TUNA
FAD CLOSURE period has ended but the catching remains poor. The fish in the market is still at the level above $1,600/mt for SKJ, no sign to decrease as the supplier has claimed that the supply is very low compared to demand. Tongol catching season is over, barely any supply left in the market. This has caused the price to increase. Yellowfin price has been reduced but it remains high for bigger sizes. Albacore remains about the same and not much movement.
Raw Material Price
SKJ = US $1,600/ton
YFN = US $1,850/ton
Albacore = US $3,200/ton
Tongol = US $2,300/ton
MANDARIN ORANGES
In 2022 China suffered from long term extreme heat. The extreme heat also triggered a drought, severely impacting the fruit volume and quality. In Hunan/Hubei province (W region), many trees died due to the drought. For the remaining trees, the fruit are small, hard, sunburned and cracked. In Zhejiang province (L region), the oranges are seriously sunburned, and for early maturing satsuma the sunburned fruit is around 50% of the crop. Besides the influence of the severe weather conditions, Covid-19 is continuing to spread with China maintaining the zero-tolerance policy. Since canned fruit processing is labor-intensive work, this will increase production costs as factories invest more to avoid infections between workers.
COCONUTS
We are entering the lean season for Coconut. Recently, demand has been low due to overstock in the market. However, demand is expected to increase in the coming months, especially as China emerges from their extended lockdown. Prices are expected to rise as demand increases. The Coconut market may have very well hit the bottom and now has nowhere to go but up due to the following reasons: Factories cannot sustain the low prices; higher demand on oil seeds due to emergence of Chinese demands; increased demand for desiccated items as we enter the holiday season; and leaner supply as we enter the lean crop season. Buyers should work to cover any open positions to take advantage of lower ocean freight rates and mitigate against price increases that are likely towards the end of the year.
PINEAPPLES
SUPPLY – Winter crop is expected to be better than the last two years. It can be said that the crop is getting closer to a normal year. Last year total supply was around 1.1 million tons, this year it shall be finished at around 1.2-1.3 million tons. Current fruit price is around THB 8.00/KG and expected to soften in October – November.
LABOR – A new minimum wage rate has been applied from October 1st onwards. The increase is around 5% which will affect production costs directly as labor cost is one of the major factors of canned pineapple.
PACKAGING – Empty can prices should see a decrease of about 7%, but as you can see from the table below, this decrease will not offset the constant increases we have been seeing since Q4 2020. Empty can costs have increased approx. 56%.
QUARTER | PRICE ADJUSTMENT |
Q4 / 2020 | INCREASE 3% |
Q1 / 2021 | INCREASE 6% |
Q2 / 2021 | INCREASE 10% |
Q3 / 2021 | INCREASE 12% |
Q4 / 2021 | INCREASE 15% |
Q1 / 2022 | INCREASE 13% |
Q2 / 2022 | DECREASE 3% |
Q3 / 2022 | INCREASE 7% |
Also, please keep in mind, although empty can prices may be reduced the label and carton prices continue to increase.
MUSHROOMS
The biggest issue to European producers currently is increasing energy costs. Rates have risen nearly 400 percent since the beginning of the year. This has understandably led to increases in materials, production costs, transportation, and general inflation rates. Many suppliers have taken to shorter term contracts instead of yearly contracts to protect their margins against the unprecedented increases. This, in addition to higher ocean freight rates out of Europe, could have a negative impact on demand.
The Indonesian suppliers are also being impacted by rising energy costs as the government reduces their subsidies on fuel. Increased production costs will increase pricing. However, lower ocean freight rates could help mitigate over-all pricing to the buyer.
ARTICHOKES
At the moment the Artichoke season in Peru is at its peak. The crop is satisfactory with volumes and quality meeting the forecast. While at the beginning the focus is on the bigger sizes, during mid-season the main crop consists mostly of smaller ones, switching to the smallest being harvested towards the end of the season.
The logistic challenges remain and are the main concern of producers. The ocean freight hasn’t reduced as anticipated and the lack of 20’ container equipment makes exports even more difficult. The situation is expected to become even more dire with the end of the year approaching. This is when most of the exports from Peru take place and the lack of space increases.
OTHER NEWS
THE EURO
The euro-dollar exchange rate curve has never been this close in nearly 20 years. After 2008, the euro rate fluctuated, but generally maintained its strength against the dollar. The euro has fallen nearly 15 percent this year. Bank analysts believe with the outlook of the Fed monetary policy, US dollar strength can continue into early 2023. This is a sign not only showing euro’s weakness with uncertainty, but also a possibility of an emerging global recession. As Euro has maintained near parity against the dollar for a period of time, it would affect exports, GDP and trading conditions in European countries.
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