The frozen whole round skipjack trade in Bangkok is still suffering from poor supply. FAD ban started on July 1st, and this means that skipjack will become more expensive in the subsequent months due to lower supply of only Fad Free caught tuna. Current price trades at $2,000-$2,050/MT. What will truly happen during the three-month FAD ban in the current exceptional price spike in the skipjack market is still unpredictable. In terms of yellowfin, the catch is getting better while its price is still around $2,300-$2,400/mt. For albacore, the price in the market is around $3,200/mt.
Raw Material Price
SKJ = US $2,050/ton
YFN = US $2,300/ton
Albacore = US $3,200/ton
Tongol = US $2,200/ton
PERUVIAN ARTICHOKE, ASPARAGUS AND AVOCADO
The current crop in Peru is heavily impacted by the climate phenomena, both Coastal El Niño and Global El Niño.
Coastal El Niño that affected Peru within the first months of 2023 has risen Peru’s coastal sea temperatures up to 6 degrees Celsius above normal, making an increase of 3-5 degrees in the weather of the Peruvian coastline. 2023 is one of the hottest years in history as stated by The National Meteorological and Hydrological Service of Peru (Senamhi).
Global El Niño has started and will continue through March 2024. This is a cyclic climate phenomenon that occurs every 2 to 7 years and brings warm water to the equatorial Pacific Ocean which spreads across the ocean and leads to a higher average global temperature. The weather forecast reports issued by national and international authorities along with the current performance of crops and gained experience from similar previous years, have packers anticipating that the impact on Peruvian agribusiness will be significant. They are already experiencing lower field yields in most of their crops, being the most affected asparagus (-50%), artichokes (-40%), avocados (-20%).
The expectations are that Global El Niño can generate floodings and mudslides, blocking roads for several weeks, which could cause logistical problems in the following months. Packers strongly suggest customers place their orders within the next 3 to 4 months to ensure product is labeled, transported to the port, and shipped on time and thus avoiding delays due to logistical restrictions that most likely will be in place.
Coconut raw material is currently in the low season with higher prices than previous months. Some packers have anticipated this and reserved quantities at lower prices. Following the 3rd consecutive year of La Nina, which has never happened before in history, experts are expecting the severe El Nino weather conditions to last longer than usual. El Nino is expected to negatively affect coconut supplies of the next few seasons. Although El Nino is just starting, it is already affecting many countries in the Asia Pacific region. There have been very high temperatures and draughts in some regions while other regions are having heavy rains and floods. There will be larger than usual fluctuations in the coconut raw material prices in the coming years. Buyers will need to watch the weather and supplies closely to buy at the right time.
Since late April supply has significantly dropped due to severe drought caused by El Nino. Most factories have already shutdown. In the East factories plan to open around mid-September as normal but in the South, they expect to open late only from mid-October onwards. Winter crop supply is expected to be less than forecasted and this year’s industrial volume is now estimated to be under 900,000 tons. Winter crop 2023 (Sep-Dec) supply is expected to be 26% less than 2022.
2023 season raw material price was on the low side in mid June, relatively similar to the price level of 2022. But starting late July, the price started to increase rapidly due to high demand. Raw material has increased from $0.40/kg to $0.58/kg. Factories have already started production and our Festival peaches were booked before the price increase.
Over the past few weeks, the factors affecting the Olive Oil market have worsened. The effects of the drought, the extreme high temperatures and even wildfires are obvious in Europe. Rising prices in the E.U. have not reduced demand as expected, leading to diminished stocks. In the U.S., where cost increases have not yet fully been reflected in retail pricing, demand also remains strong. Now Turkey, the one major producing country that had a better 2022/23 production has announced a ban on bulk olive oil exports until at least November. All these facts together with a severe reduction of olive blossoms in Spain in early summer, have kicked prices up in an unprecedented situation in the global Olive Oil market.
Regarding the potential evolution of prices, there are 3 variables to analyze:
1.) Availability of oil: There is practically no oil left in Tunisia or Morocco, Greece does not have the capacity to offer, Turkey has prohibited exports. The very little oil that remains is in Spain, which is why the Spanish market will be the one that set prices in the next 2 months.
2.) Level of demand/output: Although it is true that the demand has dropped, we cannot say the same about the output, we understand that in July we will be at another 70,000-75,000 Tm of output, more than enough data for production to intensify its bullish pattern.
3.) Forecasts for the 2023-24 campaign: Although the two previous variables will determine the price in the next 2 months, the price for the 2023-24 season will be set by the size of the harvest in Spain.
Experts recommend buying only if really necessary and only to cover immediate needs. More demand before the new crop is out will increase prices additionally as there is already so little inventory left. We will keep monitoring the market and provide updates as we get closer to the new crop numbers coming out.
There are several key drivers that could impact the Euro to USD exchange rate in 2023, including interest rates, inflation, and financial market situations. Inflation rates forecast shows underlying price pressures still remain strong, with inflation excluding energy and food projected to be 4.6% in 2023. On the other side, the projection for economic growth indicates a recovery in the Euro Area economy which brought some confidence to the market recently. Bank analysts believe the Euro to USD exchange rate could experience fluctuations in the coming months. It's also recommended to monitor economic indicators, central bank actions, and global developments.
PORT CONGESTION & OCEAN FREIGHT
As we get closer to the peak season, the Ocean Freight market presents some challenges in diverse ports around the globe, having an effect on transit times and rates for the U.S. imports.
Ocean carriers have announced another round of GRIs across all lanes to begin August 15. However, capacity is still available on all major trade lanes.
A majority of the International Longshore and Warehouse Union (ILWU) Canada membership ratified the latest deal, signaling an end to the ongoing labor disputes of the past few months. Any remaining backlog is expected to be cleared through the ports quickly.
Trans-Pacific services get reworked as freight downturn continues, the service speed would increase transit times on some services by up to two days, but the overall adjustments would reduce schedule gaps and instances where vessels get delayed.
The number of vessels waiting to cross the Panama Canal has reached 154, and slots for carriers to book passage are being reduced in an effort to manage congestion caused by ongoing drought conditions that have roiled the major shipping gateway since the spring. The current wait time to cross the canal is now around 21 days.
ACME FOOD recommends booking 3 or more weeks prior to desired shipment to secure space and to guarantee equipment and loading for your most time sensitive cargo.
Average container prices have been relatively stable in the last 30 days as compared to the price volatility over the past 90 days (30 days – July, 90 days – May-July).