RM Curtis & Co Ltd Market Report

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

Aug-Sept 2016

Inside this issue: Edible Nuts Dried Fruit Seeds

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Market Highlights Brazils — With many of the processor/packers looking to shut down for the remainder of the season over the next month or so, we are faced with a worrying scenario of dwindling supply from origin with still 7-8 months before there can be any respite from new crop. Cashews — There seems to be no let-up likely any time soon to the continued “bull run” we have been experiencing on Cashews. Raisins – It looks set to be an interesting season ahead on vine fruit, given big crops in key origins and a lot of competition between them for market share.

El Nino El Nino

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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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R M C urtis & Co Ltd

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EDIBLE NUTS Almonds

Comment

There has not been much activity over the past month despite the July shipment report at 138.6m lbs (v last year at 122.5) being up 13% year on year.

the harvest is well under way at the time of writing and so far at least there is little to challenge the last official estimate of 2.05b lbs.

We have become quite used to such increases and as such the response was fairly muted.

Some orchards are much better than last year while others have disappointed but there is an unspoken hope and belief that the final figure can be bigger.

Key numbers from the report were: Western Europe: + 37%

We expect replacement prices to continue to trade within a narrow range in the shortmedium term, with the currency playing as big as factor as any other fundamental.

Asia: + 48% - mainly driven by strong demand from India for Diwali as China/HK were down 16%. Middle East: down 47%, based on buyers who bought heavily earlier this year, who are still working their way through those older purchases. Shipments 2016 to date are up 9.3% and which serves to show that demand for Almonds continues to grow on-going almost regardless of price but especially when matched competitively against many of the other nuts in the category.

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

There seems to be no let-up likely any time soon to the continued “bull run” we have been experiencing on Cashews. While some buyers have been holding off from forward covering - in the hope for some price respite, as and when they have come albeit reluctantly to the table, so this has fuelled the origin seller’s instincts to push for higher prices, in response. As prices have climbed, so inevitable defaults have come about, and this then drives further demand for limited spot stocks and additional demand for prompt shipment.

demand from USA and Asia for their needs Sep-Dec has brought further price increases of late but for the U.S. at least, prospects for the Brazilian new crop at the back of this year are key to the States’ demand being taken care for 2017. Then – early into the new year, we will have a clearer view on the prospects for the Asian new crops although we can already mention that the drought affecting many regions of Africa may well have a negative bearing on the supplemental W. African crops on which India and Vietnam are so dependent. Unfortunately, this collective uncertainty will likely keep prices high for the short-medium term.

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

A quiet month with the only issue outstanding being the scarcity of light grades from the tail end of 2015 crop and until new crop is available in the UK from midNovember onwards. Another successive, large Californian new crop is welcome news in that it should ensure that total walnut supply into 2017 should be a match for even a growth in demand.

and this increase in demand is highly likely to come. Not only is the use and application of walnuts growing in a multitude of new innovative products across home baking, food manufacture and even snacking – but from a price perspective with higher pricing on pecans, hazelnuts, cashews, pistachios and macadamias, walnuts – and especially those from the better looking/tasting origins such as California and Chile look increasingly great value for money as an ingredient or inclusion.


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Brazils

Comment

With many of the processor/packers looking to shut down for the remainder of the season over the next month or so, we are faced with a worrying scenario of dwindling supply from origin with still 7-8 months before there can be any respite from new crop. Brazils generally start to arrive in the UK from May onwards, so it is a concern that we have such a long period between now and then to feed any uncovered demand.

the weather from December onwards will determine the Bolivian new crop although we can predict a similar production as usual at 20,000mts +/-. The wider concern is the expected growth in international demand for brazils as another component of the treenut basket and with healthier eating in its ascent, it is inconceivable that demand for this nut will decline and push whatever size crop increasingly to its limit.


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Hazels

New crop pricing has opened from Turkey and it has been a bit of a shocker. Despite the fact that the 2015 crop carry over (around 120,000mts) combined with the higher estimated new crop (580,000mts) would total 700,000mts – which is around the same quantity of the 2015 crop itself, the Turkish growers are focusing their efforts on maximising pricing for the new crop and hence this massive opening price hike.

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Comment

short term, we would not expect pricing to ease too much since the growers have deep pockets and will feel under no pressure to lean on prices. They know as do the rest of us, that demand for new season Turkish hazels is wide open but the timing and the volume of demand shown will be key to how Turkey responds and if buyers play a cautious hand, this might build to pressure from stock holders to shift some of their product. However, this might not be until the very back end of 2016.


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Pecans

The weather across the southern USA and Mexico over the next 2-3 months is critical, as the developing new crop approaches its final development and in order to avoid any repeat of the late wet weather which last year caused such severe subsequent issues. Although that was very unusual and likely linked to El Nino, its impact is still being felt today. At the time of writing, the first hurricane (“Hermine”) has hit Florida and the Carolinas and while we have no reports of any damage to the pecan crop itself, clearly there will be widespread damage caused. This period of the season will make sellers especially nervous given the background of last year and likely prevent any chance of prices softening until the crop is safely in.

