Although not usually a big topic in the news, anchovies are now newsworthy because there aren’t enough raw materials to meet the demand of the anchovy market. The fishing in the North Atlantic Ocean near Morocco has been very short. Fishing in the Pacific Ocean off the coast of Chile and Peru has been very short as well. Over the past 15 years, much of the world wide anchovy production has moved to Northern Chile and Peru. Due to the effects of El Nino, the water off the coast of Peru is warmer than normal making it difficult to attract cold water Anchoas Ringens, anchovies. The fish are migrating further north away from the traditional catching areas of Arica, Chile, and Pisco, Peru, and are headed to Chimbote, Peru, which is about 6 hours north (by truck) from the main factories around Pisco, Peru. There are no official figures for the raw materials, but it is quite short in supply and the cost has almost tripled in the past 3 years. The yield of the fish is only about 25% so the increase has not had an overwhelming impact on the cost of the finished product. Processing anchovies is very labor intensive which is a huge reason as to why anchovies are expensive.
The prices of anchovies should remain firm, but they will continue to be in very short supply for at least the next 6 months.
Not to sound like a broken record, but the oil market is very strong, with special pressure on Extra Virgin. There are two simple components that determine the annual supply: the carryover (leftover) from last crop and the projections from the new crop. The new crop oil estimates are typically confirmed sometime at the beginning of the calendar year. There are also several factors that affect pricing. The main factors are consumption, availability, and exchange rates. So far this year, consumption seems to be unusually strong, especially in Spain, which is the world’s largest consumer of Olive Oil. The total availability for this year’s supply is tight, especially considering that consumption is pacing ahead of historical usage. Although the exchange rate is favorable of the US Dollar vs the Euro, it is no longer offsetting the price because prices continue to increase.
However, the biggest factor in Olive Oil pricing is the ‘speculators’. There are a few companies that have tremendous strength and can turn a market at a moment’s notice. They can do this by buying up a lot of oil in a very short time which in turn moves the market. Or they can do the opposite and can sit back and leave the market alone, leaving it weak. These speculators have the biggest influence on the fate of the olive oil market. The price of Pomace and Extra Virgin should remain strong until late fall as new crop begins to be harvested.
The port situation in California is having devastating effects all around the country. The International Longshore and Warehouse Union and Pacific Maritime Association who operate the West Coast ports are locked in a bitter labor dispute since the contract terminated this past July. Since that time, getting containers out of the port has been painfully slow, and there is a tremendous back up on the piers and in worldwide shipping. Due to the back up on the piers, cargo vessels cannot dock and unload and are therefore waiting in the harbor. Waiting in the harbor means the vessels are not returning to world wide ports to reload for another voyage. As we stand now, there is a world wide shipping problem of historic proportions, and spreading to all ports here in the USA. There are more containers to ship from the Far East than there is steamship space to handle it all. It is hard to get containers on vessels for the voyages to the USA, and even harder to get the vessels unloaded and out of the ports.
So that importers do not use the ports as their warehouse, the pier allows only a few days to take our containers out of the port. If you don’t they levy escalating fines called demurrage for each extra day beyond the free time. For all importers this has been a tremendous expense, notwithstanding the delay in getting our cargo.
A Federal mediator has been appointed to help negotiate. We would like to see our President make an executive order declaring the ILWU to get back to work in earnest, and hope to clear up to backlog in the ports, and harbors.
Read the article below for more details:
The value of the US Dollar has been rising steadily the past two weeks in quite an abrupt manner, approximately 8-10%! This is the strongest the US Dollar has been vs. the Euro in years. Despite the shifting sourcing to lower cost producers, many products still are imported from the Eurozone. If this trend continues, we hope to see some easing of prices in the coming future.
You can easily read about the rising prices of California fruit, and the short supply, in publications such as The Food Institute Report, www.foodinstitute.com. Imported canned fruits are an important component to provide the additional quantities needed to meet our growing demand. Yes,there are some companies that are importing fruits solely to be the lowest cost provider, with little regard for quality or reliability. There are plenty of acceptable quality canned fruits available at fair prices. However, as we get closer to new crop (July), stocks will dwindle, and product typically is tight, especially on fruits packed in Juice. Now is the time to partner up with a reliable source to plan your long term fruit requirements. New crop Peaches, do not get into the supply chain until August, with Pears, at least a month after, and Fruit Cocktail shortly thereafter.