Tuesday, August 31, 2021

MEXICAN ALLSPICE PIMENTO HIT BY BAD WEATHER

 

GOOD MORNING
TWO WEEKS AGO MEXICO WAS HIT BY A HURRICANE WHICH DAMAGED THE ALLSPICE PIMENTO PRODUCTION AND EXPORT.
BELOW IS A BRIEF REPORTWE RECEIVED FROM ONE OF OUR SUPPLIERS.
ATTACHED SOME PICTURES

OUR BELIEF IS THAT PRICES WILL RISE FOR THE FUTURE CONTRACTS.
LAST PRICE INDICATION WE HAD BEFORE THIS EVENT WERE IN THE RANGE OF U$ 3,600 – U$ 3,700 FOB

CONTACTS US FOR MORE INFORMATION
BRGDS
MW
manager@peppertrade.com.br
WHATSAPP: +5511988027709

 












I would like to comment that we have suffered a lost in the Allspice crop due to the entrance of Hurricane Grace to the main production area of Allspice.

 

Last August 21st, the hurricane Grace entered to the Mexican territory for the second time to Veracruz, the first time was to Quintana Roo and Yucatan (affecting also the production are of Tabasco with some strong rains); and these areas suffered great material affectations because of the strong rains that have continued the whole week and because of the hurricane winds (205 – 240 km/hr) that affected all the areas, leaving the main cities and specially the small towns without electricity for more tan 4 days, and also the communications (telephone and internet) were very limited, and causing a lost of Allspice of 50 – 60%.

 

The floods and the continuous rains are preventing us to continue drying, and as we do not have enought electricity, the product we had in the warehouse is beginning to go bad, for that reason we will require some days to review the situation of the collection and drying to be able to offer again.

 

Thank you for your attention and comprehension.




Thursday, August 19, 2021

The spike in container freight rates finally reached brazilian shipments

 




Just as an example cost of one 40feter from Brazil to Mexico (ports of Altamira/Veracruz) was
in the range of U$ 1,500 /1,800 in April 2021 and rised to U$ 2,800/3,200 at the end of May.

In June it was billed already over U$ 4,000 and , now in August U$ 6,300.
It is previewd for  September/October in the range of U$ 8,000/9,300

Exporters are facing trouble to sell on CIF/CFR terms and prefer FOB terms with buyers assuming the risk of freight.

In June 16 we already published the report below:

Specifically in Brazil freight rates where little affected if any, until now, but it started increase from the beginning of this month.

Routes and availablity of vessels and containers where altered already before, with changes happening on already contracted and booked vessels and ports, causing delays and dificulties to plan shipment and arrivals.




Freight - Global trade runs into choppy waters

 





The spike in container freight rates smacks of top shipping lines exploiting the market with their oligopolistic power

A shipowner tries to fix freight rates in such a way as to recover capital costs, depreciation, operating costs, agency commission, administrative expenses and other overheads, and get a reasonable return on investment. But with coronavirus taking a toll on the global economy and seaborne trade in early 2020, the container shipping sector was badly hit.


The sector had been struggling with an over-supplied market and slow demand growth even before the pandemic which kept the container freight rates generally low over the past few years. As the pandemic weakened economies, this segment experienced major setbacks. The early part of 2020 witnessed modest recovery in demand and freight rates, but with the outbreak of the pandemic the prospects for demand not only decreased but fleet development was also affected.


With lockdowns coming into force in March 2020 and reducing the demand for container goods, shipping companies adopted strategies to manage supply capacity to reduce costs and keep freight rates from falling. The spread of Covid also led to a sudden drop in demand for seaborne transport. This development forced the container lines to apply strategies such as increased blank sailing (that is, skip port calls), idling of vessels and re-routing as a way of adjusting supply to low demand. This allowed freight rates to remain stable at a time of lower demand for ocean shipping.


Although blank sailing, accompanied by low oil bunker prices, helped shipping lines mange supply capacity and reduce costs, it still accounts for about 40 per cent of the operating cost of a vessel and has an impact on revenue due to capacity withdrawals (Drewry London 2020, Annual Report).


From the perspective of shippers, these strategies meant severe space limitations to transport goods and delays in delivery dates which had an impact on supply chains and the proper functioning of ports (UNCTAD Review of Maritime Transport 2020).


The levels of increase

These factors culminated in freight rates reaching historically high levels by early 2021. The surge in freight rates spread across some developing regions such as Africa and Latin America, and even outpaced the rise observed on the main East-West routes. While the increase in freight rates recorded on the Asia-East coast-North America route was 63 per cent, on the China- South America it was 443 per cent higher than the median for that route.


Rising freight costs over the last year due to shortage of shipping containers have reportedly had a detrimental impact on small and medium-sized exporters. Drewry’s Composite World Container Index — a global index for container spot market freight rates on all major routes — peaked at $6,727, up by over 300 per cent since the emergence of the pandemic in December 2019. Drip Capital, a California-based digital trade finance , in its analysis on the global shipping crisis has stated that small and medium businesses globally account for more than 25 per cent share of the $18 trillion maritime trade. While the Suez Canal hold-up in March 2021 unleashed different challenges on the shipping and logistics industry, small and medium businesses particularly have been going through a bad patch since the onset of the Covid pandemic.


At a time when exports are giving a big push to Indian economy, exporters are forced to shell out more to ship goods to global destinations. Container lines have announced surcharges and as on July 7, freight rates from J Port, Mumbai, Mundra and Hazira to the Mediterranean have seen an increase of $500 per TEU (twenty foot equivalent unit). Currently, it costs $2,800 per TEU to Barcelona in Spain — an extra $500 would mean an 18 per cent increase in shipping costs. CMA/CGM — a French shipping company — will apply a high season surcharge of $1,250 per TEU for dry cargo to the east coast of Central America from India via Malta.


