RM Curtis & Co Ltd Market Report

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

Jan-Feb 2017

Inside this issue: Edible Nuts Dried Fruit Seeds

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Market Highlights Brazils - Unsold stocks of brazil nuts both at origin and destination appear to be running very tight and still with 4 months before new crop starts to arrive into Europe, it is hard not to see this situation becoming worse before it can be any better.

Sultanas - The local Turkish market for vine fruit is firm in Lira terms – although the conversion of the weak Lira exchange rate to USD for export pricing is offsetting this, to some extent.

El Nino El Nino

Sunflower - Extreme cold weather in Bulgaria of late has prompted the authorities to impose a ban on truck movements and which has set back newer arrivals across Europe.

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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

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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

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EDIBLE NUTS Almonds

Since our last report, we have had in the November and December shipment reports and which came in at +33% and +15% respectively over the same months in 2015. (187.5 v 140.5m lbs and 156 v 135m lbs). These increases over the previous season came as little surprise and neither report resulted in any major price increases. The increases that have come however, have been related to the currency and also to some extent, offset by the belief that based on on-going new crop receipts - this 2016 crop will probably end up at 2.1b lbs which would be the biggest ever Californian almond production (the 2011 crop at 2.02b lbs previously held that record).

Comment

the other pressure on the market itself has come from very high rain and snowfall over this Californian winter so far, and which has had a clear and direct impact on the long term reduced water levels. While the weather over Feb-March is going to be key as usual to the extent of the development of the 2017 crop, there were many post-new crop harvest who were talking about drought and this very wet winter so far must have gone a long way to resolving this major issue. But it is vital that this wet weather pattern changes over the next 3-4 weeks.

As we all know, since the Brexit referendum, Sterling has continued to weaken and while the timing of and the extent to which the exit from the EU remains unclear, with every indication that the final deal looks likely to be a “hard” departure, so the UK currency wobbles further.

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

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EDIBLE NUTS Cashews

Comment

As previously reported, and in some anticipation of the likely impact of better and bigger crops from West Africa and the Far East from March/April onwards, we did see some strong downward pressure on pricing end 2016 albeit offset to a major extent by the tricky currency situation. What appears to be unravelling at the moment, is that buyers for Q1 2017 who had expected to see further pressure over this period have now started to show their hands and this demand has actually pushed origin sellers’ pricing higher.

if short term demand is uncovered pre-new crop and as it now appears, then we could see a technical squeeze as importer/traders did not plan to carry a surplus in their stocks and there may not be enough time to replenish the pipelines at destination. If this does play out in this way, then new crop opening pricing might be higher than had been previously expected but good crops from key origin should ensure that the pressure returns once new crop shipments are under way.

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

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Comment

Walnuts

With U.S pecan prices extremely firm, it is not surprising that domestic buyers have switched allegiance to their cheaper cousins (walnuts) and this strong demand has contributed towards the continued market strength. Also buoyed by shorter supply from Eastern Europe and India, California is enjoying something of a monopoly of supply this year and while they are not driving price higher fast, it is more of a slow “creep” northwards.

Californian walnut shipments Sep-Dec 2016 were running approximately 80,000 (short) tons over the same period last year and this is a measure of how strong demand truly has been. Other reports suggest that this bumper Californian crop (680,000 short tons / 616,000mts) is already 75% shipped or committed and with strong on-going pecan and almond shipments, it is hard to see any price decrease on Californian walnuts any time soon.


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Brazils

Comment

Unsold stocks of brazil nuts both at origin and destination appear to be running very tight and still with 4 months before new crop starts to arrive into Europe, it is hard not to see this situation becoming worse before it can be any better.

the higher the levels of current crop achieved before new crop, the higher the first new crop shipments will invariably be.

As always, the weather over the next 2-3 months is critical to the logistics of moving the crop from the jungle to the processors and out via Chile for international export.

For those of us in the UK and Europe, the strong USD is driving local pricing even higher and so benign weather and optimal crop is key to stabilising origin pricing at least over Q3 and beyond.


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Hazels

The decline in value of the Turkish Lira against the USD over the past few months has been one of the biggest factors on hazelnuts (as well as other Turkish exported crops mentioned in this report).

