RM Curtis & Co Ltd Market Report

RM Curtis & Co Ltd Market Report Dried Fruit, Edible Nuts & Seeds

Jan-Feb 2018

Inside this issue: Edible Nuts Dried Fruit Seeds

Market Highlights

2 8 14

Brazils - New crop will most likely ship around end Jan for a March arrival into Europe, although those early quantities will not be great and will likely disappear as fast as they come in until the receiving warehouses are replenished. Cashews - Cashew nut pricing has slightly improved over the past month – both driven by the weaker USD, as well as hopes and expectations that the Vietnamese new crop will be better than the past year.

El Nino

El

Pumpkin Seeds - With old crop stocks at destinations in rapid decline, so the impact of a smaller Chinese new crop will start to unravel over the next few weeks and months.

About RM Curtis & Co Ltd.

Curtis are one of the leading UK suppliers of dried ingredients including Edible Nuts, Dried Fruit, Pulses, Seeds and Rice.

Please visit our website for more information on our products and brands www.rmcurtis.co.uk

For almost 170 years customers in the Retail, Food Service, Catering and Wholesale, Bakery, Confectionery, Snack and Manufacturing sectors have benefited from our commitment to quality, service and value. RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20Tel: 7274 6090 (0)20 7737 1827 +44 (0)20 Fax: 7274+44 0717 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 2

R M C urtis & Co Ltd

J an - F e b 2 0 1 8

EDIBLE NUTS Almonds

Comment

The New Year has started with a very active Californian almond market, with strong international buying and some nervousness pre-bloom from origin stock holders and processors (“handlers”). As always, the weather over Feb-March is key to how pricing will perform short-medium term, and the monthly shipment reports will show the extent to which demand seems to be outstripping sales for the same period last year and on-going.

Despite recent USD strength, prices at most destinations still remain competitive – both historically and in comparison with most other treenuts, so it is easy to see how demand based on pricing and diverse application, will stimulate more sales and push this bumper crop to its limit. There are some strong predictions for everincreasing crop sizes in the coming year as new planted orchard acreage comes to fruition.

The December shipment report has been released and shows a mighty 30% increase year on year (156m v 204m). This is the 3rd record month in succession and the biggest ever December shipments.

But clearly that is also heavily dependent on the cooperation of the weather - so the next few months in California (and Spain) are critical.

The good news at least in part is that the crop receipts suggest that the crop should be 2.3b lbs which would be 2% up on the previous estimates of 2.25b.

Spain has also undergone some intensive increased planted acreage, so weather permitting, we could finally see a crop at or even over 100,000mts - all being well.

RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20Tel: 7274 6090 (0)20 7737 1827 +44 (0)20Fax: 7274+44 0717 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 3


J an - F e b 2 0 1 8

EDIBLE NUTS Cashews

Comment

Cashew nut pricing has slightly improved over the past month – both driven by the weaker USD, as well as hopes and expectations that the Vietnamese new crop will be better than the past year. Supply also from the African raw seed origins looks healthy and combined, could see production restored to levels that could see further price reductions as we move further into 2018.

Short term however, prices might be stable as origin is working off higher price input (seed) pricing and, because there is so much forward uncovered demand yet to be covered, so origin is understandably cautious about offering lower pricing as they are fully aware that demand is wide open. As reported elsewhere in this report, growth in demand for all nut products shows no sign of waning, and with growers increasingly making strong profits each year, the pressure on grower/stock holders to sell quickly for cash, is also diminishing. Some markets may just have realigned to higher levels for that reason and a return to historical lower pricing might never happen aside from when there are true bumper crops / over-supply.

RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20 Tel: 7274+44 6090 (0)20 7737 1827 (0)20Fax: 7274+44 0717 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 4


Walnuts

Californian walnut pricing remains high, and especially so on Pieces where the market is extremely tight. As previously reported, there are 2 key issues on Californian walnuts this season. The first being the crop size itself, which was supposed to be a bumper crop, but this was reduced by the extremely high Californian summer temperatures last year. The second being the high percentage of whole halves increasingly being produced by the advanced shelling techniques, and which by default is producing a lot fewer Pieces in the process.

J an - F e b 2 0 1 8

Comment

The culmination of this is that prices are high and availability of Pieces is now really low. Processors are now genuinely looking at cutting Pieces from Halves and depending on their own use of – or possible sale of the by-product to improve the yield, we could be looking at Pieces pricing ending up at a premium to the Halves from which they have been diced. At such an early stage of the new crop season, it is an amazing position to have found ourselves in this soon.