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Comment

the bigger problem however, is that given the clear on/off nature of this crop (meaning, a good crop is invariably followed by a smaller one), despite this present crop being small – this was supposed to have been the larger within the cycle so even without any adverse weather, the crop will probably not be big. Limited to possibly zero carry in, running into a smaller crop predisposes no obvious reason for any price respite into 2017. That is, other than through a slump in demand caused by the very high pricing. That is, other than through a slump in demand caused by the very high pricing. For reasons outlined elsewhere in this report, with some major differentials existing between pecans and other treenuts – especially walnuts, it is highly likely that there will be some defection from pecan buyers into other cheaper nuts on-going. But we very much need that in order to counter the short supply for the foreseeable.


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DRIED FRUIT Comment

Coconut

After the dry summer in Philippines and Indonesia this year, there are still unanswered questions over the long term effect to crop size and yield. Last year, it was linked to the early manifestation of El Nino and this year may have been an unfortunate coincidence, but given the strong increase in demand for coconut and its derivatives, low yields are not what we want or need.

with strong demand still to be covered for Sep-Dec ’16 – let alone into 2017, and with very strong and increasing demand for coconut water, coconut milk, VCO etc, reports of lower yields are unwelcome. Coconut oil pricing is also firm because of an increasing defection away from the contentious palm oil market (due to sustainability concerns), and strong coconut oil invariably leads to higher desiccated pricing.


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Raisins

Comment

As also reported below in Sultanas, this looks set to be an interesting season ahead on vine fruit, given big crops in key origins and a lot of competition between them for market share. Despite some localised rains at the start of the drying period in Turkey, the total crop is still looking good with pressure presently on pricing coming from stock holders also trying to offload their residual carryover stocks from 2015 crop. California and Iran also report very good new crops, with both presently keeping a close eye on the Turkish price trend and anxious to stay in touch.

clearly, with all of the key origins trading in USD, the weak (but slightly recovering at the time of writing) Sterling is converting harshly into UK delivered pricing, but pressure between key origins is in part offsetting this negative fundamental.

Chile is the exception with Flames still short following late rains during drying in March and with strong demand and ever-widening application of and for this product, looking like we may see an on-going squeeze on supply for the remainder of this present season.

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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R M C urtis

Sultanas

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Comment

Reports from Turkey suggest a new crop between 310320,000mts but it could be bigger. After many consecutive months of Turkey missing out on business as the market looked elsewhere during the chlorpyrifos “era”, exporters are more keen to fight for market share than the growers who are typically frustrated by prices they consider too low. There is even talk of government intervention by the TMO (which we are more familiar with on hazelnuts) in order to stabilise pricing – but this would only open the door once again for other origins to launch a counter offensive.

China is equally motivated to retain its own unexpected market share (China made strong sales during “chlopyrifos-time”), so for now at least, strong competition between origins should keep some pressure on all sources despite the strong USD. We would expect therefore pricing in the short term at least to remain under some collective pressure but with much of 2017 so far entirely uncovered, how and when and in what volume demand reveals itself will determine medium to longer term price trends.

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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Apricots

Comment

Despite new crop in Turkey coming in larger than 2015 crop, prices now seem to have hit some resistance whereby origin sellers are comfortable to stand their ground and buyers are comfortable to pay the price. While the Lira has stabilised against the USD since the coup, clearly the UK’s best hope is for some gradual recovery of Sterling - for apricots and obviously all other imported products traded in US Dollars. The immediate aftermath and shock waves following the Brexit referendum created immediate political and economic uncertainty. To a large extent – other than some residual elements of idiotic xenophobia – it feels increasingly like “business as usual”.

for apricots in isolation, we would expect pricing to remain within a narrow range for the short-medium term and with the currency conversion being the most likely greater influence.

But it is still early days - and until the Brexit-Exit is better understood in detail and timing, the UK might remain a question mark for overseas investment and the value and recovery of Sterling might continue to reflect that.


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Seeds Pinenuts

Comment

Prices in the short–medium term look set to remain firm on the back of an expected short crop and from the impact of the currency. Although most of the major buying has been done for the rest of 2016, the underlying firmer trend is also coming from Chinese and Hong Kong based speculators who are looking to profiteer from this present price trend.

there are those however on the ground who confidently predict a 2017 crop - which could be much bigger than this new crop - and the previous crop - and although it is way too early to say for sure, if this were the case then there could be some major price adjustments on pinenuts to look forward to over 2017. Short – medium term however, pricing looks likely to stay stable to firm other than any additional effect coming from the currency.

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

Prices have remained stable since our last report with the new crop in China expected to be similar in size to last year’s current crop. What may change is the percentage of Shine Skin to GWS although now that the darker GWS seed is favoured by the domestic market, it is unlikely that this variety will drop below Shine Skin again any time soon.

as always, the weather pre-harvest and over the next 2-3 months is key and any late frosts coming from an early winter, would have a predictable response on quality and quantity. As reported elsewhere, the main influence of late has been from the fluctuating fortunes of Sterling, and in the short term other than the weather, that might remain the greatest influence.


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Seeds Sunflower

Comment

This is a critical time for the harvest in Bulgaria where the harvest of the crop in the south is already under way with the remainder soon to follow. The first reports are actually quite negative with some observers now downsizing their previous best guesstimates of this next crop coming in as “average”.

As reported elsewhere, demand for sunflower, coconut and rapeseed oil is increasing as buyers defect away from palm oil, so with a smaller new crop; increased demand from oil crushers - as well increased demand in use and application from sunflower seed buyers, together with a weaker currency, we can expect to see some strength returning to this usually stable market over the rest of 2016 and potentially into the New Year.


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