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Olive Oil: Prediction For The Upcoming Season

Olive Oil:

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.

Tuna Fish: Current Market

Tuna Fish:

As last reported in February, prices were so low that fisherman and canneries were not able to sell profitably.  For Skipjack, the bellwether of the tuna market, prices have significantly increased over the past couple of months and raw material has not been plentiful. Prices are up $2.00-$3.00/case and are showing no sign of retreating.

Fishing of Tongol and Albacore has had very little success, which pushes up the price of raw material.  Over the past few months, the prices of these canned products have been steadily increasing and as of recently, even less raw material is landing.  Tongol price has increased by as much as $5.00/case and Albacore by $2.00-$3.00/case.  April and May are the best time to catch fish, but this year it has been far below an average catch.  If things don’t improve soon, we will see a very strong market.

A Brief Update: Status of the Fruits

Fruits; Apricots, Peaches, Pears, Fruit Cocktail/Fruit Mix

The dominant producing countries (USA:California, China, and Greece) all begin the season around May with apricots being the first crop to be harvested. For the Chinese fruit, the general trend is for downward pricing due to the recently devalued Chinese RMB (Chinese currency) and a general oversupply of fruit worldwide.

Apricots: This year’s apricot harvest will be delayed until the end of May due to low temperatures experienced in Northern China.  The price of the new crop is expected to be lower than last season due to the devaluation of the RMB.  The US demand for apricots is not great, but many other countries have a demand primarily for apricot pulp for drinks.  On a positive note, there should be no supply issues heading into the new season.

Peaches: Peaches are the next fruit to be harvested.  For China and Greece, there is good carry over which puts a downward pressure on prices.  Another contributing factor on softer prices is the ocean freight rates, which have been the lowest we’ve seen in years.  It costs considerably less to ship a container from China to New York than from New York to Florida! This will most likely change early this fall when holiday goods start shipping to the USA.

Pears:  In China, canneries pack pears when they are harvested in September/October and will store additional fresh pears in refrigerated storage where they will keep for up to 8 months!  Large quantities of fresh pears still remain, which must be canned before they begin to go soft and before the new season begins for all canned fruit.

Fruit Cocktail/Fruit Mix: Fruit Cocktail has 5 fruits; peaches, pears, pineapple, cherries, and grapes.   Fruit Mix has 3 fruits: peaches, pears and pineapple.   Two of the main ingredients in these products, peaches and pears, continue to have soft prices and have no shortage of product.

Tuna Fish: General Updates

Chunk Light Tuna: The chunk light tuna market is at the bottom. Since raw material is at a very low price, it is not profitable for fisherman to sell their catch to packers who are unwilling to process and pack it at the current market prices. There are two prominent species of tuna being used for Chunk Light Tuna. Over the past few years, Skipjack has been the traditional species and now Bonito is being processed in China and Vietnam, where labor rates are lower than Thailand. From certain factories, the quality of Bonito is much lighter in color than Skipjack (and at a lower cost), making it a very good value!

Tongol Tuna: Tongol is lightest in color of the light meat tunas, but is used as an alternative to the higher priced Albacore. Tongol is packed in all of the traditional tuna producing countries: Thailand, Indonesia, and Vietnam. Vietnam has a very short fishing season, which is in the fall, but they do receive limited quantities of raw material during the rest of the year. When raw material is available, the quality of fish from Vietnam is preferable. Indonesia is also a quality packer of Tongol and typically their prices are more competitive than Thailand. The market for Tongol tuna has been fairly stable the past few months with fluctuations of about +6%.

Albacore Tuna:  The heaviest fishing season for Albacore is in April. Raw material has been in steady supply, but as of recently, it is a bit tight with prices firming. Fishing boats are coming in from the sea now for the upcoming Chinese New Year on February 8 (which lasts for about 10 days). Prices are firm and will continue to be so until at least April when the new season begins.

Ocean Freight: Large Capacity and Lower Fuel Help Drive Rates Lower

Due to significant overcapacity of the world’s leading steamship carriers and the advent of the new Panamax super sized vessels coming into service, ocean freight rates have continued to decline.  The precipitous drop in oil prices has also been a large factor in the declining ocean freight rates. Through a variety of surcharges, the ocean carriers are attempting to raise rates to a profitable levels, but overcapacity is not going away easily. We can expect severe fluctuation in ocean freight rates in the coming months.

The cargo vessels used for international shipments over the past 20 years or so will hold about 8,000 TEUs (twenty food equivalent units –  1 teu =  about 1 TL domestically) and the new Panamax vessels hold about 14,000 TEUs!

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