Generally, markets are suspended for a variety of local reasons that all lead back to COVID 19. Whether in lock down, re focusing production or other related reasons, very little is happening to generate volatility, other than the impact of currency rates.
Now is the quiet season, as followers of this report will know from previous years. We are between harvests. 2019 crop is over and more or less sold/contracted. 2020 harvest is just being planted. It is weather dependent, pest dependent and supply/demand dependent. This will all unfold in the coming months, but for now we must wait and see.
The opening stocks of shine skin & GWS pumpkin were lower this season due to no carryover from 2018 and a smaller harvest in 2019. Supply was then disrupted in Q1/2020 due to the COVID-19 situation and lock down in China lead to a disruption in supply and delays in shipments. As the outbreak moved to EU/USA shipments were further pushed back as buyers saw demand decline meaning the reduced export volumes continued into Q2/2020. This saw prices drift a little lower but have now stabilized and we fully anticipate that stocks will gradually be used up and the carryover into 2020 harvest will again be minimal.
With new crops not expected in China until October and arrivals in EU/USA December there is the potential for a demand led rally. Remember too that the lower grades are in short supply due to an exceptional quality in the 2020 harvest, this is giving the whole market a firmer tendency.
The crop is coming to an end, and farmers are taking advantage of the higher prices, but there is a deterioration in quality available now. For golden linseed supply is getting tighter and tighter and prices are escalating, if offers can be found.
No indication for new crop yet.
India, whilst in lock down, is also harvesting a good summer crop of around 50,000mt. Farmers are rushing to gather in the seed before rains arrive in Gujarat this week and cause potential damage. Processors have been closed now since 23rd March. For EU the tight control of salmonella regulations are impossible to be fulfilled as courier and sampling systems are stopped due to lock down, so no product is flowing EU direction now, and will be unlikely to leave India now until late May at the earliest. This will potentially create a supply vacuum in EU. There is really no market in India at present, with no supplies going to market due to lockdown and no exports too, so prices have drifted down a little.
China having reopened is buying sesame from Africa, but the lock down is developing here, and plagues of locusts are impacting on agriculture in East Africa, just to make the problem worse. If China starts to buy aggressively sesame could jump upwards very fast now. This might be avoided since Brazil is increasing its sesame crop for harvest in June/July and China could switch to this origin, particularly since they have developed good trading channels there for soya after the US/China trade battles of 2019.
The Central American supply situation has been heavily impacted by the sudden and immediate closure of the fast food industry in EU. This has turned off demand overnight combined with a reduction in USA.
This has created an overstocking situation but also emptied the supply chain, which is roughly three months long and thus will create supply problems later in the year.
Millet is still in plentiful supply, but the price is firming a little, possibly due to demand from China for various grains. Lock down issues are impacting on the supply chain.
Old crop demand has been steady and some processors are now withdrawing from sales until new crop due to being at full capacity. The COVID-19 situation has caused the major producing countries to suspend sunflower sales, but this has not impacted on Bulgaria. New crop plantings are underway, and we anticipate the overall expectation to be similar/slightly lower than 2019. Various processors of kernels are emerging from Ukraine, ready for next season.
To our knowledge there is limited available seed from processors with new crop in Spain the first to harvest and as yet we have no figures for this. There has been some slow down in demand from bakeries leading to the push back of some consignments. We anticipate there is sufficient stock to get through to the new season. How plantings progressed in Czech Republic etc. during lock down are unknown, so whether this will add disruption to supply at harvest is as yet unknown. Of course poppy is very susceptible to weather too, and none of us know what will happen on this front either.
New crop due around now is looking good in terms of quantity, but we are yet to see reports on the crop quality. We are concerned about the supply of material to meet EU/UK regulations on pesticides etc. In Peru logistical challenges have been the major concern limiting availability and we hope if lock down ends on 10th May the supply will improve.
The market is steady, and the on going concerns over aflatoxin & glyphosate remain from some origins. Cheaper offers from Paraguay/Argentina are often from non accredited or without the previously mentioned guarantees. There is a concern over dry weather across some of the growing regions, but at this stage, with the product so widely grown these days we are not too concerned of it impacting on the price.