Generally, markets have started to turn on more or less all items now. Additional freight rates are on the up, fuelled in particular by the current situation in Israel/Gaza. We have seen rates from China increase 100% this week alone. Obviously, oil is also firm adding surcharges on top of rates.
Buying interest is also returning for 2024 now, as we at last see the delayed positions of consumers starting to be used up.
Whilst the news about the GWS crop has been in the market for some time, prices have only just started to react, and move upward. A direction which will continue now, encouraged by strong buying interest. As reported the area planted was significantly reduced and the yield is down 40% on top. Prices will continue to climb.
Shine skin has caught all unaware, whilst the area planted increased significantly, these have also experienced a yield reduction of 30%, so prices have rebounded as processors rush to cover their unbought inventory demands. Shine skin will increase further in the short term, but we still expect it to trade at a widening discount to GWS.
The crop continues to be delayed as heavy rains persist in Kazakhstan. This will impact seed quality now, and also raises the concern that desiccators such as glyphosate will need to be used to bring in the remains of the harvest.
So currently we see old crop material trading at a discount to new crop and delivering better quality seed. This situation will not last long.
Finally, it is worth noting that imports into the EU have increased from Russia and decreased from Kazakhstan. Obviously reflecting the price differential and the two-tier market developing on this item depending on consumers purchasing strategy
The big news is the surprise reduction in Indian crop forecasts from c. 250,000mt to about 170,000mt. so, we are seeing sesame prices increase from already firm levels. With strong domestic demand through until February there is really little chance of prices dropping, and we could see record highs in the coming weeks.
There is little stability in the sesame regions of Northern/middle Africa as we all know so overall, we see a reducing production globally for 2023/24. Especially for EU use due to pesticide issues from South American origins.
Central America will harvest end November, but the trend in planting area continues downwards as alternatives; maize, sorghum replace sesame as a cash crop.
Good harvests are being reported generally, with poorer quality, but overall good availability and soft pricing. Logistics continue to be a challenge as farmers want to clear stores in Ukraine and EU regulations add some confusion as to who can import and who cannot from Ukraine. Overall, it feels like a good time to cover millet.
Oil demand is high from Eastern Europe because of the low pricing, but this is likely to change soon, and possibly quite fast. The extreme heat experienced in Bulgaria and Romania this year led to significant crop reductions. Both countries saw their harvest fall by 20%, or roughly 500,000mt each. Farmers are holding back stocks anticipating a price correction from these unrealistically low levels. It is really in our view only a matter of time before this market corrects, and with demand coming in from EU/USA now and huge quantities required by China this day is approaching.
So, buyers are realising supplies are limited and buying interest increases now. Prices are lifting off the floor and will continue upwards for the remains of this season. The Czech crop is now seen to be around 15,000mt, about as small as we have ever seen it. Two years ago, we were looking at 28,000mt. When global production totalled approximately 65-70,000mt. If we add up 23/24 production, we struggle to reach 30,000mt.
Prices have exploded in the past few weeks, with crop forecasts 50% down. Of the harvested material as little as 20% is EU compliant from Peru. Bolivian material is priced even higher that Peru. Prices will likely steadily increase through until the next harvest in April.
Alternative origins continue to try to develop quinoa crops, with several EU countries, UK, India all producing small harvests. Generally, however quality continues to be poorer than the South American material.
Paraguay sold heavily at harvest time leaving limited stocks for EU quality material. Farmers are switching to sesame in Paraguay, which has been paying better for them. Processors are sitting on the limited stocks now and are likely to release once prices reach an acceptable level for them in Q1/2024.
It will be interesting to see how the Indian crop develops come the Spring of 2024.