RM Curtis & Co Ltd Market Report

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

Sept-Oct 2017

Inside this issue: Edible Nuts Dried Fruit Seeds

Market Highlights

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Cashews - Origin prices remain stable with some sporadic but temporary weaker pricing coming from Vietnamese processors who are under variable pressure to sell for cash. Pecans - Hurricane Irma was so strong that it managed to destroy many pecan plantations completely and caused a lot of crop damage elsewhere. As a consequence, prices have firmed.

El Nino

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Sunflower Seeds - Despite some delays experienced in early new crop shipments, the general consensus is that the new crop itself looks like another strong production in Bulgaria, which will hopefully be a match for existing and even growing demand.

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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

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R M C urtis & Co Ltd

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EDIBLE NUTS Almonds

Comment

Almond prices have firmed of late, due to the following reasons: Firstly, Sep-Nov is the busiest time of the year for strong demand and ahead of Christmas manufacturing, so origin is anticipating and seeing strong demand from both traditional and “emerging” destinations. Second, despite this Californian new crop being the biggest ever, there are reports of high levels of insect damage which might just result in the crop being no bigger than the last official estimate of 2.25b lbs. Third, almond prices are comparatively (and historically) good value at present levels. When we look at most of the other “tree nuts” in the basket, almond prices are excellent value and helped of late by a weaker US Dollar.

with strong demand and cautious but possibly reduced supply, it is inevitable that we see some price increases and that is exactly what has happened of late. Behind California, there are also strong crops in Spain and Australia but clearly California continues to dominate the almond landscape due to its own massive production. Origin had privately believed that the crop could easily surpass 2.25b lbs and it still might – but for now at least, a sense that the quality impact might damage that prospect, has shifted sentiment towards a sense of disappointment over optimism. For that reason, the market can easily remain nervous over the remainder of 2017.

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

Origin prices remain stable with some sporadic but temporary weaker pricing coming from Vietnamese processors who are under variable pressure to sell for cash.

the prospects for this scenario however, depends fully on the success of the Brazils, West African, Indian and Vietnamese consecutive new crops.

With high prevailing interest rates on loans (13-15%), some exporters need to sell stock just to repay their loans – even if this is at a loss.

All being well across these key origins, then cashew prices are due for a major price correction into 2018.

There is still some considerable reluctance presently to cover into 2018 as buyers continue to hope for better new year prices.

While to some extent we may have become accustomed to cashews at these levels, they remain way over their historical average. And at least for the UK, increasingly losing its appeal in development with other nuts at similar or cheaper levels.

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 the Californian harvest starting in October, we are waiting for news on how the quality and quantity matches the earlier estimates. The last official pre-harvest estimates were that the new crop was set to be down by around 2% and that the colour (following their extreme hot Californian summer – 35 days of 100 degrees + ) would be darker than last year.

While we wait to hear if this is accurate or not, California is nervous about offering anything into new crop and with the only prices available presently either coming from residual current crop – or their best guesses of higher pricing they expect to see once new crop is under way.

with reduced crops reported in both Eastern Europe (Ukraine, Moldova, Bulgaria) and India, this will further remove any pressure that California might previously have felt to compete closer to their cheaper competitor origins. As we speak, Californian exporters are preparing to see the timing and volume of new season demand from traditional European destinations – but also from Turkey and China who both import large quantities of inshell for further processing (and some re-export) themselves. So it looks highly likely that Californian prices will open in earnest at a premium to old crop levels and with this strong demand expected, we could see prices firming into early 2018.


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Brazils

Comment

With still some 6 months before new crop starts to arrive at the ports of destination, this market looks likely to have very many more twists and turns before an inevitable and quite possibly major price correction expected next summer.

clearly, the burning question is also the extent to which demand may have been changed for a much longer term.

We all know that by now origin is pretty much sold out and any stocks that are needed to service the remaining period between now and new crop will be in various warehouses awaiting their sale.

What will be fascinating is the extent to which demand has already displaced itself to a completely different extent, whereby even massively reduced supply may now only be servicing equally massively reduced demand.

As previously reported – at best, this is a tiny (and wild) crop and the lessons learnt this season are that any unforeseen issue can tilt the balance dramatically and severely. The impact on the local communities in Bolivia whose livelihoods are fully dependent on this crop has been extreme. As has been the adjustment to prices to record high levels. If an underlying level of demand resurfaces before new crop is here, then prices can easily springboard back to the highs of earlier this year and which would be of little help to anyone. Even when new crop starts to arrive, late next Spring, there will be a period in which prices likely remain high as the pipelines start to refill, but then followed by an inevitable price crash. But long before then, many buyers may have already decided that this extreme volatility is one uncertainty they can do without - and it may then take a very long time before this market encourages anything like the same level of interest that we had seen prior to 2017.


