All the tuna packers have encountered a raw material shortage situation on pole & line albacore tuna. Only small batches will be accumulated by the fish suppliers, and they will ship to the packers once they have enough to fill the container. The supply situation will not get better until June/July. Skipjack is being offered USD 2000mt currently, increased $300/mt since Feb. The catch has slowed down for all areas and price will tend to be up around USD2200/mt in the next month.
Raw Material Price
SKJ = US $2,000/ton
YFN = US $2,250/ton
Albacore = US $3,300/ton
Tongol = US $2,100/ton
Packers now have a clearer picture on crop outcome. It is expected that from April to August raw material will be short causing higher prices and insufficient supply. Packers are paying higher prices than usual due to the specific quality of raw material that is needed. Also, it is expected that additional fresh nuts will be exported abroad to countries such as China. Consequently, there is high competition for obtaining raw materials. Packers need to plan early to meet booked needs. We also strongly recommend buyers to secure tenders quickly as prices could increase even more as supplies diminish.
Pineapple supply has improved slightly but it is still lower than usual. Raw material is quite high at around THD 8.50/kg. Compared to the same period last year it was at around THB 6.50-7.00/kg.
As for the summer crop, it will start this month, peak in May and last until the middle of July. Summer crop will not be a big crop due to drought. The problem will be in 2nd half of the year as it is forecasted that winter crop will come late in November due to continued lack of rain. Total tonnage out of Thailand is forecasted to be around 1.1-1.2 million tons with only about 0.8-0.9 million tons going to canneries. As a result, packers are becoming more active in the following weeks. Those that slowed down in the past few weeks have now become active and increased capacity in preparation of an expected delayed winter crop.
Mushroom prices have steadily increased over the last couple years and are expected to keep increasing through 2023. The biggest impact on pricing this year will be the release of the ITC final determinations on Anti-Dumping Duties for many European suppliers. Alternative mushroom sources/origins will react by raising prices for any unsecured demand. Any buyers that haven’t secured their tenders will be in for a surprise.
Short/medium term, May-June period:
The lack of supply in countries of the Mediterranean Basin, above all Greece, Tunisia, and Turkey, together with the more than sure landing of Italian buyers in Spain, is causing a clear increase in tension and consequently in prices. Tunisia and Turkey are running out their stocks, all the demand will now look to Spain.
Long term, period July-September:
There is only one variable to consider when commenting on the current market situation and giving an opinion. It is the lack of water. If it does not rain significantly in the coming weeks, the lack of irrigation for the summer will be a factor, and with it, the devastating consequences for the next harvest. Just thinking of a 2023-24 harvest of less than 1,000,000 tons, something very feasible if the lack of water continues, leads us to an unimaginable and uncontrollable price scenario. Today production is in a long-term panic and there will be nothing to change this feeling, only abundant rain, everything else, low outputs, high prices, need for cash... are secondary variables that will not come into play.
If in the next month and a half the rain is abundant, prices will likely relax. If it does not rain, the price trend will be upward, but it is difficult at this point to foresee how much the prices will go up.
Compared to year 2022, the USD and EUR exchange rate remained relatively stable during the first quarter of 2023. Bank analysts still forecast a long-term weakness for USD. But it could also get volatile and is influenced by a variety of different reasons, including interest rates, global economic conditions, and monetary policies. We expect the USD depreciation pace to slow down later in 2024 when interest rates are getting back to a lower range. Then it will enter to a period the monetary policies will support a gain position for USD.
PORT CONGESTION & OCEAN FREIGHT
The container shipping industry had to contend with very high freight rates throughout most of 2022. However, in the last few months of the year, the rates started to come down and the trend of lower ocean freight rates has continued into 2023. The drop in rates was directly related to an oversupply of containers along with a drop in demand. However, this was short lived. As the capacity issues are sorted out and shipping routes are adjusted to fit demand, we will see rates start to increase and then level out.
Transport capacities have improved since then, and port congestion is less of an issue than it was in 2022, but it is still eight times higher than the pre-pandemic levels. USA congestion continues to be a costly problem. The same capacity constraints we have been seeing previously in dray, chassis, container yards, warehouses and the rail infrastructure continue to exist. The systems and personnel that drive these processes are getting better at handling the strain.
The introduction of new vessels in 2023 will increase the market’s transport capacity, but this increase will be offset by the withdrawal of older vessels and the need for shipping companies to comply with new IMO 2022 regulations, effective January 1st.
Decarbonization of shipping will take some ships out of commission as they are brought up to the new standards. Sailing more slowly is one factor that could slow down shipments and cause a rise in demand for capacity.
One final note is that we are seeing some forecast issues from the shipping lines caused by blank sailings out of Asia. We have had many delays due to planned sailings being canceled. On the other side of the coin sometimes containers arrive early because planned vessel stops are skipped. Meaning these blank sailings just add another layer of complexity to forecasts, as shipments may either arrive either early or late mid sailing. ACME continues to develop our strategy to lessen these shocks, and to increase transparency when they do happen.