News in from California – the Almond tree bloom is progressing due to unusually warm weather in California.
Some of the early varieties of Fritz/Sonora are starting to bloom.
The 20% plus increased export trend continued in January. If there were enough fruit to continue this trend to the end of the season (which we doubt), year end exports would reach 103,000 tons with a further 15,000 tons of domestic consumption. We believe over all supply is around 10,000 tons short of this. Prices increased sharply again during January as packers struggle to cover short positions in an illiquid market. Size 5 and larger are now more or less sold out. The price differential between size 1 and size 8 is now $2500 per ton, but small sizes being the only fruit left is now starting to increase in price as well. Under normal circumstances we would ex
pect to see the price increase put the brakes on shipments, however, a lot of business, particularly retail has been writ
ten at the lower levels, and this will keep the shipping numbers somewhat solid for the rest of the season, the only caveat we would put to this is the possibility of packers being unable to find acceptable quality fruit to ship in the second half of the season. The price has risen 70% since the unrealistically low speculative opening prices, and defaults are being reported. We conclude that the crop will be exported in its entirety, and prices should remain firm.
Here are a few observations
Year to date exports are 34,860 tons, compared to 35,207 tons last year, an decrease of barely 1%.
Price related decrease in demand in traditional large markets, Germany (-16%), France (-9%), Italy (-23%) and the UK (-13%) were offset by growth in the newer markets notably the USA (+33%) and Asia, mainly destined for China (+26%). The switch in recent years from seasonal to year round consumption, combined with the smaller crop this year and rise in demand from the USA and China should keep the market firm. We believe Turkey is close to 100% committed for the 2017 crop, and that buyers who are not covered by the end of February are unlikely to find availability until new crop in October.
Limited volumes of vine fruit has been delivered and the quality is good. The crop size is still predicted to be around 55 000 – 60 000 tonnes and the weather has been good thus far.
Although scattered showers have been reported in some regions, it has not had a significant impact on quality.
The hot weather and dry wind will assist producers to dry product in half the period vs previous year. The Orange River has sufficient water and the drought is not causing any issues in this region. The biggest concern is the impact of the drought in Vredendal where all the currants are produced. Initially the view was that the drought may reduce the volumes by 25-35%, but this could be as high as 50%. Some producers do not have any water for irrigation available, resulting in significant crop losses.
The crop is currently being harvested and we will advise once we have a better view of the available volumes. We will inform you soon on the new crop prices for the vine fruit once we feel confident on crop size/quality.
The apricot crop has been the smallest in many years.
Peaches and pears should be available to service the market and prices have been given.
Mango is also available, but customers have to contract soon to ensure sufficient supply. The fresh product is available, but dryers will be hesitant to dry if product has not been contracted.
Prices for Sweetened Dried Cranberries (SDCs) have continued to rise slowly in recent weeks.
After a long period of oversupply and low prices, a smaller than expected crop in the U.S. and Canada and ongoing legislation to limit supply continues to lift prices from their recent lows.
California still has limited availability on major inshell walnut varietals. Due to the record number of high heat days (100+ F // 38+ C) this year, many packers are opting to shell what they would normally sell as inshell product. Packers can better control for heat related damage during the shelling/sorting process, so we expect most packers to move on to selling their shelled walnuts faster than usual this year.
Prices from the USA seem to be on the return. December shipments were in line with last season, being roughly 1% above December 16. Despite these positive figures, are the year to date shipments still far behind last year (inshell exports -30.7% / shelled exports -8.2%).
Californian suppliers are eager to move some stocks, providing some relief to the market. This downwards trend might be slowed down by the increased import levels in Turkey, as described above. So far Turkey has been one of the most important absent buyers, this might change due to the more favourable import rates. The January shipment report will provide more insight in the actual impact on the demand from Turkey. Looking back on the Turkish imports of last season, which were YTD at 111 million inshell pounds in comparison to 57 million inshell pounds this year, the impact might be more than just a drip on a hot plate.
With suppliers well sold and most manufacturers well covered we would expect the market to remain quite but stable.
The next point of interest for both producers and manufacturers will be the flower count later in February bringing the first signs of what might be expected from the new crop!
The 2017 season, until the end of January has seen 59.000mtons of dried apricots having been exported overseas from all grades and qualities. When we compare this level with last year figures, we can see around a 20% increase in quantity being shipped. However, there has been some quality issues, 2017 crop is larger than 2016 crop in total volume. We would not have guessed that there will be a real raw material shortage this soon into the season, however raw material suppliers such as growers and handlers are now limiting the supply as the prices rise, in hope of resting a higher price for there remaining stocks of quality raw material.
Main factor behind this fact is the dry and warm winter conditions in the growing region of Malatya. There is risk of early blossom due to the warm winter together with risk for water shortages in Spring. Raw material suppliers think if there is a frost damage at the end of March, prices will increase sharply so they are slightly increasing the prices now step by step.
However, we will not be able to see the actual result of dry winter before the blossom and early stage of the fruits.
Turkish dried figs prices continue to increase as it has done since the beginning of 2017.
Although export shipments of 2017 crop is around at the 35mtons level, we can see a serious shortage of raw material. Especially, big sizes fruits N1, N2, N3 these are almost finished or the prices have become too expensive for buyers. Most of the buyers of big size dried figs have rotated to small sizes this year in order to continue their business. Remaining quantity for larger fruits are either already contracted or waiting for Ramadan period sales now.
Despite available stock raw material is limited now, we observe that the quality is acceptable concerning the time of the year depending on storage conditions of the manufacturers. Also, small size dried figs N 8,9,10 and baby sizes are actually at quite cost-effective prices currently. We can see almost double price difference between baby whole figs and N4’s recently. While natural dried figs N4 bulk shipment price offers are around USD6/Kg nowadays, N10’s around USD3,2/Kg and Baby size around USD2,4/Kg on Fob basis.
Until new crop 2018 come to the market in September, we do not expect a major relief in price levels. But this may increase during Spring period when the availability of material becomes shorter.
Today we are seeing slightly more interest mainly from smaller buyers who push forward with cover. Many of these companies usually only buy when they have a better view of their customers’ demands otherwise operate on a ‘hand to mouth’ basis. Most major users are now well covered.
Last week the Levant in-shell price has passed the 10 TL level after a long time. The market has been very flat on the Turkish Lira prices since the beginning of this season until New Year.
This brought a comfort zone for all the stakeholders of the supply chain after a very long time. Due to significant demand from Europe for the last 2 weeks, we saw the price being pushed up as supply could not meet.
There are serious quality problems on the Eastern Black Sea region and we are also at the end of supply for Akcakoca hazelnuts which are almost finished; max 5-7% remaining.
For the time being we would expect the market to remain stable with the possibility to increase, producers still hold back just in case of weather problems in the spring.
It seems like TMO is the biggest inventory holder in the market right now and they prefer to wait and see where the price could climb up. The hazelnut prices are still within the budget on EUR basis which explains the ongoing solid demand.