The Western Pacific catch has been difficult due to bad weather. The catch in the Indian Ocean and Maldives are quite stable. Overall, with poor catching, traders have been pushing the price up for both skipjack and yellowfin. Catching of albacore is also poor and now Bumble Bee and Starkist are very aggressive, seeking albacore for renewed production drive, thus the price will jump up quickly. In addition, freight remains to be extremely hard to secure and offering prices are still shockingly high with no sight of it going down anytime soon.
Current Tuna Market Raw Material Price:
SKJ = US$1,500/ton
YFN = US$2,550/ton (very limited supply)
Albacore = US$3,200/ton (limited supply)
Tongol = US$2,200/ton (short supply)
The global olive import value is currently measured at USD 70.37M and the market is expected to grow at a CAGR of 4.5% by 2026. The olive crop has seen a steady increase in hectares from 10,279 to 10,578 in 2019. Spain currently holds the largest share of the world’s olive production but the increase in demand has resulted in new exporters coming to market such as Peru and Morocco. The 2022 green olive crop is expected to remain strong through the 2022 harvest. Current olive sales are rising even with the current logistic challenges of importing to the U.S and are expected to remain steady over the next few seasons.
The global olive oil market is measured at USD 13.03B and is projected to reach USD 16.64B by 2027. The 2021-2022 harvest in Spain is expected to be a similar volume and quality to the 2020-2021 season. The global olive oil production is expected to reach approximately 3 million tons in 2021-2022. The olive oil industry is experiencing an increased growth in Europe primarily due to the increasing demand for olive oil across food service and retail consumers. Increased health awareness and a shift to healthier oil alternatives has resulted in the recent market growth. Spain accounts for almost half of all global olive oil production. The U.S. leads in olive oil importing with a volume of about 355 thousand metric tons per year.
Year 2021 was a very challenging year from many aspects and is expected to be the same for 2022. Covid-19 created high demand followed with unreasonable shipping freight cost which made a huge impact on cost of packaging material, cartons, and energy. In addition, the Israel Shekel is very strong against the USD and war in Ethiopia is expanding creating big pressure on the supply of the sesame. There is a general price increase of 17%-22% for tahini in 2022.
Packer estimates they received 10,000 tons of fruit in November and December each month at Baht 6.5/kg. Packers are facing problems fruit containing high nitrate content and some rotten fruits due to heavy rain the last couple of weeks.
Apart from the cost of sugar and packaging that keep increasing, the cost of coal that is used for production is also increasing around 22% from third quarter.
Water chestnuts season starts in November and normally lasts till February/March. Even new fields of crops were added this season but planting yield reduced. Low material availability with high demand drives the prices up. – approximately 40% on retail size cans and 60% on foodservice cans.
China – 50% raw material reduction in harvest due to cold weather and field management change. Current raw material price is around $0.47/kg vs last year $0.22/kg. The other factors to influence the price: tin costs increased about 50% this year, sugar costs increased $32/ton, exchange rate RMB against USD appreciated. Labor costs and production costs also increased with the recent “dual control of energy consumption” policy. Manufacturing operation has been limited to “run for 5 days and stop 2 days”, the production capacity is only 70% of that under normal conditions, these are the main factors that caused canned mandarin prices to go up this year.
Spain – The official crop forecast indicates a reduction of the size crop about 10%. In addition, there is a price increase in the tins, fuel, and packaging material. Canneries are also waiting on the fresh market demand throughout October and first fortnight of November to determine the cost.
The new season for pear has started and runs through November. The current harvest is about the same as previous year, but prices are up by 8% due to labor and tin plate cost increases.
We are still in the Philippine typhoon season which could impact operations of vessels between Asia and America. Prices are expected to rise due to the rising costs of raw materials and packaging; supply difficulties; world-wide supply chain crisis; and the continued excessively high ocean freight costs.
Philippines – Philippines is well sold through December and looking to sell January-March. Price remains steady but is expected to increase. Raw material prices have increased due to increased demand in all coconut products. Origin is catching up on delayed shipments but the low vaccination rate and Covid protocols are impacting productive capacities.
Indonesia – Indonesia still has some small quantities available for December, but it will quickly disappear as other origins’ supplies are depleted. Heavy rains have impacted harvesting while origin moves into lean crop season.
Thailand – Thailand supply will decrease slightly as they enter the low season. The exportation of whole young coconuts could increase as China’s COVID situation improves as they are the largest buyer. Prices are expected to increase slightly as supply tightens.
Vietnam – Raw material costs are at an all-time high. Costs are even higher than the traditional low season which happened to coincide with the strict Covid lockdown in Vietnam. Supply is short and demand is high, especially with the very large orders the factories need to catch up on after reopening. These conditions are putting the factories under a lot of pressure to be able to complete their pending orders.
Current at $1.1535
The Federal Reserve announced interest rate resolutions recently, which maintaining interest rates unchanged at 0%-0.25%, and with a debt reduction plan launched in November, the goal is to reduce monthly asset purchase. With the economic news from Europe remains mixed, some downward pressure is still on the Europe’s economy. The factor could bolster the trend for USD strength in the end of this year. Bank analysts believe the euro/dollar needs to break through 1.16 to gain confidence, and if the exchange rate drops below 1.152, the short positions will dominate.
OCEAN FREIGHT AND SUPPLY CHAIN
The supply chain continues to be plagued with problems – from COVID protocols, power outages, labor and equipment shortages, space constraints, to port congestion. Experts say these conditions will continue well into next year. The backlogs of container ships at US ports are at an historically high level with 100 ships waiting to berth in Los Angeles/Long Beach and 25 in Savannah with more ships in route. In addition, some carriers are suspending service from several origins to Seattle until further notice due to the continuing terminal congestion. We will start to see roll overs of containers and vessels as carriers continue to omit sailings into these lanes. Terminals are taking longer to unload vessels because there isn’t any room to discharge the containers. To move the containers from the terminals faster and ease the congestion, many of these highly congested ports are implementing additional fees for long terms stays.
Although ocean freight rates have remained fairly steady for the last two months, most of the available space continues to be at the premium rates instead of the FAK quoted rates. Customers will need to continue accepting premium rates through the holidays to ensure space on vessels. The Lunar New Year shipping push will further impact this through Q1. Much like the congestion, the ocean freight rates are expected to remain high well into 2022 as space continues to be limited.