Currency update

The last few months have been all about interest rate rises to attempt to control the increase in inflation globally. These actions are likely to pause for a few months with attention switching to the various published data. So far these are tending to show a weaker situation in both the EU and UK compared to the US.

Eyes are also on China where economic slowdown and major issues in the property market can potentially impact on western economies if not carefully managed/controlled. Tensions continue between China and Taiwan as military escalation is reported across the median line in the Taiwan straits.

For now, however currency volatility is expected to be minimal, with trade in a relatively narrow range until future trends develop.

FX Monthly movement

  • US$/ £ 1.26
  • US$/ € 1.09
  • £/€ 1.16

General news

As reported last month generally many items look undervalued currently as a factor of slow demand as processors empty their inventory. We anticipate this situation to be corrected by end 2023 and would expect demand therefore to come in shortly and prices firm up.

Freight is gradually increasing too as we forecast some months ago, which feeds into the end price obviously.

The UK Government has announced it will not implement full Brexit controls on imports from the EU until January 2024, to facilitate disruption at ports. The EU implemented the controls immediately.

The new Border Target Operating Model has also been published intended to simplify the paperwork and data required for importing.

Pumpkinseed kernels

GWS stocks are now exhausted, apart from heavily pesticide contaminated material. The new crop forecasted volume is significantly lower, about two thirds of 2022 at 12-15,000mt, so prices are expected to be supported. GWS is an export orientated crop, with next to no domestic use. So, prices will depend on whether buyers can switch to shine skin due to price difference.

The Shine skin crop is different, however. There will be some carryover and the expected harvested is looking good at possibly 30% more than 2022. We are looking at a volume of 250-300,000mt. However internal demand grows year on year in China for snacking use. This is becoming a preferred market, since the pumpkin does not need to be shelled, and thus requires significantly less processing.

So, we expect the differential between the two grades to widen over the coming weeks.

Linseed

New crop arrives in October having been delayed by heavy rains earlier, but prices are starting to appear. As with sunflower farmers are disinclined to sell at these levels due to the cost of production, so prices are gradually firming for new crop. As demand comers in we would expect this movement to gather pace, especially if China comes in looking for significant volumes.

Sesame seed

Prices have been relatively steady in the last two weeks. Firstly, India has virtually no free material until harvest in October. This is expected to be similar to last year at 200-250,0000mt. India has also started buying natural seed from Brazil, with arrival starting in September. This seed will not be for EU/US use due to pesticide levels, and also a further 25,000mt from Mozambique which should meet western requirements.

Africa & Brazil are offering competitive natural sesame seed compared to India but cannot compete in the hulling market due to lack of processing capability, quality challenges and logistical issues, so we expect India to continue to dominate this market, with competition from Pakistan. As stated earlier the EU is becoming a less preferred market due to import challenges.

The strong Indian rupee will assist export pricing from India if it continues this season too.

Hulled Millet

Ukraine has started to harvest, but it will take until October before we have a full assessment of the crop. The extreme weather, conflict and issues such as the recent dam disaster are all expected to impact on quality either as poor physical or contamination issues.

Despite the closure of the grain sea route, millet continues to arrive in EU by road, avoiding the restrictions imposed by its EU neighbours attempting to support their domestic prices.

We see organic supply as challenging due to tightening regulations as reported elsewhere.

Sunflower

Harvesting is well under way in Bulgaria and Romania with 25% already collected. The quality is poorer this season with smaller seeds, lower yield and decreased oil content. All factors impacted by the excessive heat and drought.

The Ukrainian situation adds further potential volatility, both with the closure of the grain corridor and escalation in the intensity of fighting and the drone attacks conducted on both sides. Already wheat prices have reacted, and we would expect similar in sunflower.

In Argentina planting is seriously delay for their crop, but there is time to catch up as long as weather improves soon.

But demand has been poor and buyers appear to be waiting for lower prices still. This seems unlikely as farmers cannot cover their growing costs at current market levels, hence the stability in the market at current levels. We are seeing an uptick now in demand, and this indicates the market is likely to increase in the near term, with upward potential very strong and minimal downward opportunity.

The conflict is also firming all freight rates from the region adding to price increase pressure.

Poppy

Crop forecasts form Turkey indicate a small output of 2700mt this season, which lines up with all other origins. Spain, we believe harvested less than 4,000mt. Australia similar. The Czech farmers are limited with their information, but the crop is somewhere between 15,000 and 23,000mt. We understand other Eastern European countries produced next to none.

With global demand normally around 65,000mt is it hard to see how supplies will come close to meeting this, even allowing for significant carryover of stocks by end users and difficulty supplying the large markets of Ukraine and Russia.

Time will tell, but in Turkey prices have jumped by € 1000/mt in the last 10 days.

Quinoa

The harvest is collected and is in line with expectations, being about 25-30% lower than 2022. There is a small carryover in Bolivia, but this is insignificant in general market terms.

Pesticides are a challenge, as with most South/Central American countries. It is hard to see a reason for the market to decline this season.

Chia

Prices have reacted rapidly to increased and strong USA demand. Farmers are reluctant to sell stock as they watch this escalation. This rise may not last beyond 2023 as additional supplies become available from Mexico to feed the USA demand, but this is by no way certain. Particularly since the early hurricane season could damage the crop significantly this year.

There is optimism that Asian demand will return this season, and with Australia looking for premium material too, the market seems to have potential to increase.

Get in touch

Frank Horan
Frank HoranDirector
Nikki Divers
Nikki DiversDirector
Jake Yerrell
Jake YerrellCommercial Manager
Vera Grosse-Drieling
Vera Grosse-DrielingCommercial Manager
Micaela Camantigue
Micaela CamantigueAccount Manager