RGT Pepper Market Report Week 43/ 2021

Vietnam after a back-to-back notching record high, mid-week 42 market was seen slowly reversing its course by about 1-2% from beginning week level trend.

 The pricing trend stood flat at level 88000 VND/kg reportedly the earning momentum week. This have finally urged most shippers to cover their needs particularly for White Pepper materials.

Though shippers were attempting to bid lower, as usual, no raw material was available for sale at a low level than the current market supporting price.

Hence, opening week 43, pricing tightens to level 88000-89000 VND with market still in a sleepy stretch with allegedly scarce availability of raw material.

This week market direction might have taken a reverse turn closing week October, nevertheless, overall, it can still be seen 4.5% higher average price trend compared to last month same period, while about 59% gain from last year same month period average pricing level.

Indonesia
Indonesia remains stable with Lampung staying at level $4350 FOB. The local currency Rupiah noted as South-east Asia’s best-performing currency since the beginning of September this year which is influencing country’s local commodities increased pricing.

The problem persists with reported issue in port congestion resulting to tight container and space availability alongside the reported overwhelming export of coal to China which have hit record highs.

Brazil
Still one of the best weeks for Brazil sellers as demand continue to pour in during the beginning of week 42. Though supportive levels are available, there are some who are still very firm with their offers at level $4200- 4300 FOB.

A more aggressive demand is expected opening week 43 as Europe reopens from their holiday last week.

Our Take-Away View
Vietnam Pepper elevated pricing these past few weeks could assimilate the near future event; taking into consideration the current reported stock positioning along with farmers bullish bias perspective that seems noticeably invincible. However, we should also take note that a smalltime correction will automatically be included in bull-favored journey. 


Freight Market Highlights
Asia to USA Freight Expected to Soften With a dip in demand for the most expensive destination ports it remains unclear if rates will continue to ease down, further reduce or even increase.

Though carriers continue to report that demand outlook remains bullish ending quarter alongside the existing port congestions. Asia To Europe Still at All Time High Extremely critical space condition with rates that remain at record high level.

Global Ports Facing Intense Congestion Port of Savannah known as home to the largest single terminal container facility of its kind in North America is reportedly at top with 81% congestion rate, while both LA and Long Beach had a combined congestion rate of 56%.

Overall, an estimated 77% of ports globally are experiencing port congestion heading to holiday season. 

© Royal Golden 2021. All Rights Reserved.

 

Vietnam spices market update 18th Oct 2021 – week 41

 

 

•         Pepper price last week increased fast 50 – 100$ at the beginning of the week. After that correction again when some speculators / dealers sell stock to take profit. Otherwise some dealers have been selling pepper stock to make a budget for coffee business when the coffee crop starts at the beginning of this month.  However, prices rose again on the weekend and were stable at 90.500 – 91.000 vnd raw material.

•         Pepper prices have increased by 1% last week and up 10% within the first half October.

•         USD has been stable compared with VND.

•         Europe and the US have started buying again.

•         The Middle East to cover raw material again after a long time by hand to mouth.

•         China's very slow buying continued from the beginning of October regardless; they  only imported 1.293 tons in Sept (normally needing around 5.000 metric ton per month).

•         Currently, the Central Highlands provinces (key pepper provinces) are still experiencing heavy rain. Vietnam is in the rainy season, so it is forecasted that there will be more widespread rains, or tropical depressions and storms. This will significantly affect the 2022 crop.

•         The 2022 pepper crop is forecasted to continue to decrease quickly compared to 2021. The crop will also come later because of the phenomenon of many leaves and pepper trees starting to have flowers. The main crop forecast of the harvest will be late in February-March 2022. (Please note; Vietnam Coffee crop has already been delayed 1 month at least this crop. Now harvesting but very slowly and coffee quantity in the new crop not much available)

 

Please see the REPORT FILE & FULL QUOTATION LIST by click to download.

 

https://drive.google.com/file/d/1yMpoA9rdV59Iz6bkBybQBtCSjWPrh33p/view?usp=sharing

 

(Please note; market changing fast so price need to update & reconfirmation)

 

Sincerely Thank you!

Mexican Pimento crop 2021- A report by Van der Does

 

Crop failure, disaster, complete chaos are just a few words that are used by our shippers for Pimento/Allspice from Mexico to describe the current situation.


The 2021 hurricane season hit Mexico hard, extreme strong winds as well as flooding and landslides have caused a lot of damage in the growing area of Pimento trees. In Mexico most Pimento trees are wildly grown or in so-called walks, therefore the full impact is hard to calculate yet. Some farmers have reported to have lost their full crop this year.

The effects will probably not be for the short term only. Even when new plantings are done today, it will take some 5 years before a Pimento tree (Pimento dioica) starts producing, it is only full bearing after 20 years. Some spice traders will remember what happened to the nutmeg production from Grenada some 17 years ago and where we are today.

