Currency update
Joe Biden’s US Dollar stimulus package scraped through the house with an extremely narrow margin, potentially opening the way for a US$ 1400 cheque for all individuals as disposable income. The oil price reacted positively to the hope of this stimulus. But whether the senate approve the package is still ‘in the balance’, but US$ strength would follow. Within the Eurozone continued selling of sovereign bonds and subsequent buying by the Central bank to support the Euro is not stopping a gradual slide in its strength. The rise of further Covid variants in this region is also causing concern and undermining Euro strength. In the UK all eyes are on the budget; extent of stimulus package, tax increases and support payments. The current trend is for sterling weakness, but this could change fast.
FX Monthly movement
- US$/ £ 1.39 up
- US$/ € 1.21 down
- £/€ 1.15 up
General news
Shipping challenges continue and will continue through Q2/2021. A shortage or misplacing of containers, plus confusion over EU regulations are challenging supply lines. All of the above also leads to escalating freight costs for both containers & road transport which will be reflecting in sales prices going forward, and due to the time delay in supply chains will impact prices for the remainder of 2021.
Organic supplies are further challenged as EU regulations impose restrictions on suppliers. Already we see a significant reduction in options from China, and with the recent ban by Indian authorities, APEDA, on all organic exports until recertification and assessment, makes supplies tight, prices firm and the future uncertain. We have achieved Kiwa organic approval for the Eurozone, which was required after Brexit. So all systems back to normal!
Otherwise we are entering the quiet season for seeds now, as old crops are largely committed and new seasons not fully planted or info known.
Pumpkinseed kernels
Pumpkin seed supply is becoming extremely tight now in China and prices are rising. We see little reason for this to change until harvest time in August/September, which means for 2021 prices will be firm. The situation is further compounded by the extremely high freight rates that are persisting from the region.
Suitable organic pumpkin supplies are non existent too.
With no real alternatives for the required volumes, we see no reason for the market to change direction.
Concerns over the Uighur population in Xinjiang are further complicating the supply chain. With all our suppliers fully approved and audited, and signed up to our ethical standards, plus regular visits by Unicorn staff, we see our supply chain immune to these issues from this area, which is the primary source of pumpkin in China. There are many reputable suppliers from this region who should not be discriminated against through this issue.
Linseed
Strong demand from China has further increased Canadian prices, and thus underwriting the whole market. The escalation in transport costs has steadied in the EU, as weather concerns and covid regulations both come under control. We expect the firmness to continue until harvest however.
Sesame seed
Well, whilst the IOPEPC & the EU have agreed a method to permit exports/imports, it is not without commercial concern for many parties. The ETO issue is relatively simple to solve since several suppliers who did not try to beat the previous salmonella regulations never resorted to using ETO to mask the problem. But confusion over EU adoption of the new regulations, and then commercial responsibility for costs, analysis & potential rejections have created a nightmare trading environment. Supplies are coming forward on a trial basis, we shall see how the supply chain re establishes, but at best it will be May/June before things return to normal.
Pricing is confused with 10-15% variances between EU/UK and non EU destinations. This will settle down, but it will take time.
In Central America demand has been good, but freight problems are restricting the flow of material into the market. We recommend buyers keep good stocks for the next couple of months. Prices have a firm tendency.
Hulled Millet
Prices continue to creep ever upward as demand slightly out paces supply. The USA crop situation reported earlier does focus demand into Southern European states. EU/UK quotas were minimal, and have almost vanished which will add further stimulus to EU product, so we feel prices might suddenly correct € 100//mt +/-
Sunflower
The bull market continues. A fundamental shortage in seed and oil for sunflower as well as other oilseeds, keeps prices firm. Freight issues delay the dispatch of Cargo further. There are few open supplies amongst hullers, who have mills running at capacity.
in Argentina the current crop is poorer than expected due to dryness in the region.
With such a situation, and no significant carryover into the 2021 harvest period prices will remain or increase from this point. We suspect supply will be extremely tight over July/August, for delivery to clients in September-November. Please make sure your contracts are placed well in advance. Spot availability will be very limited.
Poppy
Prices are stable for now, but we see plantings reducing due to an over stocking of the finished product from alkaloid manufacturers. The situation in the Czech Republic is concerning due to escalating covid infections. This will likely impact on farmer plantings, after a lack lustre season of demand.
Potentially poppy prices could firm considerably for Q4/2021 onwards.
Quinoa
Poor plantings this season in Peru in particular driven by weaken demand, especially from the USA market cause some concern over volumes available for the current harvest due this month. The amount of EU suitable material will be lower still due to pesticide limits. It seems unlikely prices will decline further. Probably worth covering at today’s levels.
Chia
Poor demand is keeping prices stable, with Paraguay the most competitive supply source currently. New crops are upon us so further news and trends should be established soon, but prices cannot drop from this point in our opinion.
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