Mel's Market Report April 2018
BUTTER: Prices still remain difficult to predict and the unexpected surge upwards due to high demand from traders on the continent which has now eased back as we head through March with some marginal reductions. It remains to be seen how much the delay in turning out cows onto pasture, due to the snow delivered by “The Beast from the East”, has on the spring flush. It will certainly set back grass growth, but whether it will have significant effect on yields, given that most cows are still housed and feed is still good value? April should give us a clearer picture of things to come.
FLOUR: With the new contract position due 1st April all eyes look to the Wheat Market and how it has been performing. In general, we are seeing sideways movement on pricing and anticipate a somewhat similar forward position being taken with a minor increase based on the current market turn. UK supply and demand estimates suggest domestic supplies are slightly less tight than original estimates. Weather conditions since January however has put pressure on the feed wheat pricing with levels now closing at their highest value since Nov 17. Grade 3 wheats which provide the softer flours are still carrying a premium due to availability so the likes of Plain and Self Raising Flour will be most affected.
SUGAR: Raw World Sugar prices remain weak due to the overall global surplus of product. News from areas such as Thailand and India, whose output has increased by 42% in the last 5 months, continue to weigh heavily on futures markets as the need to sell off product in this season shows no sign of easing. Brazil has slowed down on sugar exports due to the lower return they are getting on Sugar Sales, but this has failed to inspire a market based on the overall global position of large stocks. There are concerns in the UK of what the long-term effect will be following the Brexit deal.
OILS & FATS: The oil market has been fairly stable during February but as we enter March there are more favourable signs appearing with the USDA report showing positive stock levels and the news out of the Malaysian Palm conference showing good stock levels that could further improve as we enter higher yielding months.
DRIED FRUIT: Dried vine fruit prices have hit the news recently with reports of shortages due to the much lower crops globally than in previous years. This has been slightly exaggerated by the media and we are not about to run out of supply, well not just yet anyway. As we have stated in previous reports this year is going to prove very difficult, especially as it progresses, and supply gets tighter. The primary drivers are the shortages of supply in the USA and Greece.
The key in Greece is that we have had two short crops, so there was no carry in from the 2016 season and with a reduced 2017 crop there was just not enough to cover typical usage. Greece is now sold out until new crop as there is nothing left to offer. The USA had major issues during the harvest due to heavy rain during the drying period and it is estimated that they lost around 70,000mt because of this. Due to this strong demand the quantity of raw material availability continues to tighten and prices for Turkish sultanas and Raisins have increased as they are the only key supplier left with any volume to offer.
EGG: The egg market has settled generally as far as liquid egg is concerned. Raw materials for colony are freely available although there is the usual increase in demand ahead of Easter. It is still anticipated that colony prices will continue to drop post Easter but free range egg is tightening and there may even be a slight increase in liquid prices. This is because Free Range demand is soaring and the dis-organisation of the free range farming community cannot react fast enough.