The value of whole around skipjack tuna is continuing to soften in the month of June, despite a rather stable supply of raw material being shipped to Bangkok. The current market level for SKJ is around $1,300 per M/T. The market should be stable but might increase during the FAD ban period of July to September.
The yellowfin price in Japan has dropped. The demand for sashimi is declining while the catching season is at a standstill. However, when we talk about yellowfin, we will benchmark with the top demand which is in Europe. The demand for yellowfin EU remains at the level of $2,000/mt. Sustainable YF like FAD free and P&L, there is not much movement on price.
Both Long Line and P&L albacore from Japan dropped slightly due to sashimi not moving during the pandemic, however albacore from the Indian Ocean/Pacific Ocean remains at same price.
Current Tuna Market Raw Material Price:
SKJ = US$1,300/ton
YFN = US$2,000/ton
Albacore = US$3,600 /ton
Tongol = US$1,700/ton
The new crop from China seems good, only some areas in Shandong had low output, most main areas are likely the same as last year. Prices remain the same as last season. The crops of two varieties that ACME purchases are very short. Variety 83 is from end of June to middle of July and Variety 19 is from middle of July to the end of July.
Greece canneries have been operating in full since June 1st. Packers are quite optimistic with the peach crop. If weather continues to be like now, they expect to have a normal crop both in quality and in quantities. Offers will be available around the 4th week of June. New packer prices will be higher than last season due to 25% additional EU tariff imposed on Greece peaches.
The situation in Thailand, being the world’s dominant supplier of canned pineapple, continues to be depressing. Only, 260,000 tons of pineapple were harvested during the first quarter of 2020 whereas it was 380,000 tons during the same period in 2019 and 512,000 tons in 2018 respectively.
Factories were only working at 30% of capacity throughout this summer season. Summer crop will end this month (2 months early) with the lowest raw material recorded in the history of its industry.
The cycle, amplified by drought, will continue with no recovery in sight for winter crop starting in October. Indonesia, the Philippines and Kenia are unable to compensate for this deficit and are simply following the market, carrying full order books well into the future.
Production of Indian gherkins is not expected to be greatly affected by the COVID-19 situation. Lock downs in rural areas were not so strict as to prevent most normal operations. The strictest lock downs also occurred at a point in the season where having fewer available workers did not significantly limit the amount that will be harvested. Prices are not expected to be largely different from previous projections and total volumes should also be in line with expectations.
European mushroom production continues to weather the COVD-19 crisis well and maintain nearly full production. All the production facilities we have spoken to had to implement new procedures and rearrange production schedules to facilitate social distancing and extra sanitation requirements. However, despite this, production has been able to keep up with recently increased demand and in a few cases expand production. Prices in general might see small increases in the future, but we have not seen any yet.
Artichoke crop projections look good in Peru. Season should start late July/August with shipments starting late August/September. However, this year is very complicated for Peruvian packers. Government has established 12% increase for labor cost. On the other hand, due to COVID-19 situation, packers are spending significant resources on preventive actions in order to be able to continue working in the fields and factories with all safety measures applied. Additionally, in their plants they need to have distancing protocols implemented, which impacts the productivity. Suppliers anticipate that these measures will become part of their day-to-day operations for the rest of the year. Overall, this may cause some price increase. Our established suppliers are doing their best to avoid translating these extra costs to our established business.
The majority of fruit is going to fresh market due to the increased demand from consumers caused by COVID. Acme’s supplier has a safety stock, so at the moment they do not foresee any danger of running out of raw material for lemon juice.
New crop has started in Greece and it looks like it will be an average one, as many growers were unwilling to cultivate due to their concerns on the COVID with their workers.
The EURO to US Dollar exchange rate is currently $1.1239 and is expected to stay at around this level for the next month. It is predicted the EURO exchange rate could go to $1.16 for the balance of 2020 due to an economic recovery in Europe, lower political risks, and no significant policy change from the European Central Bank (ECB).
OTHER MARKET NEWS
NAFTA is being retired and the new USMCA trade agreement will take effect July 1, 2020.
As reported by AFI the U.S. Trade Representative is conducting review in the ongoing Airbus dispute, which led to the imposition last year of punitive tariffs on many products from the E.U. (See Annex I). Via this review, the U.S. is considering modifying the list of products subject to the punitive duties. A similar review conducted earlier this year resulted in very few changes but there’s no way to know if that will be the case this time around. Annex II contains a list of products originally published in earlier notices in this investigation, under consideration but not currently subject to punitive duties. Annex III contains a new list of 30 products being considered for imposition of punitive duties. An updated list could contain products from all three lists.
Ocean freight from Asia are at an all-time high right now. In 2 months time, we have seen rates skyrocket due to space issues & blank sailings. Rates for July are as follows:
- BKK to WC- $2,350 (was $1,250 5/31)
- BKK to EC- $2,500-2,800/20’ (was $2,050 5/31)
- China to WC- $2,350-2,600/20’ (was $1,300-1700)
- China to EC- $2,800-3,050/20’ (was $2,150-$2450)
It is unclear how long these high rates will stay, but rumor is that the steamship lines will try for another rate hike in Sept/Oct when the last of the peak season shipments sail.