Mel's Market Report February 2020
We are now the other side of the pre-Christmas cream increase. The fall in cream value combined with some better exchange rates around December put butter pricing under pressure as we see further reductions now heading into February. SMP prices continue to increase with the ongoing demand in the world market. Cheese prices remain stable with little change noted.
OILS AND FATS
Rapeseed - Oil prices traded within a relatively narrow band in the latter part of 2019, with prices relatively unchanged despite ongoing concerns over tight supplies and limited import opportunities. In UK terms, a strengthening in Sterling against the Euro masked the current supply and demand issues which will continue throughout this year.
Palm - Oil prices continue to rise supported by the expectations of a larger than normal fall in the seasonal production downturn and strong demand from biodiesel. Malaysian production peaked in September, one month earlier than “normal” and the indications that the seasonal decline in November/December would be great than expected appears to have been realised.
Currants – New crop came in around 22,000 MT, which is considered good by Greece. In theory this should be more than enough to cover the export demand. At the start of the season some subsidies were introduced to encourage farmers not to hold fruit back from the market in order to drive prices higher later in the season. Other packers were attempting to introduce a stable ‘minimum’ field price to pay to farmers in order to bring stability back to the market. The question now is has this all worked? We have been able to cover the early part of 2020 at a more favourable level but whether the reductions continue remains to be seen!
Sultanas - Everything in Turkey at the moment would suggest downward pressure is going to be applied to the pricing of raw material in the coming months. We have already seen a weakening in material prices in 2020. Farmers are still asking for higher levels but with the lack of interest are accepting lower. The hardest thing to predict is where this pricing level will go and where it will settle. Traditionally we see prices fairly firm during the beginning of each year as the fear surrounding frost and storm damage during the crucial growing period in March and April creates caution. We have a bought position through us through the Easter period which offers a discount on our 2019 price list.
Our contract cover takes us to the end of March. Shorter cover was based on the speculation that Q2 could offer downward movement and also suppliers uncertainty last year over Brexit!