Mel's Market Report June 2018
DAIRY: There is still unpredictability in butter prices as we headed through May. Cream looked set to make a further upward move as the inclement weather and abundance of rain in past months still impacted on production.
SMP prices also adjusted upwards with shortages on block cheddars as everyone was playing catch up due to the Spring delay and the first flush. We maintain some stability in butter pricing as we head into June and monitor the market as we await a most welcome downward adjustment!
FLOUR: The second quarter of 2018 sees world prices generally trading sideways in the main as this market looks for some direction. There is limited new news around that is not already factored in to the futures pricing and which wasn’t already understood in Q1. In the US we have now seen rainfall which seems to have addressed the concerns in dryness. Although this had a little effect on the market but with no real fundamental issues analysts are keeping their eyes are on USDA reports and the prospective planting data it provides for fresh news. In the UK demand for product has seen a slightly more optimistic market position whilst Grade 3 Wheat stocks remain tight which continue to put pressure on the softer flower variants such as Plain and Self Raising Flour.
SUGAR: The already ample world stock position on Sugar continues to be supplemented by reports of high yields and availability heaping more pressure on producers to trade product at anything like break-even levels. With trading demand down and availability of product high, world pricing is under major pressure to hold its levels. Following the removal of the trading tariffs EU producers took the opportunity to increase their output which was boosted by good growing yields. This has resulted in heavy EU exports onto what is already a market in surplus and the outlook can only be one of falling prices as we head towards another year’s harvest. The prospect of a high carryover is a certainty and producers will want to reduce this where possible and sell as much current season product to make way for 2018/19 crop.
DRIED FRUIT: Sultanas/Raisins. There has been much speculation as to what the 2018 Sultana/Raisins crop will be from Turkey this year. The previous 2 years have produced crops of over 320,000mt and of good quality, placing Turkey in the driving seat on availability and price. We have seen exports this year way ahead of the previous year due to the issues in Greece and the USA, so much so, it is expected that there will very little or no carry over.
Early reports on the 2018 crop development have indicated that although it will be a good crop it will not reach the levels of the previous two years, Turkey has had a very dry unusually mild winter and the growers have already started to irrigate the vineyards due to drier soil conditions. On Inspection of the vineyards it is evident in some regions that the cluster count is below that of last year, so we could expect to see lower yields. Also with recent hail storms in some regions the damage to the newly formed berries has been significant.
EGG: May offered cost reductions across the range.
OILS/FATS: The market remains relatively stable, we have seen a marginal upward movement on rapeseed oil but this has been anticipated as a short term blip and will level out over the coming weeks.