Currency update
Markets dislike uncertainty, and FX markets are particularly prone to this. With the global financial crisis, driven by all factors known to us, it is difficult to predict any movement therefore. Certainly, the deepening EU energy crisis as winter approaches. Recessionary fears globally are a major concern obviously, and the continual strengthening of the US$ adds to this.
It seems likely interest rates will continue to increase with a large percentage movement expected in the UK and potentially the USA too. The UK remains particularly volatile at present due to the political turmoil and could well come under further pressure. Certainly, some analysts see a scenario where it drops below parity with the US$.
There is a tendency to forget about the FX rates when considering commodity markets, but in fact currently this is driving more price volatility than other factors.
FX Monthly movement
- US$/ £ 0.99
- US$/ € 1.14
- £/€ 1.15
General news
We will be exhibiting at Sudback towards the end of October and have visitors at SIAL, Paris too. Please arrange to meet up with us.
We have strengthened the Unicorn team in the last few weeks, with new colleagues in technical, finance, logistics and commercial departments, with more to arrive before Christmas. Hopefully this will enable us to further provide an efficient service on all levels to our suppliers & customers.
Freight markets are trending softer for 2023, but this is still a speculative situation and very dependent on the global energy sector amongst other factors, so it is difficult to significantly factor optimism into forward pricing. Especially when many origins are reluctant to offer extended supply contracts beyond a couple of months forward these days.
Pumpkinseed kernels:
New crop has been collected and generally quantities were good and all grades; snow white, GWS, shine skin are currently available. GWS in particular is looking good with excellent colour and texture. Shine skin quantities have decreased in Xinjiang due to a resistance from certain markets to support this region, but Inner Mongolia has compensated. The overall crop will be slightly smaller than last year, but we do not see this as negatively impacting prices.
The biggest concern for pumpkin will be the organic supplies due to P>A> requirements by the EU. These are challenging most suppliers and will make organic pumpkin extremely short this year.
Linseed
The Kazakhstan crop is well into harvest now, with approximately 50% collected. Material looks to be good quality and high yields. Since there is also some carryover supplies should be available. But we need to get the goods out of Kazakhstan and that is tricky without transiting Russia, which some clients are not prepared to accept.
As winter approaches logistical issues contribute to firming prices, and availability from other origins where base prices are higher all add firm tendencies.
The issue is definitely going to be confidence in supply chains for 2022/2023. We would recommend a variety of origins being considered and this being the first consideration not price.
China is expected to be large buyers of linseed from Kazakhstan this year, and generally this adds firmness to markets as we all know.
Sesame seed
The new crop has started in Rajasthan, Northern India and as we know has been severely impacted by the rains. We expect a 15-20% reduction in yield and a deterioration in quality. Rain damaged seed leads to discoloured hulled sesame. Domestic demand will remain strong in India for the remainder of 2022.
Pakistan had a severely damaged crop due to the floods. China has increasingly relied on this origin for supply, replacing Africa in the past few years so they will have to look elsewhere for supplies.
African origins remain equally firm.
We do not see any weakness in the sesame market and would strongly suggest cover should be taken soon. As news spreads of the relatively poor supplies, we see a strengthening market.
Hulled Millet
As you would expect the Ukrainian harvest is poor compared to last year for all the well publicised reasons. Sadly, the quality is not great either due to wetter conditions. There is concern over where prices might develop for Q1/2023. Shippers are reluctant to offer in this position wanting to get stocks out soon before the weather or the situation on the ground deteriorates. Other origins are uncompetitive currently, but we feel the Ukrainian material is likely to firm up and close the gap on US/Canadian prices.
Sunflower
Once again, the harvest is more or less collected, but oil seeds remain very volatile at present. There is a general expectation for prices to increase, and this is making farmers reluctant to sell. In addition, securing forward supplies is difficult. EU production due to drought is down, and obviously the Ukrainian harvest is down some 20% or more.
Current spot prices are in our view attractive but are only spot prices. The forward positions are difficult and trading at a ‘risk’ premium.
But sunflower should probably be covered now.
Poppy
Incredibly short situation globally on supply. The price is only being held down by challenging demand routes into Russia. We do still see 2023 being very difficult on availability.
Quinoa
The crop has issues with pesticide levels this year which is making qualities for the EU/UK challenging to come by competitively. The non approved material will go to local, less demanding markets but it is difficult, especially for organic material, to get conforming parcels.
Asian demand has not been as strong as expected, rather halting the firmness in the market, which is 20% up on the start of the season.
Cheap prices probably mean nonconforming product.
Chia
Quite an unusual situation with many of the producing countries; Argentina, Bolivia & Mexico becoming net importers. Making Paraguay of interest to all. Demand has been steady so far.
We have material available ex African producers at competitive levels and expect to be stocking this as an alternative this season.
White chia is very difficult to come by.
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