Market Reports

Mel's Market Report April 2019

CURRENCY: Sterling strengthened despite Theresa May's failed Brexit deal. The deal was defeated by a margin of 230 votes which is the largest defeat suffered by any UK government in history. The market is hoping for a softer Brexit or no Brexit at all, either of these will be viewed as positive options for the UK and its currency.

DAIRY: Butter prices were expected to ease a little post-Christmas before slowly firming again. This did not happen and as large buyers moved back into the market after sitting on the fence the price took an unexpected upturn. Once stocks were replenished, the quiet trade and improved Sterling v Euro rate has created an easing in levels as we headed through March. Brexit result, winter and spring conditions will largely determine the path of prices in Q2 of 2019.

SUGAR: UK farmers are entering the final weeks of the 2018/19 beet harvest. Weather has again played a major factor in the crop which has declined in comparison to the 2017/18 crop.  Yields have dropped considerably and production will be much less than the 1.37 million tonnes of sugar achieved last year. The new campaign will commence again in October 19 and the expectation of pricing will likely be at higher levels for many who took a long term position at the end of last year.

FLOUR: Wheat from France and the US was the cheapest at the last week’s Egypt tender with Russian too expensive to compete, showing that demand is now switching out of the Black Sea into the US and EU, but it was the receding prospect of a trade deal between China and the US which sent the US markets lower last week. The recent USDA report was perceived as mildly bullish giving higher US ending stocks.

OILS AND FATS: PALM - The palm oil market was the strongest member of the veg oil complex during March. As a result of recent falls and palm being competitive against other products this warranted the move into slightly higher costs. Although stocks remain at record levels and is not likely to change in the near future due to better than expected production figures and weak export demand.

RAPESEED - The demand on the nearby positions remains strong especially from the biodiesel market and the outlook for the 19/20 crop still looks rather bleak. However, there was a slight improvement on this front as better acreage in the UK and Eastern countries moved slightly higher to aid the very tight supply.  An unexpected dip in the market early March presented an opportunity to take some cover in order to provide stability over the coming months.

DRIED FRUIT: Prices for Turkish Vine Fruit have been climbing by approximately 45% from September 2018. As mentioned in previous updates, this drastic price increase has been caused by currency volatility, political unrest, raw material quality, lower availability in other origins and a smaller 2018/19 crop. Now the factors to watch are the development of the new crop which so far looks promising and has benefited from some good weather.  April will provide further certainty on an indicative volume for new crop after the potential frost period has passed.