Exporters hit

According to FIEO (Federation of Indian Export Organisations), a 40 foot container to the US before Covid costing $2,000 is now $6,200 6500; the rates to Europe have increased from $1,200 to $5,000, while the West Africa market has seen a 600 per cent jump.


According to the Indian Rice Exporters Association, African nations are the biggest buyers of Indian basmati rice. Africa as a market accounted for 54 per cent of India’s $4.796 billion non-basmati rice shipments during 2020-21. Freight rates to Africa has more than doubled to $115 per tonne compared with $45 per tonne a year ago. An African buyer, who used to get rice delivered at $400 per tonne last year, has to pay $500 now.


Container shipping lines will be able to advance a number of arguments like shortage of containers, congestion in the South China and the US ports on the west coast, delays and detention of ships at ports due to the pandemic and labour shortage, empty container repositioning, the hold-up of ships at the Suez, etc., to justify the abnormal increase in freight rates.


Had the increase in freight rates been modest or moderate, the global shipping community would have accommodated such increases. The world’s top ten container lines seem to control about 85 per cent of the total cellular container capacity and they seem to have taken unfair advantage by exploiting the market with their oligopolistic power. These container lines have formed shipping alliances among themselves to consolidate their position and continue to abuse the potential market power.


Latest reports suggest that the US President has issued an executive order demanding the Federal Maritime Commission to take all possible steps to protect American exporters from the high costs imposed by the ocean carriers. In the circumstances, the best antidote appears to be for the national Competition Commission to monitor freight rates and market behaviour with a view to creating a fair, stable and sustainable environment in the area of maritime transport with requisite regulatory oversight.

https://www.thehindubusinessline.com/opinion/global-trade-runs-into-choppy-waters/article35546658.ece


Global trade runs into choppy waters

Jose Paul  | Updated on July 26, 2021

The writer, a former Chairman of Mormugao Port Trust, is an Adjunct Faculty of Indian Maritime University, Chennai


Re- published on August 19, 2021 by






Wednesday, August 18, 2021

Pepper Market Report Week 33/ 2021 - A report from RGT

 









FOB PRICE ©IPC

Vietnam
Price soar week 32 reaching Tuesday last week at level 80,500 VND/kg for pepper raw material.

From beginning August, raw material went up of about 8.05% in span of ten (10) days with Black Pepper that is now higher of about 4.67% and White Pepper higher of about 6% today.

Succeeding days, raw price eased and stayed stable at 79000 VND/kg dubbed for a paused in demand overseas. Firmness persists even during weekend attributed to the inventory level that is believed to be running low along with the prediction that China will resume its buying spree by August/ September to cover their deficiency from Indonesia origin.

Day trade-78,5000 VND

Afternoon-80,500 VND

Almost 2.5% intraday gain

8.05% Upsurge in span of 10 days


Indonesia
Lampung reported stable whilst Muntok White continue to be seen at an upward trend reportedly being seen traded at level highs of $7000-7300 FOB from origin.

Though other might see it as déjà vu of week 12 market bubble, it is important to take note that Muntok farmers have been consistent with their standing since week 26 for the clarity in expected poor crop this year followed by overall pepper market situation.

Brazil
Trading activity was active entire week with a good volume of demand. In fact, the splurge in demand have caused offers from $3800 FOB level to go up at $3900-4000 FOB by ending week. Compared to Vietnam, this origin was seen a cheaper alternative from last week trade off.

Though raw material was being traded last week at level 18 BRL/kg, according to sources, some farmers prefer to hold their inventory materials in belief that it could touch at level 25 BRL/kg.

Freight

Freight Situation from Asia.
A severe equipment shortage across all Asia origins continues. Though certain destination ports such as Pakistan and Indian Ports have increased 182-219% compared to last year, this year rates are noticeably stabilizing for Karachi; while for India, though seen with an increasing trend, the level is only about 20-25% upsurge from Q1-Q3 of this year.

The top worst affected major destinations are Mexico, Europe, Jebel Ali and USA showing roughly 500-977% increasing uptrend in addition to difficulty in booking a secured space.

As from Indonesia to other destination, it is even seen at its worst condition this week. Taking note that no direct routing from Indonesia port which means transshipment to other congested ports is a must, contributing to the upscale in price trend

Freight Situation from Brazil.
Spike in freight cost along with a very tight vessel and container availability started to be noticed from Brazil ports mid Q2 this year and became obviously a major concern by Q3.

No hint of warning, it took everyone by surprise with a sudden upsurge from about 280%-330% clearly seen for all America routes.

Overall, ocean freight remains bullish going forward. This is despite a reported decrease of shipments from ports under lockdown such as China, Vietnam, and Indonesia. The latter does not change that fact that freight capacity is heavily curtailed by port congestion that is not easing. Vessels and containers can be shift easily from one trade to another but port from one to another cannot.

---------------------

Recommendation

Market remains stronger than ever despite all ongoing global supply chain disruptions and headwinds related to raw material, environmental concerns, crop issues and freight cost. This becomes more evident these past few weeks that ‘bullish believer’ is now taking a stand that situation going forward for pepper could rise in coming years till abundant supply exceeds demands which does not seem to happen in next 2-3 years times. Thus, staying strategically covered at all times will perhaps be the next logical thing to do at this point in time


RGT Pepper Market Report Week 33/ 2021
© Royal Golden 2021. All Rights Reserved..