Allspice/Pimento is the only spice that is grown exclusively in the Western Hemisphere. This leaves us with only a few alternatives. Honduras might be a good alternative to the Mexican produce, but the exports are small compared to the amounts Mexico usually exports. The same for exports from Guatemala, these are also limited; an additional disadvantage is that Guatemalan material can hardly be imported by European buyers. Due to the machine drying process in Guatemala most of the times PAH-levels (Polycyclic Aromatic Hydrocarbons) are too high to comply to EU legislation. The last option is material from Jamaica. This material is considered as a premium variety and historically always sold at premium levels.

Clear reports on the current situation and the outlook for this season are still hard to find. We at Van der Does will be monitoring the situation a daily basis. Please contact our brokers if you need further information.

RGT Pepper Market Report Week 40/ 2021

 

Vietnam – market wrapped up third quarter with this period year ending at a strong note having raw material traded at about 81500 VND/kg with a reported alarmingly low stocks in raw material at origin.

Thus, full September month average is noticeably higher of about 62% from last year same month period, while a full third quarter average have soared of about 58% from last year same period quarter. 

Beginning of fourth quarter once again headed to a firm footing with week 40 raw touching at about 83000 VND/kg – highest raw price recorded so far with about 55% increased from beginning year until today. 

Shortage of raw materials and unavailability of containers are both throwing everyone out of balance with an earlier report that 2022 crop is projected to be poor causing majority of farmers/dealers to keep and hold their current remaining stock position today. 

Indonesia – continued to be inactive with lack of  export interest. This does not stop market to remain firm at level $4275 FOB. Situation in ocean freight remains an existing issue as well up until now. 

Brazil – in strong demand that boosted price to go up at about 2-3% from last noted price. However, there’s a risk factor involve with the worsening situation in Vitoria port of where majority of  order loads are being shipped.

News circulating that MSC carrier has lodged a bid to take over Brazil’s Log-In Logistica Intermodal of which latter is known to have seven (7) feeder box ships in its logistics portfolio.

If the takeover will happen, majority fears freight could increase as MSC is known to offer premium freight prices compared to other carriers.

Container shipping to USA remains uptight heading to last quarter of the year. We have noticed the elusiveness of Baltimore bookings from Vietnam since August month with a reliable source informing that vessel catering to this destination have quenched down to 34 containers. As peak season kicks off, port congestion worsens in China and USA, Daily Breeze reports 70 ships sitting outside the Ports of LA and LB—an estimated 525,000 40-foot containers that need to be unloaded. Though other sources are claiming there are more than double that—waiting off Shanghai and Ningbo in China

Nowadays it is either difficulty in sourcing raw material at origin or shipping it out of origin due to freight booking issues both influencing the current market scenario. Equally a serious exorbitant price must be paid whatever origin market you wish to participate or take a bet on. 

 © Royal Golden 2021. All Rights Reserved. 

 

Shortage of raw materials and Corona consequences affect spice industry

28 September 2021

(Bonn, 22 September 2021) The significant increases in raw material prices as well as additional costs for energy, packaging and logistics are placing a heavy burden on members of the German spice industry.

"Supply bottlenecks, increased demand in the countries of origin and additionally problematic weather conditions in Southern and Eastern Europe are aggravating the harvests for 2021 and causing distress for the spice industry," says Dr Markus Weck, Secretary General of the German Spice Industry Association, describing the situation of its members.

Raw materials are currently in short supply in many areas of the manufacturing industry - the German spice industry is also being affected. The reasons for this development are numerous and partly a direct consequence of the worldwide Corona pandemic: a lack of harvest workers in the countries of origin, an overall slowdown in production and port closures due to lockdowns worldwide are causing crop failures and shortages. Extreme weather conditions such as heavy rain in Southern Europe or enormous drought and forest fires in Eastern Europe exacerbate these failures.

The spice industry is particularly dependent on imports: Distortions in freight and logistics have a direct impact on the spice trade. The consequences, such as the lack of availability of shipping containers, are omnipresent and lead to drastic cost increases. To give an example: The pure freight costs for a container from China are around 900 percent higher than the freight costs as they were before the pandemic. This has an immediate impact on the import of classic spices such as pepper, paprika, ginger, nutmeg, cinnamon, onions, cumin and turmeric. "Our members do not expect the situation in the freight sector to ease until the second half of 2022 at the earliest. Until then, the situation will remain extremely tense both for classic spices and for the purchase of many other products such as mustard seed or Mediterranean herbs," reports Weck.

In this difficult initial situation, companies in the spice processing industry are additionally burdened by other factors. One such factor is the development of energy costs, especially in the form of the CO2 pricing. Since January 2021, the price per ton of carbon dioxide has been 25 Euros - and this is set to double by 2025. The situation is similar for the costs of packaging materials. Plastics, composites and cardboard packaging in particular cost significantly more than in previous years; surcharges of 30 to 40 percent are not uncommon. For packaging materials such as steel and sheet metal, the costs have even almost doubled in many places

RGT Pepper Market Report Week 39/ 2021

 Vietnam – market remains steady entire week with raw material in firm standing full straight week at level 81,000  VND/kg for raw material trading with local dealers allegedly pushing up the prices even higher.
Thus, opening market today, raw material went up at level VND-81,500 VND/ kg. 

