As last month, it is clear I think that all edible/confectionery seed markets are now increasing, for a variety of reasons. Supply challenges, shipping irregularities, poor harvests, contamination/adulteration concerns all play a factor. The key factor as always is that all these issues only manifest themselves from the cheaper sellers. Price for commodities is more or less consistent for similar qualities. Find a significantly more expensive or cheaper offer, there is a reason which will probably not be apparent on the specification. Know your supplier and their sourcing strategy.
Well the market has reacted to the supply situation. GWS pumpkin is very short and insufficient to meet export demand this season. What does this mean? Well defaults internally amongst Chinese suppliers have started, prices are escalating rapidly and will not decline, contract renegotiation will happen and perhaps most concerningly, old stocks which have poor pesticide residue levels will come back into the market place. Cover should be take now from strong, secure suppliers we really recommend no delay on this item.
Shine skin pumpkin is slightly different. The crop is significantly bigger, and adequate, although as people switch over from GWS it will firm prices somewhat. Fundamentally domestic demand keeps this item firm through until after Spring Festival, which this year is mid February. After that there is a some potential for a decline, but it is by no means certain, and since these goods will not arrive in their destination warehouses until May, the market will not react quickly.
At a time where transport becomes a problem across Eastern Europe and beyond, Covid is also taking a greater hold. The price is rocketing and with limited availability of raw material transport replacement prices are being further impacted.
Processors are unwilling to offer too far forward as market uncertainty kicks in. Farmers are under no pressure to sell and oil demand relatively high. Kazak yield is poor and with large amounts of this & Southern Russia’s crop produced for the Chinese market, there is potential for a shortage of quality seed in Q2 2021. Likely to be increased imports from Canada where the crop is fair, and prices are competitive.
So, all the talk is about ETO residues, discovered by a consumer in Belgium in Indian sesame. Ethylene Oxide is used to treat for salmonella and other microorganisms, effectively killing them. It is not permitted in EU/UK/Australia but allowed in USA. It permits sesame from poor hygiene environments to pass the EU screening programme. So, whilst solving the Salmonella concern, it actually masks the quality & hygiene standards the sesame originated in. This of course permits exporters to produce and tidy up low quality raw material, reflecting in sharp pricing.
Source sesame from good quality, hygiene-controlled environments, with adequate water purification and heat treatment facilities and there is no problem, but it costs a little more.
Sadly, many recognised names have been caught up in this issue and this will impact negatively on other processors who have not had the problems or used the gas.
Aside from these markets are firming in India as the harvest appears to be worse than expected, particularly for the good quality seed. Currently market arrivals are 10% of normal, which is concerning, but there is time for them to pick up. The Indian Government has also reduced export incentives from 6% to 3% for 2021.
But all the talk is on ETO and what testing regimes the EU & IOPEPC will put in place for supply to recommence. Overall, it will improve the quality of sesame coming to market in the medium term.
Mean while Central America is awaiting their harvest, we are hearing early reports of a reduced crop due to dry weather particularly across Mexico, and buyers are looking for alternative origins which are limited. The availability out of Africa for hulled seed of a suitability quality & food safety is limited.
Currently good offers available out of Poland and Ukraine, it is a question of transport more than anything else. Polish crop was relatively unaffected by the dry weather, however the large spread on offers encourage caution on supply, due to concerns that this will impact on yields and quality. Processors are more tentative than they previously were. America is, once again, priced out of the market, before even considering levy, and therefore could import more than they export this season. US farmers have turned to more lucrative crops this season and crop levels are poor.
The market price has somewhat stablised this month, although there is every expectation this is temporary and prices will climb further in the coming weeks. Fundamentally because global production is forecast now to be 6% lower than last season, with big shortfalls in East Europe, Russia, Kazakhstan and increases in USA.
The usual seasonal problem regarding availability of shipments is compounded this season by shipping container availability in Bulgaria.
The sudden price hike has led to sellers withdrawing and defaults from smaller operators who were unstocked. There are some traders with long positions offering cheap levels, but these will be limited in quantity.
A stable market situation as we are between the North & South Hemisphere crops, demand is stable, supply adequate, and whilst some harvests were disappointing, and the future areas look reduced, for now it is in good balance.
Buyers in Northern Europe are continuing to buy with price the primary concern the cheap offers. Out of Holland in particular. Much of this will be the lower grade Codex material and may not pass EU MRLs. This should be carefully considered since the EU will eventually catch up with this practice, as we have seen this month on sesame, and in 2019 on organics from China. Aside from this global demand is down, in particular from the USA, and a wider range of origins have led to a consistently low market. The pandemic is expected to have an impact on next season’s crop.
Elections in Bolivia have seen the MAS party elected, which should reduce levels of unrest seen in recent months. This assumes a peaceful transition of power however! Bolivia has began reacting to the low demand and is falling into line with other origins. The crop was also below expectations in Bolivia this year. Good quality seed coming from Paraguay at present and market is still soft due to lower global demand. Argentina is offering at very low levels but caution on pesticides, supply, and shipping.