The obvious concerns of the economic impact of the new variant have probably removed the risk of increased interest rates early in 2022, since the economic shock and risk of further lockdowns or escalating cases. But high inflation rates are leading to increased pressure for pay rises and whilst there appears little chance of these reducing, with Omicron adding further pressure to supply chains & labour shortages.
FX Monthly movement
- US$/ £ 1.33
- US$/ € 1.13
- £/€ 1.118
Prices have been a little more stable recently, be it at high levels. Supply chains continue to be a major concern. Arrival dates of shipments alter constantly and it can be by several weeks as vessels miss destinations or get delayed on discharge. But what is certain is they are not shortening in time.
Shippers are generally impacted by a lack of containers, and receivers by a shortage of vehicles and personnel to unload the boxes.
Organic supplies continue to be challenging with many suppliers switching out of the range, and prices increasing accordingly. We feel a major rethink over supplies for this sector is required, which is less focused on low pricing.
We are please to welcome a new commercial representative to our EU team. Dennis Kuehne joins us from 1st December to continue the development of our business from the German based office.
The GWS market was pushed firmer this month as processors and speculators became concerned over the shortage of raw material. It pushed prices up by nearly 10%, widening the spread from shine skin, the larger crop where supply is plentiful. Bad weather impacted early in China with the worst early snow for 115 years, which added firmness to the market. Adding further shipping challenges.
We are concerned there are a large number of buyers uncovered for 2022, so see little chance of weakness in this market. Two scenarios present either the market will gradually increase as the season progresses, or we could see a large jump when buying starts.
It has been a busy month of renegotiating contracts and supply arrangements due to the supply problems in Kazakhstan and Russia. Supplies are resuming, but there are many parcels with high pesticide levels that need to be avoided.
Non EU origins are firmer still, tending to indicate there is upward opportunity for prices.
Generally we would encourage buyers to make sure Q1/2022 at least is covered, and stocks are held. This time of year sees weather challenges so this will add further anxiety. Also with poor harvests everywhere demand is going to continue and the oil complex adds further firmness.
A very short market. In the end India had almost 50% of its normal crop this year and strong domestic demand. The premium shippers are managing to source seed free of pesticides, so imports into the EU are progressing, although it is an expensive exercise whilst consignments await port health testing clearance.
Africa has a mixed crop, but generally and overall short, but India is having to import from Sudan to fill its shortfall, and this seed also has pesticide concerns.
It is hoped that India will boost product of their summer crop which is due in April. For a variety of reasons it is a better time to grow sesame in India, and could potentially change market supply for the longer term.
Central America is harvesting now. First reports indicate good yields and quality but low area planted. So crop size will be slightly disappointing. Japan is ready to cover large volumes upon harvest, so no weakness here.
Sesame is set to be problematic for 2022 a mix of short supply, contamination, shipping issues, but the premium manufacturers will manage this scenario.
Major worries over supplies from Ukraine as the Russians amass troops on the border. This is encouraging civil unrest and causing home working conditions. In addition Covid is ravaging the community, and we all know the crop was short and pesticides are an issue.
Prices have increased slowly, we think this is more due to poor demand than supply pressure. So could change rapidly.
As reported the crop is small and we expect a deterioration in quality as 2022 develops.
A very difficult situation. Fundamentals show a global demand shortage for vegetable oil, which is keeping prices high and potentially going to push them higher.
Shipments are difficult from the region meaning stocks are low in EU/UK. Generally people are short covered too, expecting prices to fall in 2022. This strategy is likely to cause the opposite.
We are expecting a legislation change in 2022 within the EU when alkaloid levels in packed goods or baked goods will be applied. This will be manageable from most origins but form the major focus for 2022 along with the issue of pesticide levels, mainly due to harvesting in wetter regions.
The crop from Australia is going to be very short in 2022 adding firmness to the market scenario. New origins are being introduced.
Poppy often suffers from high microbiological levels due to poor storage conditions of the raw material and this needs monitoring along with those mentioned above.
The second crop is disappointing, and whilst the majority is red and black quinoa for the Chinese market it has not assisted pricing for white. Supply chain issues continue to put pressure on pricing and availability of stock.
Very little raw material left in Paraguay, so material offered is likely to be local imports from Brazil or Argentina. Suppliers advise a lot of raw material is contaminated with too high Paraquat levels.
Alternative origins are coming available at competitive levels, but will need new technical approvals, and potentially EU/UK cleaning since not yet GFSI certified.