Since April 2016, the Lira has depreciated against the USD by around 35%, and while the Turkish government tried in December to intervene on the money markets to stem the decline, this was only a temporary respite and any expected major USD (downward) correction following Trump’s victory in November, has significantly failed to materialise. Of interest also, is the fall in hazelnut exports since the start of this new crop. While initially this can be pinned on the (25%) price hike that followed news that the new crop was 25% shorter than last year, there has been a consistent reduction in demand ever since and which with the weak Lira, has brought hazelnut prices in USDs back down to more recognizable levels – all be that partially hidden in the UK at least by the slide of Sterling.

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Comment

this decline in exported hazelnut tonnage has been a major factor in creating some pressure in Turkey while the weakening Lira has brought about a weaker conversion rate (into USDs).

With hazelnut prices now positioning themselves better against other nut products and with prices way off the highs from the start of the season, we are now starting to see buyers looking to cover and consequently, the supply of hazels to the processors has suddenly slowed way down – funnily enough. What we do know is that many buyers who have played this market very close to their chests still need to buy and if demand gathers momentum, then we can easily see prices firming in the short to medium term – regardless of how the US Dollar itself plays out against the Lira and Sterling.


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Pecans

Comment

for those that can switch out of pecans into other products, no doubt they will and for those that cannot, we’re stuck. For sure, international demand will be affected by any further escalation of price and we are already hearing that there is very little demand from those ultra price sensitive destinations,

At the time of writing, there seems little good news to report.

China included.

There are mixed reports of whether this USA new crop is down on last year since some areas are way better and worse than others.

This situation has been further wound up by strong buying over December from 2 or 3 of the packer/processors with the deepest pockets. Those wanting to wind the market up in order to cash in later on.

But what is clear is that new and unsold offers don’t stay available for long and many are predicting escalating issues on Pieces as this season unravels. With the same likely scenario seen at times last year when Pieces were processed from Halves and the usual premium/discount between the 2 grades inversed.

What those speculative buyers seem to fail to appreciate is that they are killing their own (and other) buyers as they do this and ultimately, they will only suffer themselves. Or maybe this approach will be effective and they will sell on their positions with maximum profit. But this approach is not healthy and will ultimately create some resistance to supporting these players when they have created new market levels by virtue of their own strategic greed.


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DRIED FRUIT Comment

Coconut

The high level, so-called “super typhoon” called NockTen which hit the Philippines on Christmas day 2016, caused some widespread damage. The crop from across the north of the country seems to have been the worst hit and will be reflected by a poorer production over the next 6 months. This is unfortunate as the Philippine crop was only just recovering from the impact of the drought over 201516. From Sri Lanka and Indonesia, a combination of reduced yield and strong demand is pushing both origin prices higher.

these factors combined, mean that we can fully expect a short-medium term price increase at origin and offset – or exacerbated by USD strength and weakness against the Sterling and Euro. With factories in both Philippines and Indonesia now largely fully committed for Jan -March shipments, any stronger demand at destination will potentially result in a squeeze on uncommitted stocks across Europe and the USA.


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Raisins

Comment

prices from California are steady in USD terms but are clearly suffering where they are converted into Sterling and Euro delivered levels.

From Turkey, we have seen some quite interesting fluctuations over the past few months and driven by 2 key fundamentals. Firstly on supply, the farmers have continued to drip feed their stocks to the market and in the hope of squeezing higher pricing. This has been effective and supported by steady purchasing (where possible) also by the processors – some of whom have a similar incentive to move the markets for financial gain. Second, currency. As reported elsewhere in this edition, the Lira has been on a steady decline against the USD since last April (2016) and for as long as this remains, then this offsets some of the local market strength in Lira.

The Californian processors have tried to keep pricing stable but it is the currency forces that have undermined them. The terms of “Brexit” – and/or the timing and conditions of…and whether it will be hard or soft - plus the latest tweet or press conference staged by Donald Trump - all continue to directly affect the daily rates and sentiment behind the USD strength and decline and we can expect many weeks and months ahead of the same.

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

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Sultanas

Comment

As reported above, the local Turkish market for vine fruit is firm in Lira terms – although the conversion of the weak Lira exchange rate to USD for export pricing is offsetting this, to some extent. As always for this time of year, the weather across the western growing region will be critical over the next 3 months and any reports of frost over March and April will typically spook the market into thinking that new crop will be reduced as a result.

