THE BIGGEST EFFECT ON CHINESE FRUITS THIS YEAR WILL BE OCEAN FREIGHT!
One of the larger cargo steamship lines, Hanjin, has filed for bankruptcy. It is estimated that Hanjin carries 7% of the world’s ocean cargo, which includes 30,000 TEU’s (twenty foot equivalent units -truckloads) from Asia to the USA weekly!
Ocean freight rates are at all-time lows, and this recent bankruptcy has given the other carriers opportunity to immediately raise their rates. We are expecting to see short term increases on Asia origin freight; between $0.50 – $1.00/case. Perhaps this will decrease to some degree come November.
To simplify the current situation, all the cargo on the Hanjin vessels around the world (about 90 vessels), is in limbo, as the Suez Canal operator will not allow Hanjin vessels in due to unpaid fees. This is the same reason why the Hanjin vessels are not being unloaded at destination ports around the world.
There are bankruptcy laws, international maritime laws, and local laws all in play here, making for a very complicated situation. Many USA importers have cargo on Hanjin vessels right now with no timeframe for delivery.
Please be understanding as there is nothing an importer can do! We are hoping the Hanjin situation is resolved soon and that the other ocean carriers can pick up the capacity. Higher ocean freight rates however, will remain in effect until at least November when the bulk of holiday shipments have passed.
Peaches: There was a very good crop in China this current season, which is concluding now. However, the consumption in China has been growing, putting a dent in the quantities available for export. The prices have softened a bit for the 2015 crop. Greece had some real quality problems this year due to some excessive rain and very hot weather. A lot of their raw material went to peach pulp, for industrial use. Also, the Brexit issue has now made exported Greek Peaches to Great Britain a dutiable item!
Pears: The harvest of Pears in China will now begin, and all indications point to another good crop season. First, Pears are harvested, and then fruit cocktail is made, followed by fruit mix. Pears have a long shelf life and when they are stored in refrigerated warehouses, they can be processed well into the spring!
Olives are harvested in the fall for the Mediterranean areas of Spain, Italy, Greece, Turkey, Tunisia, and Morocco. Thus far, the growing conditions have been very good, but rain is still needed for the olives to mature to full size so the farmers can get the best yield. The fruit fly incidents have been causing some concern, but if the weather turns cooler, perhaps this will reduce the risk of crop damage. This is a newly reported problem still being assessed.
Olive Oil has been under some pricing pressure, keeping prices firm. There seems to be sufficient inventories of most varieties used for table Green Olives. The supply of the Hojiblanca Olives, used for ripe olives in Spain, and the Kalamata Olives in Greece, also have good numbers which maintains strong supply. Because of the financial crisis in Greece, over the past few seasons the farmers have been asking for more money which pushes up pricing.
Typically, new crop prices for olive oil and table olives are announced in January. The pricing for new crop Kalamata Olives is also usually announced early in the year as well, as this crop is still harvested into the first quarter of the year.
According to the recent report of The Thai Food Processors’ Association, El Nino caused higher temperatures than normal during the first months of the year which threatened the upcoming pineapple crop and damaged the plantations greatly. Around 30-40% of the crop was affected with damages including sun-burnt fruits. Because of the severe drought that El Nino has brought on, farmers were unable to properly care for their plants that will result in a delayed winter crop.
Since the fruit supply has been low, there hasn’t been enough for cannery production, forcing packers to run with half capacity. Most packers are struggling to fulfill their contracts and shipments are delayed by several months because of the insufficient fruit supply.
The total crop outlook from January through the annual shutdown in August has been predicted to be around 1.1 million tons of fruit which is about 30% less than harvested the same period last year. Because of this severe shortage raw material prices are expected to increase to THB 14.50-15.50/kg.
Apart from dealing with expensive raw material, Thai pineapple packers are forced to pay more for tinplate as well; the price was increased by USD $30.00/ ton in 2Q16 and by another USD $130.00/ton in 3Q16.
At the recent New York Fancy Food Show, some Thai packers claimed there wouldn’t be a relief in pineapple supply before the winter crop of 2017, given the long growing cycle of the fruit.
The market is typically tumultuous and this year is no different. The market is now at a low point for the crop year (December – November).
This year, things are pointing to a good crop, but the right amount of rain, no hail, and good sun are still needed during the growing season. An early indication of the crop season is to see the conditions of the Spanish crop when the olive trees bloom in April.
Production from other sources such as Tunisia, Turkey, Greece, Morocco, and South America will provide our year’s total supply. Spain, however, is the dominant source of olive oil while Italy is the dominant country for bottled olive oil.