Skipjack tuna price is holding steady, remaining at $1,300/MT in the month of October. Thai packers are trying to bid at $1,200-$1,250/MT but fish traders have declined this price. Catching in Western Pacific has been poor since September and prices below $1,300 are a loss for the boat. Packers are waiting to see how much more supply will hit the market in the coming weeks. Long Line albacore has softened slightly but there have been no changes in Pole and Line; catching for Pole and Line is slow and labor intensive.
Current Tuna Market Raw Material Price:
SKJ = US$1,300/ton
YFN = US$2,000/ton
Albacore = US$3,600/ton
Tongol = US$1,900/ton
Raw material costs are lower than last season, but canneries are facing high labor costs and RMB appreciation. There is a lot of stock of foodservice A10 product from the last crop and most canneries will not produce any new packs this season. W region packers have already started production for European customers, L region packers will start to pack in late Oct. Packers will update their prices in early Nov if RMB continues to appreciate or if raw material prices go higher.
The mushroom market in the US continues to see growth overall, but it is very uneven. Demand from most foodservice uses, apart from pizza, has almost completely dried up. Fresh and retail sized canned mushrooms are showing steady growth, however. Both domestic and European producers are having trouble operating with COVID restrictions, which combined with higher prices for inputs and production, will probably lead to higher prices over time.
Prices for Extra Virgin Olive Oil are up 15% this year. Spain and Portugal had very hot summers and very poor rain in September and October so far this year. The forecast for total Spanish production is now 1.51 million tons, down from the forecast of 1.85 million tons from earlier this year. Current Spanish carryover is only 491,000 tons, fully 264,000 tons lower than last year. Demand is up worldwide and because of US tariffs on Spanish olive oil, Portuguese olive oil is in particularly high demand and further price increases are expected there. Worldwide production of olive oil is projected to be 5% lower than last year with particularly low availability of Extra Virgin Olive Oil containing the proper levels of ethyl esters. With less than 30 days until the start of harvest, we are watching the market very carefully.
Spanish table olives are facing a year of short rainfall and significant water deficit in most growing areas. Expected quality and quantity is different for each variety. Hojiblanca, Cacereña, and Carrasqueña olives are expected to have smaller crops than last year, while the Manzanilla harvest is expected to be above the average for the last couple of years. Overall, the Interprofessional Table Olive Association, which is part of the Spanish Ministry of Agriculture, Food and Fisheries, predicts a total harvest around 15% lower than last year.
Manufactures have slowly caught up with their production backlogs due to the COVID-19 shutdowns and are now producing their new orders. The majority of coconut producers are now fully booked until the first quarter of 2021. Unfortunately, Sri Lanka is now experiencing renewed restrictions (curfews) due to new COVID-19 outbreaks and is experiencing factory shutdowns in certain areas. In addition to the pandemic troubles, coconut manufactures are not able get enough supply of the raw coconuts, as most of the farmers have diverted their production to produce Copra or Dried Coconut Meat which is used for coconut oil production. The demand for coconut oil has increased and Copra is being offered higher prices. Comparing the price of the Green Coconut in June to prices in October, there has been an increase of approximately 15-20%. Price levels are expected to continue climbing up slowly in the next 3-4 months.
In other coconut news, allegations by PETA of the use of monkey labor by farms in Thailand has led to some of the large US retailers to pull coconut products from their shelves while the allegations are investigated. None of the suppliers used by Acme are under investigation, and we have always used third party verification to ensure no monkey labor is used in any of our products.
The supply of raw goods in Thailand continues to be extremely weak with record prices. The winter harvest is off to a slow start, and many factories remain closed or have closed again due to lack of raw goods. In the upcoming months, output will remain at no more than 50% of normal rate. It cannot be compensated by other countries, such as the Philippines, Indonesia, Vietnam and Kenya. The time between seeding and harvest-ready fruit is 18 months, so relief can only be expected around the middle of next year. Until then it is important to secure supplies and take precautions where it is possible.
The EURO/USD rate continues to hover in the 1.17 to 1.185 range. Expectation of further lockdowns in Europe, combined with the dovishness of the European Central Bank, may push the EURO lower in the short term. However, most analysts are predicting a further weakening of the USD over time. Global economic uncertainty tends to support the dollar due to its status as a reserve currency, so many traders are pricing in an expected drop if conditions improve.
Across the US, grocery stores are purchasing with the expectation of a large increase in demand for Q4. Stores are stocking up earlier and in larger volumes than in years past. The New York times has reported that 53% of consumers plan to stockpile food at home if there are any COVID lock downs. Most people surveyed have said they plan to cancel or scale back their holiday gatherings this year. While most analysts expect overall demand to be higher this year than last, purchasing patterns could be very different, so there could be shortages of select goods through the end of the year.
GENERALIZED SYSTEM OF PREFERENCES
The GSP program is currently set to expire on Dec 31st. While this program has been renewed many times in the past, there is no guarantee it will be renewed before it expires. The program offers tariff reductions on over 3,500 products from 120 countries. Last month a bill to renew the program was introduced to the Senate, but the text has not been released nor a summary of the bill. We will be watching these developments very closely, but some disruptions across several sectors of food imports are entirely possible.
OCEAN FREIGHT AND SUPPLY CHAIN
Trans-Pacific imports continue to come in at record levels with the ports of Los Angeles and Long Beach moving 22% more containers than this time last year. Ocean freight rates are expected to remain at that their current record highs for several more months. Warehousing and trucking rates are also rising in response to the increased demand.
- BKK to WC – $2,900/20’ (+200)
- BKK to EC – $3,500/20’ (+$100)
- China to WC – $3,100/20’ (+$1000)
- China to EC – $3,750/20’ (+$100)