful still.
Brazils:
This market reflects another nasty situation which is developing, and at some rapid rate of knots.
As this current crop comes to an end, it appears that there is next to no carry over across Europe or the U.S. into the new season and now and even worse, it appears that a major shortfall in the Brazilian new crop itself will push Bolivian supply to and beyond its own limit.
Comment: although we would have hoped that the high prevailing prices would have encouraged optimal collection, the natural deficit in the Brazilian crop was not factored into this appraisal and with Brazilnut prices themselves still (for now) comparatively good value, and with China’s new found interest in “western” food stuffs including anything in a shell, we can expect demand to be strong at a time when supply is possibly the worse it has been for some years.
2) Dried Fruit:
Coconut:
Prices have continued to firm since our last report, on a combination of strong demand taking advantage of a product for food manufacture and snacking which looks increasingly good value, set against a reluctance at origin to offer beyond June on the assumption that prices will be higher by then.
Comment: additional growing orders
from bio fuel manufacturers (as Crude prices climb), and crushers (as edible Oil prices follow) are adding to the growing feeding frenzy and with reports that the major processors across both the Philippines and Indonesia are now fully booked on production this side of July, means that UK, and European stocks levels are rapidly depleting set against very limited replacement pricing.
We can confidently expect prices across the second half of the year to continue to rise and only a collapse of the Dollar could result in any chance of prices heading back to the (recent historical) lows seen last year.
Raisins:
Despite the news in our last report which reported the prospects of the 2010 U.S. Export Programme, bizarrely this policy has been extremely slow in its introduction and in its detail still appears to offer only limited retrospective subsidy to processors although this will at least open the reserve pool to processors in order for them to fulfil forward sales.
On the other side, they report that the crop itself was no larger than 290,000mts and there still remains the danger of crop damage from the weather so no one is in a hurry to discount the market, particularly since most are smarting from a 6 month period in which they will have not made the profits they were planning from a fully subsidised programme.
With a growing gap now appearing between Californian and Turkish pricing, there is an increasingly strong likelihood that California will start to lose considerable ground following huge additional sales at the start of the current crop and on the export stage, as it becomes increasingly uncompetitive against discounted Turkish fruit.
From Turkey itself, Raisin prices are starting to slowly track downwards in the wake of the Sultana correction (see below), and although Turkey is relatively tight on Raisin supply itself, they will however seize any opportunity then can, to recover some of their lost market share.
Comment: with provisional prospects looking increasingly optimistic for both optimal Californian and Turkish new crops from August, raisin pricing over the next 4-5 months will be largely determined in California, by their ability or willingness to compete with Turkey, the currency, as well as the quantities of uncommitted residual stock both here and at origin which is slowly winding down and with prospects of only a limited carry over from both these key origins.
Sultanas:
The situation on Turkish sultanas has been relatively complex over the past 4-6 weeks.
Firstly in late March, reports of a widespread frost which mysteriously (!) seemed to affect every key agricultural region across the whole country, although to be fair, there was an unseasonably cold North Easterly weather pattern which unexpectedly crossed down into Turkey from Siberia, suddenly sent the vine fruit processors into something of a panic.
Fortunately in the case of this crop, the damage was quite isolated and the crop was not at its most vulnerable to frost, but it was enough to send prices back up while the situation was being assessed.
Second, the export figures from Turkey have meanwhile made for interesting reading.
After the price hikes in September and October 09, which sent prices rapidly northwards, to some extent this damaged Turkey’s international business seemingly irreparably for the remainder of this season.
It allowed in for the first meaningful time, the Chinese with prices able to substantially undermine Turkey’s target export prices and even for a while, allowed California’s retention of market share without which, it is likely that U.S. sales into Europe would have been far fewer.
With additional sales from Iran, South Africa, Australia and even latterly even Afghanistan, Turkey has largely allowed in the competition and for some considerable period, also managed to price itself out of contention – although it should be stressed that their quality and processing standards are still amongst the highest in the world.
Comment: the export data though is interesting. Recent weekly sales are some 30% lower than for the same period last year, and season to date, their sales are approximately 23% lower than season to date 2008-2009. What has become clear over the past few weeks, is that Turkey is becoming increasingly aware that despite the frost, they could very easily produce a new crop well over 300,000mts and with a possible carry in of 30-40,000mts should the present weekly sales continue to drift so far below last year.
