Currency update
Falling inflation rates in both the EU & USA have indicated that perhaps further interest rate rises in the USA maybe slowed, whilst the EU is more likely to add further increases in the coming weeks. Overall, we are seeing the US dollar weakness at present against both Sterling and the Euro. With Sterling particularly strong against both currencies, partly as a response to the latest interest rate increase.
Certainly, both Sterling and the Euro have been at their strongest against the Dollar for at least a year, providing some buying opportunity for dollar-based commodities.
FX Monthly movement
- US$/ £ 1.27
- US$/ € 1.09
- £/€ 1.16
General news
Broadly the same situation remains in markets where consumers and end users are still overstocked, over bought and lacking confidence. In many circumstances we feel buyers are actually leaving their purchases too late now, and there is a distinct risk of importers holding too little stock for Q4 delivery. As prices decline due to lack of buyers and push back of contracts, all play a waiting game to find the market bottom, and thus risk missing what are attractive prices, provided they are from reliable suppliers who will fulfil their obligations.
Pumpkinseed kernels
Demand continues to be poor for pumpkin from the export market so prices ease little by little. As we know the plantings of GWS are reduced this year again, whilst shine skin is being grown in good quantity. So far everything progresses well with the new crop due August/September. It is likely a wider spread will develop between GWS & shine skin in the new season due to the above factors, but it is definitely a demand driven market at present.
Linseed
Again, weak demand has led farmers to reduce planting areas, and as prices decline buyers wait for unsustainable levels as far as growers and processors are concerned. Already the market is below what is an economic level, so a small bullish change could increase prices rapidly. To assist the reduced area planted there will be some carryover in Kazakhstan, but we do anticipate price increases.
In India the market has already started to react, and prices have increased. India is increasing its area grown, and potentially might become a Major player in this crop in the coming years. The quality is excellent and well cleaned.
HCN remains a challenge here, especially for conventional material. The 250mg level for bakery goods is manageable, but the max 150mg, is very challenging for packers of the product.
Sesame seed
Rain in India has hampered the summer harvest. Whereas the monsoon should come in July, it has been raining since April and definitely damaged summer crop quality. But the quantity was good and aided supplies although prices have not fallen and material is rapidly disappearing from market yards. Partly due to issues with the supply chain from Sudan due to the political situation.
Certainly, these price levels are likely to support a large crop to be sown once the monsoon is coming to an end, but with instability in Africa, India remains the safest supply option and demand continues.
In Central America we are in mid season, with old crop stocks largely depleted and new crop 6 months away. Brazil has harvested in South America, which will take some pressure off the natural sesame market for the time being.
Hulled Millet
Here again uncertainty across growing regions is delaying new crop offers. Indications are more or less in line with current prices, but we are yet to see the impact of no irrigation in Southern Ukraine due to the recent dam burst, how the EU reacts to imposing localized bans on Ukrainian imports to support domestic agricultural industries.
Sunflower
High stocks of old crop sunflower seeds are keeping the price artificially low, as demand is pushed back by consumers. New crop expectations are generally below targeted areas in Ukraine and potentially Bulgaria too. But so far all is favourable with the harvest. The cost of production of new crops does not support the current spot price, so it is seen as almost inevitable prices will increase further forward.
The situation is clearly unstable, and with so much volume growing in a conflict zone, anything could happen at any moment.
Poppy
Its going to be a tough season, once buyers are realigned with stocks and usage. Prices will most likely increase, potentially quite rapidly and severely since supply is going to be very short compared to usual global demand. Add to this the challenges on alkaloid levels and it looks very challenging.
Quinoa
The crop in Peru is anticipated to be 25% lower than 2022, and Bolivia is also anticipating a reduced production, but perhaps not as significant a decline. EU/USA regulations limit the supply of suitable material to these markets fuelling a price differential, between compliant and noncompliant goods on pesticide levels. Whilst not monitored, the cheaper product will continue to flow into the EU/UK through some sources.
Chia
As with Quinoa, EU regulations continue to tighten making supplies difficult. Out of South America new crop prices are yet to be established, with the earliest shipments in August. The crop is in good condition, but late due to a large amount of replanting taking place and thus at risk of early frost impacting quality and yield.
India a new origin for this item has stocks to supply through until new arrivals from South America, Quality is similar, and it will become a more significant player in the market in due course.
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