Pag e 5


J an - F e b 2 0 1 8

Brazils

Comment

Brazil nut prices are still following the trend previously detailed, in terms of a sliding scale from stocks (or lack of) nearby trading at a premium, down to discounted prices over the second half of 2018 to reflect better stock levels once new crop is refilling the empty supply pipelines. Not surprisingly, origin was trying to ship out new crop as early as possible, although the timing of the collections during Dec and Jan have restricted the amounts that they could ship when they would prefer. Meaning new crop will most likely ship around end Jan for a March arrival into Europe, although those early quantities will not be great and will likely disappear as fast as they come in until the receiving warehouses are replenished.

Under these circumstances, prices on brazil nuts are showing a sliding decline by month – especially over the second half of 2018. Made the more attractive by the weaker USD of late, delivered prices over Q3 and 4 are significantly cheaper than anything available over the remainder of Q1 and 2. Importers are understandably nervous about bringing in uncommitted stocks, on the basis that the value could easily have dropped during its journey from origin to destination. But for that same reason, light stocks at destination will most likely continue to keep physical stocks in Europe at a big premium to replacement values but only until there is enough stock in circulation to reduce even that premium. Such a crazy season will likely deter some buyers from reintroducing brazils into their range for some time and against the permanent backdrop of a small crop at best being ultra- susceptible to any damage or crop reduction in the future. But that said, memories are short and once pipelines are replenished, brazils could easily re -establish themselves against the backdrop of strong demand across the whole nut basket.


Pag e 6


J an - F e b 2 0 1 8

Hazels

Comment

Hazelnut pricing has firmed quite significantly since the start of 2018 and this is due to several reasons: Firstly, reports suggest that as much as 90% of the new crop has now been sold by the growers to middle men or to the processors, meaning that the supply of fresh material to the market has slowed down and in theory, the stock now sits with a more speculative part of the origin supply chain.

With plenty of buying still to be done and the majority of the crop in strong hands, it is easy to see that prices could be manipulated higher in the coming weeks and months.

Short contracts (earlier higher priced sales) continue to be covered in at origin and destination, meaning that there is additional demand presenting to origin sellers and naturally results in higher prices in response. The TMO is still in the market to buy – even though fresh stocks from farmers is now harder to find, but their purchase price of TL10/kg is keeping the local market firm as this procurement strategy shows no sign of stopping any time soon. Nor is there any sign of when they might sell.

Many also believe that the Lira remains undervalued, so if the currency continues to creep steadily back upwards, then this would also convert to higher export pricing.

Finally, the weather clearly over the next 3 months across the growing region will be key and as we know from bitter experience, a severe frost at this most sensitive time in the growing cycle, can cause mayhem in the extreme.


Pag e 7


J an - F e b 2 0 1 8

Pecans

Comment

Amongst these buyers, one of the biggest markets is China and the volume they buy, and can buy, is enough to move the market on their own.

There are strong and quite opposing views on the prospects for Pecan prices and which for 2018, will start to play out in the coming weeks and months. Speculation last year that Mexico was up to 40% down might have been over-playing things, but recent reports from the U.S. suggest that the amount of stocks being delivered into them from Mexico suggest there is a problem. This could be in part because some of the Mexican producers are rich enough to withstand the pressure to sell their stocks early in the season, but for many others, the prevailing prices are high enough to guarantee them a very good return, so it’s unlikely that they would refuse a chance to sell at these levels and more likely would be chasing price lower in an attempt to lock in a big profit. From the U.S. many processors are also well aware that there is plenty of buying still to be done for 2018, and so they feel under limited pressure to reduce their prices knowing that it is really only “when” and not “if” buyers will start to forward cover.

While they have already covered their requirements for their new year, they have a lot of buying to do for the rest of the year – as have many buyers in the UK and Europe, so while cautious buying could see origin prices drifting through general inactivity, with the crops no bigger than last year, it would be easy to see pricing sensitive to any demand that shows itself. The flip side to that could be that Pecan prices are still both historically and comparatively high set against other nut products, so unless there is a strong realignment, then some destination markets could easily switch to cheaper alternative nuts, reducing overall demand and bringing extra pressure on to origin sellers.


Pag e 8


J an - F e b 2 0 1 8

DRIED FRUIT Comment

Coconut

Prices are unchanged in origin since our last report, although the partial Sterling recovery of late against the US Dollar, has clearly helped UK pricing. Strong supply from the Philippines has enabled the key processors there to edge into contention as the more competitive origin, which is unusual given that Indonesia is typically the most aggressive between the 3 primary origins (Philippines, Indonesia and Sri Lanka).

