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.
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.
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.
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.