Chelmer Foods Seed Market outlook 04.09.2023
Prices in British stores rose in August at the slowest pace in nearly a year, according to industry data, that offers further relief for consumers hit by high inflation and for the Bank of England which is trying to quash it. The British Retail Consortium said annual shop price inflation cooled to 6.9% in August, its lowest since October 2022, weakening from 7.6% in July.
Food price inflation fell to 11.5% from July's 13.4%. Prices rose in month-on-month terms by 0.5% having fallen for the first time in two years in July from June.
The BRC's inflation measure captures prices of goods sold in store and is seen as an early signal for the broader official consumer price index which has fallen from a peak of over 11% last October to 6.8% in July. However, inflation remains more than three times the BoE's target and investors expect a 15th back-to-back increase in interest rates to 5.5% from 5.25% on Sept. 21 after the Monetary Policy Committee's next scheduled meeting.
Heavy rainfall may well disrupt the harvest and therefore delay new crop offers, in turn putting pressure on prices. This could also mean seeing no significant offers through till new crop. It may now be the case that the bottom of the market has now gone. We will sit tight and see how the market reacts to the new crop which will start to harvest in September. Overall, the cultivation of Linseed appears to be pessimistic. Canada is expected to be 20% down, same by comparison with Kazakhstan, and Russia at similar levels being 25% down. Even in the UK it is expected that yields will be as high as 50% down. Prices today are firm but steady, however, may see a quick shift.
Harvest in Bulgaria is now estimated to be 25-30% done, with reports of a lower yield due to unusually hot weather and droughts. So far, the agronomists are seeing a smaller sunflower seed with a below average oil content, both factors indicating lower yields. Bulgaria’s cultivation areas are expecting to produce circa 1.9M mt with Romania’s expectation to be circa 2.5M mt. In the next coming weeks, we should see more accurate figures. In combination, farmers are still holding onto a hefty carry-in and remain reluctant to sell. Of course, the war in Ukraine rumbling on is also supporting prices and having an unpredictable ever changing detrimental effect.
What with new crop still to come in to play there is some disparity in price levels offered out. There are some yield concerns due to abnormally hot weather, the ongoing Russia-Ukraine conflict, and the fact that some suppliers are in a short position. It will be interesting to see how the coming weeks unfold.
It is becoming less and less likely that the more focused figure of 19,000mt will be harvested this year from the Czech crop. Heavy rainfall earlier on has suspended harvest in some areas and delayed the crop altogether. This has also resulted in substandard quality seeds in some cases. Taking into consideration the above, it is putting increasing pressure on prices and creating a quick-fire turning market.
We are now hitting a tight period, depleting current crop levels coupled with a slight increase in demand domestically, prices are now holding firm while we wait till new crop. Nonetheless, it still remains the belief that new crop will be healthy and much larger than last years, despite the fact the GWS acreage will be approximately 40% down. Harvest is due to start near the beginning of September and will be completed by the end of the month. From there, in theory, we should see more competitive price levels.