Currency update
Generally, whilst struggling with strikes and cost of living issues the UK economy has so far avoided recession, and the Government has had good news regarding balance of payments in January. Attention now turns to the March budget and what level of fiscal restraint is required. Sterling is also hoping for a positive outcome to the Northern Ireland protocol which should help build positive relationships within the EU.
The EU is still seeing rising inflation with concerns that it is entering a wage-price spiral. The ECB has been at pains to confirm it is monitoring this closely since it would lead to upward inflation. Essentially this probably means they are prepared to raise interest rates further to keep price rises under pressure.
The US dollar continues to benefit from the risk averse environment we are currently in. Escalating tensions between Russia and the USA fuel this, and there is also a general concern that interest rates perhaps have a little further to go.
FX Monthly movement
- US$/ £ 1.21
- US$/ € 1.06
- £/€ 1.13
General news
We are experiencing a general slow down in demand in the UK, as consumers switch to own label products and supermarkets reduce their ranges. The problem is compounded by a continual overstocking throughout the supply chain. Processors are keen to keep their outputs up, so doing their best to keep material going into the system which keeps pressure on all to keep it moving.
Pumpkinseed kernels
As predicted demand has returned to the pumpkin market after Spring Festival and prices have risen for all grades. A general tightness in supply of GWS and strong domestic demand for shine skin are the main contributors. For GWS there is very little free stock remaining in the market, what was available is in processors warehouses now. For shine skin there is opinion that less than 50% of last years inventory remains in the market at the same point in time. So if true there is little chance of weakening prices in the short/medium term.
Organic material is still difficult to find that adheres to EU regulations on PA etc.
Linseed
A two tier market developing in EU, less so in UK but still present, for Russian v non Russian sourced material. The price difference is significant, and we see some buyers being tempted by this. In the UK, we make sure all material comes with genuine origin declarations. Russian material incurs a duty of 35% in UK, so it is important origin is clearly defined. In EU the price difference is close to 20%. The new HCN limits are proving challenging for the non bakery buyers <150mg/kg can only really be achieved through heat treatment of the seeds. We are experiencing more problems with golden linseed than brown.
Sesame seed
What a difference a month makes. Suddenly the Indian market became short of raw material and prices jumped up. The situation was further exacerbated by defaults form African shippers of raw material to India. Essentially now the cupboard is bare, with no local seed in India, a short supply from Africa. Processors are sitting on a variety of different inventory; from India to Brazil. Demand remains poor for EU/USA.
The jump in prices encouraged planting of the summer crop, and volumes are expected to double for the harvest in April. Since this strong upward movement prices have started to slip back down, and whilst still a way to go, it seems likely the trend will continue. Once the summer crop arrives, we see the harvesting cycle begin elsewhere in the world starting with China in early summer, and if crops are normal prices should continue downwards.
Hulled Millet
It seems good quality raw material is becoming hard to come by now in Ukraine, which is firming prices slightly. Poland has some good quality and is offering this at a slight discount but we expect this to change. EU/Ukraine origins are still significantly under rest of world options, particularly if levies are declared correctly and not mis declared as seed for sowing.
Sunflower
Prices remain quite stable, with a slight premium for forward positions. Demand from China continues now their economy is recovering from the covid wave. There is concern over what will happen this summer in Ukraine, the major global source of sunflowers. The conflict will definitely lead to a reduction in availability. A shortage of planting seed, high and short energy supply, fertilizer supplies will all have a negative impact on area and yields. The escalating tensions between Russia and the west will not help matters.
Sunflower seems well priced currently and surrounded by uncertainty.
Poppy
Well, a short supply situation has failed to deliver higher prices. This is primarily due to a big reduction in demand from Ukraine and Russia. Some material from EU processors is finding a route into Russia, but the drop off in Ukraine demand has not returned. Issues in Australia with alkaloid contamination of edible seed has turned off this pipeline too. Indications for 2023 plantings and harvest are all reduced on 2022, which was short, so there is potential still for a significant upward correction.
Quinoa
Supply of EU compliant quinoa is limited now, and with the USA demand picking up there is a firmness in tone to the market. Poor weather has led to a significant area needing re sowing, perhaps 25% of the total. Civil unrest in Peru continues to hamper supply chains and availability. The situation should become clearer late March/April.
Chia
Supply and price levels have impacted on this item to slowdown demand leaving all with too much stock. This will gradually clear in time for the new harvest in Paraguay. We hope to have better supplies of white chia this year, but would urge clients to place orders as soon as offers are available since the quantity is strictly limited and will soon sell out.
Get in touch