Strong demand for Sri Lankan coconut from the Middle East in the build up to Ramadan mid-May ’18, has driven Sri Lankan pricing to record highs and also record differentials between their prices and those of Philippine producers. Indonesia’s short crop has pushed their prices over Philippines and, while there are some cheaper Indonesian processors offering cheaper, in general these cheaper offers represent factories who are found very wanting in terms of their process and limited if any accreditation.

As usual albeit more than ever, this strong demand has resulted in the key factories being pushed to their maximum capacities, meaning that there is no chance of any new enquiries being fulfilled within 2-3 months at the earliest. This means that those prompt enquiries can only be supplied by material on the spot and which given the slow speed of replacement, means that spot prices for physical goods are trading at a big premium to replacement. None of which suggests any coconut price correction for some time ahead, unless currency moves considerably against the USD.


Pag e 9


J an - F e b 2 0 1 8

Raisins

Comment

Underlying prices in California over the past month have remained firm, but stable at destination due to the USD weakness. Packer/processor sellers fully appreciate that the sky high prices are risking the defection of some customers to other cheaper options if and when available, but due to the short crop this year, they are reluctant to reduce pricing even when things are quiet.

With Californian prices unlikely to ease any time soon, and with Turkey close to selling out for the remainder of this season; with Iran short and thus creating additional pressure on the U.S. and Turkish stocks, so (apart from currency) there seems little chance of any downward price correction on raisins from any source any time soon.

Their belief is that if buyers need and want Californian raisins, then that is what they will have to buy. And if some buyers defect, there will still be plenty of buyers who still have to buy this origin. From Turkey, their stocks of raisins have sold through so well that it is quite possible that they might sell out some time soon and easily long before the next harvest. Chilean prices are firm, but really in response to market strength elsewhere more than any other reason. Their own new crop will harvest over Feb-March and there is no reason to suggest so far, at least that there is a problem with their next production.

RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20 7274 6090 +44 (0)20 7737 1827 Tel: +44 (0)20Fax: 7274 0717 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 10

R M C urtis

Sultanas

J an - F e b 2 0 1 8

Comment

The same high pricing on raisins and the shortage of Iranian new crop this year (as reported above) have combined to create similarly worrying fundamentals in Turkey on sultanas. Their new crop is in excess of 310,000mts, but with strong sales of fresh grapes to Russia at the start of the season and a growing domestic demand for both fresh/ table and dried product plus the shortfall in Iran, these factors have combined to drive prices up from before and since Christmas. Reports continue to suggest that Iran lost around 50% of its own crop due to the extreme hot Iranian summer last year and this deficit has resulted in a huge redeployment of demand crossing over to Turkey.

To the extent that local pricing has increased steadily and with the Turkish Lira edging higher against the USD (with many observers of the opinion that it still remains significantly undervalued) so this converts to even higher export pricing. 2018 has started with warm local temperatures in western Turkey and this will likely trigger an early flowering and increased chance of possible frost damage. Also, the past two years has seen big production in Turkey following much colder temperatures over Jan-March, so arguably this, combined with the chance of a smaller new crop anyway if the vines are stressed, all point to a smaller new crop coming; little to no carry in and a current crop that by default will be pushed to its limit.

RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20 7274 6090(0)20 Fax: +440717 (0)20 7737 1827 Tel: +44 7274 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 11

R M C urtis

Currants

J an - F e b 2 0 1 8

Comment

New offers from Greece for currants have all but completely dried up and with still eight months to run before the next crop, the present dire situation looks likely to further deteriorate.

There are other origins of currants – mainly South Africa and California, but both markets are also very high in price with a berry count typically much smaller.

Greek processors are aware that there are still stocks of unsold current crop sitting with the growers, but sadly greed prevails, and they are not releasing further quantities while they believe that prices tomorrow will be higher than those of today.

For that reason, this doesn’t offer an immediate solution to the problem in Greece and so, for some buyers still uncovered, there is the hope that as and when Greek stock holders decide they can optimise their margins, then stock will be offered through the processors and then at least there will be offers to review – albeit at price levels hard to predict, presently.


Pag e 12


J an - F e b 2 0 1 8

Apricots

Comment

The weather in Malatya over the next 4-5 months will play an increasingly prominent part, as assessments are made and revised over the prospects for the 2018 crop.

Warm weather in Malatya since the start of the year is making local grower/processors extremely nervous.

We are presently in a season with a bumper crop, but the low point on origin pricing actually came before the harvest, as origin speculators leant on the market in order to lock in their forward short sales with the intention of covering those same sales later on.

We saw the full impact of snow and frost on the developing crop during March in 2014, and should such an event happen again, then the upward trajectory would be unstoppable.