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on the back of a good crop this year (310,000mts +/-) Turkish sultana prices have been competitive aside from the currency fluctuations and allowed Turkey to largely challenge for the volume they have lost in recent years to China. When China and Turkey are roughly trading at the same levels, Turkey “wins” on quality and China only really made the gains it did last year on the back of the massive uncertainty surrounding the nightmarish pesticide issues. However if we can learn anything from history, it is that a big crop is often followed by a smaller one and knowing the unpredictability of the weather, let’s face it – anything can happen over the coming weeks and months to drive uncertainty into what is already a market with a skittish feel about it.

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

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Currants

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Comment

This has not been a good year for Greece in its currants sales and it is hard not sympathise with their plight (to some degree). Forward sales before and immediately after harvest last year are the norm but they ended up some way below the subsequent market as news of the crop shortages filtered through in the monthly that followed. This crop was at least 2-3,000mts smaller than earlier forecasts and this shortfall was enough to send pricing significantly higher - and to then impact on the momentum that had been building towards a far better export market than Greece had really ever seen.

as per the reports on Turkish dried fruit, the success of the 2017 crop is critical to the medium-longer term profile of currants in this category. Any weather or quality related issues that drive further increases to an already firm market will only serve to push currants way higher once again over sultanas and raisins and this doesn’t work for anyone. The UK and Netherlands remain the largest target market for Greek currants and the emerging destinations in India and Australia have already been affected by Greece’s efforts to look after their traditional markets. Another year ahead of high and potentially higher pricing to come, will only serve to drive a major divide between currants and the (potentially) far cheaper sultanas and raisins, and this will definitely not be good for anyone’s business.


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Apricots

Comment

The Lira weakness (against the USD) has similarly offset any localised market strength and resulted in some cheaper offers on current crop as a result. Despite the Sterling weakness having a counter-effect, we are seeing apricot prices back at more historically recognizable levels and this has in turn stimulated more demand from those sectors looking for those products which offer consistent quality and at more competitive pricing.

again, the weather over the coming months will be key and it is still relatively fresh in the minds of many as to what unravelled in early April 2014 in Malatya when a highly severe frost decimated the new crop. Frost reports are no new thing and we can expect to hear them again this coming spring. But the point is that apricots from Turkey are sensitive to frosts up to June and we are now very familiar with what can happen next when the frost is as bad as it was in 2014...


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Seeds Pinenuts

Comment

Given that for those of us in the UK we have seen such a major currency impact on pricing of all products imported in USDs, it is interesting to see pinenuts still trading forward in Sterling at lower levels than we have done for some years. The size of the Siberica variety new crop was better than anyone expected, and we hear that even speculators who had bought into the price decline over December have had to re-think their strategies and re-sell their positions before the losses became even worse.

on the other hand, cheaper prices invariably stimulate more demand and this has already started to show. While this additional demand might not (yet) push prices higher, it has to be seen as a stabilising influence in the short-medium term.

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

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Seeds Comment

Pumpkin

As we write, we are at the very start of the new season and as such and with Chinese new year coming at us early this year (28th Jan) there are some predictable disruption to early shipments as some facilities are closed and will not be churning stocks out until first half February. This has created something of a short term supply squeeze, which could see firmer prices over Q1 with a chance for some correction from April onwards.

we know that Chinese domestic consumption is also increasing and general use and application elsewhere will maintain underlying demand on-going. But most reports suggest that the crop this year will be strong and once supply and demand are more evenly back in balance, we will then be likely affected more by the fluctuating currency over the course of 2017.


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Seeds Sunflower

Comment

Argentina reports a change to their tax regime whereby production of soya bean has better returns to growers than that of sunflower.

Extreme cold weather in Bulgaria of late has prompted the authorities to impose a ban on truck movements and which has set back newer arrivals across Europe. While this should not have more than a short term effect on supply, this is coming out of a Bulgarian crop already reported to be down on last year and with its 2 other key competitor origins also reporting smaller productions.

China has also reduced its own production in response to the much cheaper pricing available in recent years from Bulgaria. While this does not add up to a global shortage, it is a shift worthy of note and with demand for this relatively cheap but highly versatile product on the steep increase, we may see 2017 as a year when there will be some price realignment away from recent years’ pricing and competitor origin differentials.


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]

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