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Hazels

While the local Turkish market is definitely firmer, the weakness in the Turkish Lira has offset this to some significant extent. As previously reported, the Turkish government has continued to buy into new crop and between existing and forward committed purchases, they look to have secured around 100,000mts already of new crop stocks – and on fast payment terms which has attracted a solid and steady supply base amongst the growers. By squeezing supply, this has inevitably tightened the local market, with an on-going commitment to continue to buy, so the firmer pricing trend looks set to remain in place.

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Comment

the increases in origin however have stimulated some strong international demand and taking the same argument as mentioned in almonds, Turkish hazelnuts even with recent increases, also look good value comparatively and (recent) historically, and which makes any shortmedium term further decreases less likely. Of late, we have also seen USD recovering against the Euro and Sterling, which in itself is a stimulus to demand when there is a real chance for further USD recovery when international politics are so nerve jangling.

The Turkish Lira however, has seen a 5% depreciation since the 11th September, and which has managed to offset the fundamental market strength.


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Pecans

Comment

In our previous report, we mentioned Hurricane Harvey which had caused some major flooding across southern Texas – but clearly the “big one” was Hurricane Irma which followed Harvey.

other reports also talk about reductions in the expectations of the Mexican crop but there is less evidence of this. All in all, the assessment is that the combined U.S. and Mexican pecan new crops are likely now to be similar to current crop and as such, it may take longer to see any price reductions.

It was very widely reported that having smashed its way through the Caribbean, it then hit land in Florida but continued its path northwards into Georgia and South Carolina before being downgraded.

Demand is certainly widely uncovered moving into 2018, and in the main because buyers had expected to see new year prices drop.

Irma was so strong that it managed to destroy many pecan plantations completely and caused a lot of crop damage elsewhere. We don’t yet know the extent to which the crops over this region were reduced by this storm, but reduced they are – and clearly and as a consequence, prices have firmed on the back of this.

So with a lot of demand to come and a disappointing but stable supply year on year, it’s easy to envisage similar pricing over the coming months (currency aside).


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DRIED FRUIT Comment

Coconut

Coconut prices remain high and look likely to remain so in the short-medium term. Clearly – strong and growing demand for all forms of coconut has been at the heart of this bull market and there seems little to no sign of anything foreseeable that will change that. With the ANUGA trade show at Cologne looming, no doubt there will be an even bigger myriad of coconut products on show and which combined, is a measure of how popular this generic product has become. Prices have also been driven by sky high Sri Lankan coconut prices.

also, and as always with coconut, such is the strength of demand that the origin factories are now at full capacity for the coming 2 even 3 months, so even if pricing at origin is set to correct, there is a natural “lag” in when those lower prices start to show themselves at the destinations. Historically high coconut pricing may have now become the norm, but with weaker edible oil prices, logically desiccated prices should follow. But for the fact that high demand may have redefined how coconut pricing now works.

With strong demand from the Middle East and with shipment time “only” 10 days from Sri Lanka, those buyers are prepared and able to pay the high prices for the quicker shipment and cheaper freight. And with Indonesian prices also offered at a premium to Philippine pricing, so the Philippine processor/exports have not had to try very hard to see strong demand tracking their escalating export pricing.


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Raisins

Comment

This is shaping up to be a tricky season ahead on at least 2 of the key producing origins. From California, a combination of a reduced new crop made worse by late rains hitting the crop drying on the vines, looks to have battered any sense of optimism and then further fuelled by a belief that the new season field price will be a big increase on this last season. All of which has combined to send replacement pricing climbing steadily higher, and with little to no chance of correction given a desire between growers and processors for a higher base field price. It seems that California no longer has any interest in how their prices will sit alongside (above) their competitor origins and the extent to which this must ultimately affect their customer base.

the one and only respite in Turkey has come from the weaker Lira of late, which clearly converts to better USD based export pricing. However, even with that, replacement pricing is firming and against the backdrop of California now soaring to levels way higher than even Chile, Turkish stock holders will be in no hurry to drop their prices only 2 months into the new season. Demand for Californian raisins has to be affected in the months ahead, but for those who need to buy this origin, there seems no hope anytime soon for cheaper pricing ahead.

Turkey has different issues – but still lining up to manipulate higher pricing if they can. As seen with Hazels (above), the Turkish government is using the TMO to secure raw material stocks and as they buy, so they tighten their strangle hold on local supply and the amounts the private processors are able to buy competitively.

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

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Comment

As mentioned above in Raisins, a concerted effort by the Turkish Government is under way in Turkey, to buy into the new crop supply in order to squeeze the pipelines and thereby forcing upward pressure on pricing.

historically, the Turkish government has intervened in this way with general elections looming, as a sure fire way of gaining support from its agricultural electorate.

To date, they are thought to have about around 8,000mts which set against a crop of 300,000mts is clearly a small proportion but it is still early days in this new season.

With Turkey still heavily divided politically between its more traditional Islamic and the more Westernised secular base, the government pledging vast financial support to the agricultural sector makes some logical sense in that this same sector employs around 50% of Turkey’s population (although interestingly, agriculture now accounts for only 20% of Turkey’s GDP).