As prices then turned after harvest and as those speculators covered their shorts and bought additional to support the upward correction, then clearly other buyers were jumping in to cover all or part of their own forward demand at prices which were still attractive historically.

With the crop vulnerable to frost even up to late May, so current crop stock holders will now be very cautious with how they sell their uncommitted inventory and will look to take every opportunity to edge their pricing up in the short to medium term even without any bad news to fuel this.

This price trend has been further supported by the Lira recovery against the USD, converting firmer local domestic prices into even firmer export levels.


Pag e 13


J an - F e b 2 0 1 8

Cranberries

Comment

Cranberry prices continue to firm. While the strong Sterling versus USD rate has improved of late, in USD terms from origin, replacement prices are now 20% + higher than this time last year and expected to rise further. These increases are due to the reduced U.S crop (down by approximately 15%) while Canada is facing a shortage of 25% compared to last year. The consequence of this is clear and will fuel speculation all the season ahead that we might be faced by a season where demand outstrips supply.

demand for Cranberries has been increasingly steadily over recent years and while cranberry juice sales are reported to be in decline, so the use and application of cranberries themselves across manufacturing and snacking is rising exponentially. So despite the short crops, origin factories are presently working to full capacity as they work hard to keep up with demand. But this is delaying any new enquiries for prompt shipment (now min 8 weeks lead time) and forcing spot prices higher to service nearby demand.


Pag e 14


J an - F e b 2 0 1 8

Seeds Pinenuts

Comment

Pinenut pricing has stabilised since the start of the New Year, following an aggressive bull run over the second half of 2017. As previously reported, this price trend had been down to negative speculation over the likely size of the new crop, as well as the on-going political shenanigans between North Korea and its near neighbours in China, South Korea and of course the U.S.

So the course of short to medium term pricing now depends on the extent to which 2018 demand unravels itself: if there is sufficient stock at the various destinations to service short term demand, then slow buying interest directed towards origin should stimulate more pressure on stock holders to ease their prices back to lower levels in order to sniff out where the next layer of interest lies. On the other hand, this is a market sometimes driven by speculators, so if industry demand, fuelled by speculation hits the market shorter term, then pricing will head back higher much sooner.

RM Curtis & Co Ltd. 95 Camberwell Station Rd London, SE5 9JJ Phone: +44 (0)20Tel: 7274 Fax: +44 +446090 (0)20 7274 0717(0)20 7737 1827 www.rmcurtis.co.uk [email protected] Fax: +44 (0)20 7737 1827

Pag e 15


J an - F e b 2 0 1 8

Seeds Comment

Pumpkin

With old crop stocks at destinations in rapid decline, so the impact of a smaller Chinese new crop will start to unravel over the next few weeks and months. Typically, Chinese domestic demand for pumpkin seed starts to pick up after their New Year (this year starting on 16th Feb) and in anticipation of this, Chinese sellers are reluctant to offer as they expect to make higher prices later on.

As usual, the differentials between Shine skin and GWS varieties will drive the demand to the cheaper option, and with domestic interest increasing on GWS (given the more striking green colouring), we would expect the gap between the two varieties to widen as the season progresses. However, with reduced supply overall, we would expect pricing to increase gradually and with historical highs on pricing still way higher than present levels, the potential price upside way outweighs any chance of price decreases over 2018.


Pag e 16


J an - F e b 2 0 1 8

Seeds Sunflower

Comment

With a backdrop of expected further increases in edible oils this year ahead, so expectations are for pricing on sunflower kernels to be drawn up on the back of such an adjustment. However, Bulgaria has sheer scale of supply in its favour and with this year’s crop being another strong volume, so it should still be a match for even increased demand should that present.

At some point – although clearly not for the rest of this season – origin will figure out that the most effective way to squeeze higher pricing is to reduce the plantings themselves or to withhold stock from sale. While there are some clear differences between the calibres and accreditations between the various processing sites in Bulgaria, the crops have been consistently big consecutively. But with other origins in Eastern Europe emerging (as well as competition from the more traditional origins in China, Argentina and USA), Bulgaria should be mindful that their hard earned, and relatively recent monopoly, could very easily be challenged.


Visit our website: www.rmcurtis.co.uk RM Curtis & Co Ltd 95 Camberwell Station Rd London, SE5 9JJ Tel: +44 (0)20 7274 0717 Fax: +44 (0)20 7737 1827 E-mail: [email protected]

RM CURTIS & Co Ltd : the ingredients people Collaboration, Quality, Value, Service


Contact us to find out more about our exciting ranges of healthier natural snacking and home baking products Email: [email protected]