Some recent concerns were that there might be a mid-season change in the limits of a pesticide called Promicydone, but luckily sense has prevailed, and this change to the limit will only come into effect next year at the earliest.
Meantime and in the run up to new crop, currency permitting, we would hope to see prices gently ease and on-going.
Currants:
The news from Greece of late has been more about their troubled economy than any particular issues on Currants.
With stiff competition (as usual) from lower priced Sultanas and Raisins, while the Greek quality has also been unpredictable, it is probably safe to say that Currants are losing their ground, reputation and market share with each passing season.
To make matters worse, despite French and German financial support to bail out Greece from its mounting debts, this appears to have only provided some temporary respite, and there remain on-going domestic issues which will probably continue to result in strikes at the port or on the roads which will impact on availability.
Comment: we may look back in years to come and evaluate that this was the time when Greek currants began to seriously wane in popularity and perhaps linked to recession steering manufacturers to better value fruit ; influenced by frustrated technical managers reviewing higher complaints levels and buyers frustrated by the cost and unreliability of the timing of supply – increasingly, Currants are becoming sidelined and largely forgotten in NPD.
Apricots:
While frosts in northern and western Turkey had some more limited impact on their respective crops, the series of frosts in Malatya are reported to have been pretty disastrous.
Although the developing Apricot crop is still vulnerable to frost damage up to the end of June, the phase of the developing crop which coincided with at least 3 separate frosts in apricot country, appears to have hit the crop extremely hard with reports varying from 50%-80% (which seems excessive) damage.
At times, Turkey can master-manipulate mis-information (with all due respect to our Turkish friends!) and although this news and this crop might end up somewhat better than we presently hear at some later state, for now at least and within an already reduced current crop, this news has inflamed an already volatile market and prices have shot upwards, predictably but dramatically.
Comment: one aspect of this crop which should be borne in mind is the extent to which demand is affected globally by prevailing pricing.
Although UK buyers might be trapped within packaging and quidding declarations, some Eastern European buyers will buy plenty below a certain level and none above it. Although potentially losing over half a crop is not good news whichever way we look at it, without any doubt the demand will drop and significantly so below the levels which would have shown given much cheaper prices.
Prunes:
For the first time in some years now, the dependable and discounted availability of Chilean and Argentine prunes as the cheap alternative to the premium Californian and French alternatives, might not materialise in the quantities that will be needed over the second half of 2010.
Damage to infrastructure is reported to present some logistical disruption to the Chilean supply while cold weather around the turn of the year in Argentina appears to have reduced their own Prune production.
Comment: additionally, the prevailing pricing on Prunes presently set against other way more expensive tree fruit markets, makes Prunes look extremely good value and while buyers might not want or be able to switch to Prunes from premium priced Figs or Apricots (and with Dates running into similar territory), from a pricing perspective they are looking increasingly attractive.
3) Seeds
Pinenuts:
Prices have stabilised of late - largely due to the slightly better currency but also due to some resistance from industry to paying these record high levels.
As we speak, the perceived supplemental supply from Pakistan appears to be largely sold out. China reports its own “coffers” bare at origin, and those stocks of Pinenuts already shipped will clearly now need to service existing and new demand from now until December.
Comment: on a reduced Chinese crop in the first instance, this will surely push supply to its limit before there is any chance of respite at the end of the year
Pumpkin:
Again, the question is where exactly any respite on supply will materialise from when the origins are largely sold out, and new crop in China is still 7 months off.
Clearly, the supply this year was made less favourable by the failure of the Austrian crop, although the majority of this supply is used historically by crushers within edible oil manufacturing.
Comment: from China, with at best a total crop 40% lighter than its historical average due to a deliberate switch away from the poor yielding pumpkin production, we may just need to start getting our heads around and budgets locked into a product which through reduced supply, may now never from China at least, return to the historical traded levels which are now almost 3 times lower than today’s levels.
Sunflower:
Based on the overall weak Sterling against the Dollar, as well as the demand from crushers and manufacturers to what is now an extremely cheap “member” of the 3 seed stable (pinenuts, pumpkin and sunflower), prices have continued to increase over the past 4 weeks.
Comment: prices are likely to continue in this trend as although supply for now at least seems reasonable, it certainly needs to stay that way given that we are still some 6-7 months away from U.S. and Chinese new seasons.
Mark Setterfield – April 2010
If you have any queries or questions about any of the issues raised in this report or indeed, about any of the products in our range, please do not hesitate to call.
