Writing a blog can be a challenge! We want to keep our trade up to date on the products we import (from over 25 countries) and we want our information to be meaningful to you. Keep in mind that we are always looking ahead at least 3 months, as that is about the minimum lead time to receive a shipment. Our supply chain is greatly affected by worldwide holidays such at the Chinese New Year (this year beginning February 8), the Southeast Asian New Year (or Water Festival in early April), summer holidays/factory closures in Europe, and Ramadan (the month long celebration in the Islamic calendar).
Our objective is to have all of our products in stock at all of our 8 USA distribution centers, 52 weeks per year, while combating all of the above factors. We believe we accomplish this quite efficiently! Thanks for reading this blog and stay tuned for more market information in the coming weeks/months.
The pricing of olive oil is quite complex. There are several very large olive oil companies who can change the market with just a few trades, which makes the market very difficult to predict. The fact is Spain, the world’s largest producer of olive oil, came up short of budget and a lack of rain late in the season put an upside pressure on pricing, despite weak consumption. Predicting pricing on olive oil is a very risky business, but currently pricing is steady with a lot of upward pressure.
The new crop of olives begins in April when the trees begin to flower. Professionals can get an early indication as to the yield of the upcoming crop by analyzing the amount of flowers on the trees and the amount of growth on the branches. Then, of course, they need favorable weather during the next 6 months of growing into the fall harvest to ensure a good crop.
Reports coming in from the major pineapple growing regions throughout Southeast Asia point to a continued supply shortage and high pineapple prices. The El Nino effect is generating adverse weather conditions throughout Thailand and Indonesia, with water shortages stunting fruit growth and making harvests much smaller than usual. Thai packers are claiming shortfalls of 15% in December 2015 when compared to the same period in 2014, while Indonesian factories have started seeing up to 60% less in raw material in the past months than the same period a year before. To compound the issue, many factories are still working on filling back orders from last season, which makes the limited raw material available that much more of a commodity. These crop issues do not point towards any sort of pricing relief on pineapple in the near future.
The Chinese Mandarin Orange pack season has finished and all reports indicate a short crop in the largest growing areas (Hunan, Hubei Zhejiang Provinces). According to sources in China, rainy weather throughout November damaged fruit trees and ripe fruit, forcing growers to dump up to 40% of fruit at the end of the harvest. The remaining fruit, according to reports, is of “very poor” quality.
At the same time, Chinese packers are worried about what they see as a decrease in the number of orders placed by US importers. The United States is China’s largest market for canned mandarin oranges and this product shortage has driven prices up. American importers seem to be holding out for falling prices, adding further pressure to the Chinese packers.
The price of mandarin oranges has been fairly low for the last few seasons, but it can be expected the prices will increase throughout the New Year if demand surpasses supply. The days of inexpensive mandarin oranges may be coming to an end.
The Thai Pineapple Industry Association has recently met and delivered its estimate of 1.4 million tons as Thailand’s total fresh pineapple production for 2015. In normal years, Thailand produces about 2 million tons of fruit, so this is about a 30% shortage. Some of the fruit will go to the fresh market, leaving the processors, canneries and juice concentrate manufacturers, with less fruit than in 2014 along with sky-rocketing prices that were unheard of in the past. In “normal years” fresh pineapple costs about 3.50-4.50 Baht per kilo, but right now fresh fruit is trading at around 12-13 Baht per kilo.
Some of the shortage is linked to the unusual weather pattern and an exceptionally strong El Nino that has been bringing lots of rain to parts of the world that are normally dry and drought to other parts, like Southeast Asia, where it should normally rain during “rainy season”. Processors fear that September 2015 to February 2016 is going to be the worst dry season the crop has ever seen. They don’t foresee any increase in the fruit supply and they predict the fruit supply to be about 40% less than what the industry needs.
Other than the weather-related crop fallout, a large part of the shortage can be explained by the “boom-and-bust” nature of the Thai pineapple industry. When the fruit prices plummet, farmers abandon their crops and grow something else that’s more profitable. Given the current high prices, farmers are expected to drift back to pineapple cultivation next year but no worthwhile increase in production can be expected before next year’s summer crop, at the very earliest.
For the time being, offers for canned pineapple from Thailand are scarce, prices are extremely high and packers are cautious about making commitments for large quantities as they continue dealing with back-orders. Other pineapple producing countries such as Indonesia or China are struggling to keep up with the high demand and can’t make up for the shortfall of Thailand, which is one of the largest pineapple exporters of the world.