So one month on and the uncertainty around the € continues. A complex solution to the Greek problem has occurred, but can the measures and the debt rollover be achieved? With increased uncertainty in Italy and Spain where further fiscal tightening is required, there must remain great uncertainty over the $’s strength! So what is keeping it strong? Perhaps one explanation would be buying interest from China, as they diversify their FX holdings away from the US$ into the €. Or is another rate hike in the offing, since the ECB president, Trichet, is soon to step down and may want to chart a course for the future!
There is not much enthusiasm for sterling however, the start of what will be a series of public sector strikes as austerity measures start to impact, along with potential further financial cuts and the possibility of the UK being the only economy to continue fiscal stimulus, does not omen well for sterling in the medium to long term. The expectation that interest rates will remain static also does not help! Really nothing to support £, so expect it to weaken. Pumpkinseed kernels:
The market is splitting slightly between the A and AA grades. Demand for A grade continues weak, and unless there is sudden strong demand is likely to remain this way. However new crop will be lower than last year and thus we expect prices to remain stable/trend upwards as demand does arrive in the market. For AA grades there is an upward trend, as advised last month, since stocks are not big enough to carry through to new crop, which will also be smaller than 2010.
Sunflower seed kernels:
Really all eyes on Eastern Europe. The USA has undoubtedly suffered through missed plantings and strong domestic demand. It is unlikely to be a significant supplier for 2011/12 to the export market for kernels. China market is heading up due to reduced expectations for new crop and strong demand internally for cooking oil. So what will happen in Eastern Europe, certainly until harvest in October we can expect prices to increase. Thereafter with solvent farmers under no pressure to sell, and strong demand from consumers with nowhere else to shop competitively it is hard to see the market falling this year. Perhaps it will weaken a little in Q1 2012.
Linseed:
The Northern European crop certainly received rain too late to improve yields and now the quality depends on not too much rain! Canadian crop was down on plantings.
Sesame seed:
India Arrivals dropped in the market yard of the Gujarat summer crop due to the delayed monsoon, making farmers think this will firm the market and thus them holding back stock to benefit from this. Demand from Europe is sluggish still. But Asian demand is strong with 24000mt of natural seed being exported to Korea and Vietnam. Is this the latent Chinese demand that has been expected? The Rupee is depreciating against the US$ which has firmed the market a little too, so all in all prices are on the rise, be it modestly. The drought situation in Africa, also fuels the speculation, although will not impact directly on the availability.
Central American: The Paraguayan crop has been disappointing and the Japanese are buying heavily, paying good premiums of Sudan/Ethiopia. Venezuela is competitively priced as an interim quality.
I think we have probably seen the bottom of the sesame market for this season and possibly next.
Hulled millet:
New crop millet will stay at current levels, due to the short supply situation, planting conditions in the USA which are not too favourable at present. Also demand remains high since it is the cheapest bakery seed. We expect this situation to be exacerbated by the bird food industry in the autumn where it will be used in increasing quantity in seed mixes replacing the expensive sunflower.
Poppy seed:
As advised last month, this is beginning to look like it has hit bottom and is going to turn. The Czech crop is not as large as last season. The morphine processors are harvesting now in Spain and looking for a significant premium over 2010 material. We strongly suggest you cover your requirements.
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We hope this brief update assists and look forward to hearing from you in due course.
Telephone 0044 (0)1372 230020
Fax: 0044 (0)1372 748597.
www.unicorningredients.com
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