The recent application of CHED (Common Health Entry Documents) regulations for goods moving into EU from perceived high-risk origins is making the transfer of our products into the Eurozone form UK more expensive and complicated. We will be taking steps to therefore hold some of the smaller lines as independent stocks in our EU warehouses.
Freight rates continue to show upward tendencies which will gather pace, assisted by increases in bunker surcharge rates due to oil price increases. In addition, the implementation of increased toll rates on German autobahns adds further logistics costs from 1st December 2023. We think this will add around € 10/mt to goods transported on the German road system.
As mentioned previously pesticide management and control continues to dominate the supply of basic raw materials, and we are implementing a range of monitoring and control procedures as due diligence to safely control the supply.
With Anuga taking place next week, it is possible market changes could occur rapidly thereafter as we have seen in previous seasons. Time will tell!
With China now on their autumn holidays we expect the domestic demand of pumpkin seed to diminish for a few weeks. This might impact the shine skin price levels where the crop is good. Quality seems fine from this season, which might indicate a shortage in the ‘A’ grade ranges, which are the poorer coloured seeds narrowing the gap between the two grades.
GWS supplies are short, and all will depend on export demand as previously stated. Demand is still low for confectionery use, but we hear strong demand from oil producers in recent weeks has affected this market.
Some concerns developing over flax seed crops now due to heavy rains. Kazakhstan is feeling strong demand from China which is an easier market to supply compared to EU and thus asking higher premiums for material heading into EU. Russia is still discounting the general market to attract buyers in EU with some success. Otherwise, they too have markets outside the UK/EU who are attracted to their material by price. We hear Norther European crops have suffered badly regarding quality. This will impact on seed appearance and impurity level making cleaning difficult.
For the hulled market concerns are rising regarding the Indian crop which has definitely been impacted by changing weather patterns. As we write it is raining in Rajasthan where early crops are being harvested. Rain damages sesame for hulling, causing a colour change. It has rained consistently in India this season, whereas normally after the monsoon the country dries up. So, the crop forecasts have gradually reduced, and quality concerns grow.
Indian imports continue from Brazil, not for EU use due to contaminants and Africa, Mozambique in particular.
Concerns globally over sesame rumble on partly due to the continuing political instability across the complete sesame growing belt in Africa, Logistics issues in West Africa and low inventory levels in China, all threaten bullish reaction to prices that are already high.
We see EU imports from India starting to recover from the ETO issues in 2019, with more exporters looking to re enter the market. Overall, however EU demand remains subdued.
The dispute between Ukraine and its EU neighbours continues as imports remain banned in an attempt for these countries to support pricing for their farmers. Goods are permitted to transit into the remainder of the EU, but the process is slowed by bureaucracy. Generally, this is weakening Ukrainian prices locally, but increasing operational costs of export. The Ukraine has reported the situation to the WHO for a potential legal challenge. The appetite is certainly turning less supportive from Poland, Slovakia and some other states.
Sunflower from Bulgaria is also impacted by the ban mentioned above. It was widely expected to be lifted mid September, but farmer protests overturned this decision. Bulgarian and Romanian harvest predictions are significantly down on last months figures.
All of this puts’ farmers in a strong position within Bulgaria and reluctant to sell at cheap levels. But weak demand is also impacting on export sales to EU, although China demand is increasing and quite strong.
The market feels too weak, but is not increasing, so there is potential for a significant rapid correction.
There is not sufficient poppy, but very weak demand. We have been stating this for some time. So, it is all about demand now, if/when it happens prices will increase rapidly.
With the harvest collected in all regions the reduction in yield is confirmed at 30-40% in Peru. EU imports have declined due to difficulty in meeting residue levels, whereas the USA has seen imports recover.
Prices have so far increased about 15% since July and we would not be surprised for this trend to continue.
Strong buying from EU and USA has meant Paraguay is heavily sold, with what free material there is held by processors waiting for further increases. Mexico will harvest soon to primarily supply its northern neighbour. India a developing origin, that will feature more in the coming years is sold out until its new harvest next spring.