As stated last month, we are in the ‘between seasons’ period. Stocks are declining, weather issues concern us about new crops, and prices are yet to be set for the new season on many items.
Short stocks have now significantly increased prices and these will remain or increase now for 2018 crop. This effectively is the stock that will keep the market supplied through to December, due to timings of harvest and length of supply chain. Buyers should cover their requirement now through until Q1/2020. We will keep close to developments and advise new crop expectations and our usual field survey in the next couple of reports.
At moments like this, quality becomes a challenge, particularly on pesticide residues, so lot specific analysis should be insisted on.
We are just waiting on info for the new season, but every expectation is for a good crop in Kazakhstan. However, there is little potential for prices to drop off their existing levels, so upside is significantly greater than any downside gains.
In India, prices are stable and mainly moving now on Forex fluctuations against the US$. The summer crop numbers were more or less as expected and have taken the pressure off local supply. Korea will be tendering over coming weeks for supplies and this will cause some local spikes, although they have upped the stakes on quality criteria considerably, and this will impact on the players prepared to enter the tender. There was a crop survey meeting over the weekend which will give us a very rough idea of crop expectations.
Strong demand from Central America is beginning to challenge available stock levels, we could see the differential between India and Central America widen in coming months. The operational challenges are also increasing with a lengthening supply chain due to shipping lines performance. We would suggest buyers should be covered in to Q1/2020 now.
With supply still coming almost 100% from USA, we just wait for European new crops available in September, and price will depend on their harvest.
This market has started to increase. Firstly, there are supply concerns over remaining stocks from 2018 harvest. We have seen this scenario before, when production capacity from the primary processors cannot keep up with demand. Secondly declining EU production for both sunflower & rapeseed plus extreme weather conditions already in growing regions and the US-China trade war negatively impacting on soya bean prices, whilst other oilseeds see an increase in demand from China as substitutes to soya, which traditionally has been mainly imported from USA.
Global sunflower production is also forecast to be reduced this season. Finally, the huge demand by China for Bulgarian kernels puts pressure into this market and rebalances the processors focus away from price demanding EU buyers.
Still some old crop around at high levels, but all eyes await new season EU poppy supply and how fast it will get to market. It is hard to see a scenario where prices will not decline somewhat, but there are no guarantees, and these things always take longer than optimistic buyers expect. With no one wanting to be caught long of expensive stock, there is a supply chain risk, so buyers should really make sure they have commitments through to October/November, and not rely on covering ‘spot’ stock.