December 2018 Market Report
Posted by Quality Ingredients on
Well, as we have said in the past ten monthly market reports, nearly everything is moving upwards, and there are still 10-11 months of this season to go! With a strong dollar, short crops and demand still holding off, the potential for further increases is significant. Obviously, for 2019 harvest, things should calm down, but these supplies won’t reach consumers until Dec 2019.
Pumpkin seed kernels:
While the small GWS harvest has remained relatively stable price wise since it is driven purely by the export market, where demand is sluggish the shine skin market has been quite active. The reason, the USA again. With the recent agreement to delay the imposition of tariffs on all imports from China into the USA. It has created massive demand for shine skin AA, as the USA importers try to take advantage of the stay on the tariff. While glancing at the whole Pumpkin market, we have learned it has led to a surplus of "A" grade shine skin which is being offered at attractive prices, creating a considerable differential in rates. Pricing will need to correct, and we expect the "A" grade shine skin price to increase to bring the differential back in line. Shine skin demand is strong in China still, so we don't forecast weakness. Now is a great time to lock in Grade "A" contracts.
Prices have been going crazy for Indian Sesame over the last month. There has been a 30% price increase in the spot market. This is being caused by the uncertainty of the new crop. There have been very mixed reports from the origins. We think India will be about 150,000mt short of sesame this season. Africa is forecasting a good crop. Certainly, Sudan has around 500,000mt. So theoretically the situation will sort itself out. However, most buyers are waiting to cover, so there is a lot of demand to come into the market, and this could hold the prices up if it arrives as ‘spot’ demand. We shall see. India does have a summer harvest opportunity too. Usually, this is predominantly black sesame, but with the current situation, we can expect good plantings of white sesame, for harvest in April. In Central America it looks like a good crop is expected, 15-16,000mt in Guatemala, up about 4,000mt. Demand at the farm level, where the harvest is just about to start is strong, as the Mexican hullers look to buy here. With a porous border between the two countries, sesame can move without duties. The Mexicans are buying in Guatemala because the Indian prices are too high for them to import and resell. Now would be a good time to lock in supply for your 2019 usage.
While prices for kernels are slightly firmer the overall vegetable oil situation looks weak. Ukraine has started with a record pace to its sunflower crush; soy futures are falling on weaker exports as the China trade war impacts, and the threat of China producing its own crop increases. (BTW, this might impact on pumpkin supply for 2019 too). Other news of note is that in both USA (soy beans) and EU (Rapeseed) weather has disrupted plantings and is likely to cause a drop in 2019 production in these regions. In the USA, in particular, we hear farmers are plowing back in the damaged soy plantings.
We have been trying to prepare you for this all year!
Supplies remain to be very short still and will get worse between now and autumn 2019. The only possible relief for the bakery segment, we see would be the Australian crop. We have also heard rumor of a large Turkish crop, however, even with low morphine levels it is not the markets favorite. Of course, each origins harvest is subject to the local weather and growing conditions. We can offer Australian, and Spanish, but not too much else is available. We strongly recommend covering your supply needs until September/October 2019 as soon as possible.
Crops are starting in Mexico and will gradually work their way down through South America over the early months of 2019. It is a little early to indicate the crop expectations. We will keep a close eye and keep you posted.
Planting starts in December, and the wild prices for white quinoa should undoubtedly lead to oversupply come to harvest in May 2019. The opening of China drove these prices, If anything, we anticipate which is on false expectation. Demand here to fall more on the red & black which sees increasing popularity in Asian markets. So, these qualities are possibly likely to rise in price as volume grown decreases and demand increases, while white should drop!
The cupboards are empty in Ukraine, Poland, and other EU sources. All eyes look to the USA and Canada and hear prices are up 20% already. With some anomalies in duty rates, there is a widespread of prices in the market.
Brown Flax Seed:
As the primary source is Kazakhstan and Russia, Canadian prices here are firming, and there are few offers. Shipments are coming out slowly, and with the weather not cooperating costs can only increase. It is an excellent time to contract.