With Iran supposedly up to 40% down on its own sultana crop ; with increasing demand from Turkey’s domestic market ; with big sales already of fresh grapes to Russia ; with escalating raisin pricing in California (with Turkish raisins clearly an obvious bargain in comparison) and with Sultanas priced well across the dried fruit, nuts and seeds basket category- so demand has every reason to be strong and is most likely to remain so into 2018.

Of late, the unexpected weakness of the Lira has helped to obscure the extent to which the local market has risen – but with raisins and currants all in the ascendance, it is increasingly difficult to imagine how sultana pricing can correct any time soon.

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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R M C urtis

Currants

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Comment

There are mixed reports on the size of the Greek currants new crop, although full consensus that the crop was significantly hit by the rain and hail storms before harvest. With 25,000mts previously hoped for and expected, reports suggest the actual crop is anywhere from 22,000mts down as far as 17,000mts and at ANUGA, we hope to get some clarification.

for certain, some areas were hit worse than others but also for sure, many buyers had not previously covered into 2018 in anticipation of cheaper pricing ahead, so there has been a combined push from buyers and pull from sellers culminating in escalating origin pricing and even withdrawal of late by some of the major packers. For Greece, this is all clearly very bad news. Higher prices will affect demand on-going and also the traction on export sales they had successfully built up over the past 10 years. New export markets opening and at pricing at times even competing with sultanas and raisins, is fast becoming something of a distant memory. While new demand for currants into 2018 might fall way back, for those who need to buy them, it is hard to see cheaper pricing returning this season – other than through some possible adjustment through the currency.


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Apricots

Comment

In the short term at least, we seem to have hit the bottom of the new crop apricot market in Turkey and if anything, have rebounded from the previous lows. Even with the Turkish Lira weakness of late (v USD) their export prices are still firmer than in early September and this also despite this crop being undeniably a big one. Although there are no official stats, the crop is widely thought to be around 150,000mts and this is the largest crop in many years.

however, a combination of factors has seen a turnaround in sentiment. Firstly, demand has been as active from local Turkish processor / exporters as internationally as they cover any short sales they made earlier and in anticipation of the large crop they saw coming. Second and despite the large crop, supply has been affected by the extent to which growers over-sulphured their large new crop stocks as a preservative but which has caused some issues amongst processors to select stocks at the appropriate levels of SO2 for export to the EU. Third, for those buyers at destinations who had not covered forward because of their own hope and expectation that big crop should mean even lower pricing, the fact that prices have bounced has clearly stimulated more activity from those anxious not to miss prices still close enough to the bottom to be attractive to lock in.


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Seeds Pinenuts

Comment

The underlying trend on pinenuts continues to suggest that pricing has already rebounded from the bottom and is back on a track to higher levels. Even the political escalations between the U.S. and North Korea has triggered more demand of late and especially from speculators who see pricing at the lower end of a traded range and in the knowledge both that at worst, any military conflict would destabilise the region and at best, there is plenty of demand for pinenuts that remains uncovered for 2018 because it has not been possible to cover any forward sales made from origin anyway.

with pinenut pricing attractive and with plenty of forward industry demand still to be covered, it looks increasingly likely that prices will firm into 2018, especially against the back drop of regional instability and strong, growing demand anyway for pinenuts from within the Seeds basket.

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

Prospects for a tricky 2018 continue to play out – not least on the back of the reduced plantings as previously reported. The GWS crop is reported to be particularly light on volume this coming year, and we are already seeing a significant differential opening up between GWS and Shine Skin, and which will likely remain in place into the New Year. Ahead of Chinese New Year (Feb 16th) we can expect to see domestic Chinese demand also strong over Dec and Jan.

historically, as the Chinese demand drops after their New Year, so supply normally pushes pricing lower as international buyers wait for the market to ease back down to lower levels. However, the extent to which Chinese growers have decided to or have been persuaded to reduce their planted acreage looks set to make this year ahead a different story and once the stocks that are still in circulation from current crop have been depleted, then the supply/demand ratio for the year ahead could get a little complicated. Demand, use and application of and for pumpkin seed is clearly and evidently on the increase. Reduced supply set against this fundamental, looks to have a predictable outcome.


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Seeds Sunflower

Comment

Despite some delays experienced in early new crop shipments, the general consensus is that the new crop itself looks like another strong production in Bulgaria, which will hopefully be a match for existing and even growing demand. Set against its traditional Chinese competition origin, Bulgarian prices are still very competitive and while there are still some buyers who prefer to buy Chinese due to its perceived superior quality, Chinese prices are set to be at an even higher premium into 2018. This is because China has responded to its own declining domestic demand by reducing its sunflower plantings, but which clearly will drive export pricing even higher.

on which basis, Bulgaria has established itself as a primary supplier of this key ingredient which is clearly fast becoming a staple ingredient in a growing variety of manufactured and snacking products. With strong supply again, the 2 main influences that might affect pricing is the extent to which increased sales of sunflower oil might have on total stocks - but also clearly the ongoing fluctuations on currency.


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