Eyeing in Vietnam New Crop 2022.
An outright bullish fourth quarter is expected to persist and the focus now of  many is securing position for next year crop. However, offers for new crop from sellers remains elusive. Reportedly, majority of last year and this year’s crop are still in the hands of farmers and traders being offered at a premium price. Foreseeable lesser crop and harvest delay brought by extreme weather condition are also anticipated, more later than this year’s crop of which could add up to market pressure. 

With the current scenario both are siding concluding that market will go higher by next year in retrospect of  Indonesia’s crop outlook for 2021-2022. 

This is now more logical as looking back at this year’s market new crop opening prices how majority assumed high pressure on side of farmers/shippers. But then quite the opposite, market went to a new record high direction that overwhelmed almost everyone.

Indonesia – relatively stable this week due to less volume available to trade in. Indicative pricing reportedly at range of $4200 FOB seeing no pressure from seller’s side.

Brazil – In active mode entire week itself in contrast with other origins, stock position is at a positive note due to  present new crop position with trading price supported at level $3800 FOB having seen a noticeable good  demands from South Asia, Vietnam, and specially Europe of which seen buying in splurge trying to get their orders as prompt as possible before MAPA ordinance starts.

Strong demand last week and Vietnam’s current position are both likely to influence Brazil pricing this week.

MAPA Brasilia Ordinance 396, published on September 21, 2021, the ordinance aside from pepper will also cover other products from Brazil origin such as nuts, grapes, mangoes, etc. beginning November 01, 2021. As initially reported, new ordinance main objective is to control and monitor residues and contaminants of export products from Brazil to Europe countries that will provide a corresponding sanction to exporters reaching a certain maximum number of alert notifications. Though the provision is said to be made legal and binding, execution on how to  implement remains to be seen in coming weeks.

Heading to the last quarter of the year and market is looking as though it will be more stronger in the near  term with an expected flagged gain in pricing levels than what we are seeing now. That leaves our last thread of hope for ocean freight cost to subsides in atleast a supportive level to sustain inflating raw material prices going forward.

© Royal Golden 2021. All Rights Reserved.

RGT Pepper Market Report Week 38

Vietnam Pepper Market continue to hold its staying power with raw material being seen stable at level 81000 VND/kg 5-day straight, went into a break during weekend then bouncing back strong opening today. 

As usual, reported shortage in raw material offers seems to generate significant influence in the current market standing exhibiting a bullish trend as we head to the remainder of the year with September month averaging to 80,025 VND/kg that is higher of about 2.4% compared to last month trading average. Despite reported reluctancy of some shippers last week to cover their requirements, few big exporters were seen actively bidding and buying out. 

 Indonesia with harvest season in full swing, sellers offer nowadays are seen at level $4225 FOB with an interest to sell their stock position. Though noted with a minimal decline of about 1.17% in pricing today, it is still quite high compared to other origins not to mention the freight cost that are still very high. 

MAPA Brasilia Regulation Update. To this date the new ordinance that was supposedly to be imposed have not yet been published so far. As expected, Pepper Producer Association in Brazil and some major entities joined forced requesting to put off further proceedings of either indefinitely delaying it for at least a year allotting enough adjustment time for Brazil Exporters in strategizing their action plan. Furthermore, raising their main concern that sudden implementation could greatly impact all active unshipped booked contracts in Europe with Brazil Export that is currently hugely affected with current shipping crisis.  Shipping hurdles increase as September month availability remains overbooked stirring major concern worldwide. 

Top Carriers Plan to Freeze Spot Rates. Following CMA CGM announcement to put a freeze in increasing spot rates, last week Hapag Lloyd and Maersk joined the pledged. However, clear information of how it will be forced remains to be seen in following months as up to this point pressure on capacity remains very tight that is expected to worsen further in upcoming Golden Week Blank Sailing. 

What to Expect with Chinese Golden Week? The Golden Week in China begins by around first week of October. This event is well-known both in in logistics and supply chain every year as it unavoidably affects all shipments concern. If September bookings is pictured out as a bottleneck nowadays in Asia-Pacific, this year’s Golden Week will be catastrophic adding up to the number of consequences in ocean freight and inland transportation across multiple trades and regions. According to some experts most affected regions pre and post Chinese Golden Week this year will be: 1) North America, 2) Asia Pacific & 3) Northern Europe. 

General Note: Nowadays, the high pepper prices and extremely high freight cost are making buyers wait and suppliers delay shipments, hence, causing supply gap to widen further which may result a sudden heavy demand at some point in time between current and new crop.

Rising cost of raw materials is becoming it more harder to secure offer and fixed commodity price from sellers. Grasping the implication that we are now heading to the last quarter of the year; market positioning appears to be headstrong and will be difficult to bring down now despite the ongoing freight crisis.

© Royal Golden 2021. All Rights Reserved.