MARKETPULSE April / May 2019 It’s all about vegetables at this time of year as the next few months will see all our winter warmers start to flourish. Despite this, the extreme weather changes in Northern Queensland, combined with the drought in the Eastern states has resulted in record prices and markets being short across most categories of fruit and vegetables. Due to the severe weather and cyclone in Queensland, the banana peak season did not occur. Banana prices have skyrocketed as a result and are expected to remain high. In the meat sector, beef supply is high due to drought conditions causing huge liquidation of stock. It is anticipated that supply will be at a 5 or 10 year low after the predicted rainfall over the next few months. This will have a huge effect on the price and availability of all grades of beef. As for lamb, while the prices have not moved significantly, lamb yardings increased across most states during the last few weeks of March. The greatest concern for lamb is not the ability of Australia’s producers to re-establish their breeding flocks, but on the weather. The pork market is experiencing unprecedented grain costs. Feed costs are expected to have no relief until November. The poultry market is currently stable. However, it is difficult to ascertain the pricing movements due to the drought and flood conditions that have occurred recently. In the seafood sector, as predicted, Norwegian Atlantic salmon prices have increased sharply above last year as Easter approaches. As a result of the recent near-record prices, demand has dropped and a softening in prices mirroring last year’s trend may occur. Local wild caught barramundi has seen extreme weather conditions at season opening, which delayed the start of the season by two weeks. The second fishing run saw improved conditions, which provided an outlook of the type of yield to expect this season. Flathead season is now winding down with smaller catches expected until October. Total global prawn production is predicted to remain strong this year. Normally this would place downwind pressure on prices. The soft prices of prawns in some cases have fallen below the production cost, resulting in some prawn producers holding off restocking until prices improve. This has not caused an immediate increase in prices, however, it could result in price volatility over the coming months.
FRESH FRUIT Apples are now in season and most fruit is being picked and supplied fresh. It is currently Pink Lady picking season as most of the Galas and Fujis have been picked. By end of April all picking should be finished and apples will come from storage for the
rest of the year. New season pears have now begun. Banana prices have skyrocketed and are remaining high. Cyclones and extreme weather meant banana peak season did not occur. Australian grapes are now available and prices have dropped. Good supply and quality is anticipated for April and May. Kiwi
MARKETPULSE April / May 2019 fruits are now scarce and are being sourced from Italy. Shortages in all citrus will start to ease with the record high prices. Shortages of lemons and oranges are being topped up with supply from the United States and Egypt. Stone fruits including plums, peaches and nectarines have had a great run and will slowly drop off in supply during April. All melons including long and seedless honey dew are now flowing in from Northern Queensland and New South Wales with great quality and supply. Paw paw, papaya, pineapples and exotics, such as lychees and dragon fruit, will all be available shortly.
VEGETABLES Avocadoes are now the Shepard variety and will be for the next two months. Shepard avocados have a greener smooth skin and do not turn black when ripe unlike the Hass variety. They have a more buttery flesh and are abundant this time of year. Tomatoes are another casualty of the extreme weather with supply being affected. In March there were record prices for tomatoes which should start to decrease in April. Asparagus are in short supply but there is
some local supply. All beans, brussel sprouts, broccoli, cauliflower, capsicum, cabbage carrots and celery have been in short supply but that is predicted to change in April and they will be good quality and supply. Cucumbers and lettuce may be effected by the extreme weather and will continue to be short as we rely on Queensland supply. Australian garlic will now be available, although it is quite expensive. Potatoes, onions and eggplants are all consistent. Celery and cauliflower has seen some recent shortages and record prices which should drop in the coming weeks. There is a good supply of buttons, flats and all exotic mushrooms and pricing is inexpensive.
HERBS AND LOOSE LEAVES Herbs are mostly back online as the warmer weather allows for better quality leaves to thrive. All loose leaf spinach, rocket and mesclun are stable. Although, these are the most susceptible to extreme temperatures so if extreme heat occurs they will be the first to be effected.
MEAT Market developments according to the Australian Lamb Co., Bindaree Beef, BE Campbell, Finco Trading, and Wilpak Meats:
BEEF • Beef market supply is high due to drought conditions causing a huge liquidation of stock • The Eastern Coast kill has been above 150,000 head for the past few weeks, which is the highest in years • Pricing on higher end product, such as grain fed, is currently stable with lower end beef, ‘A’, ‘C’ and ‘PR/S’ very cheap but poor quality
• With the pending large rainfall, beef supply will become very tight • There are predictions that supply will be at a 5 or 10 year low after the rainfall. This will have a huge effect on the price and availability of all grades of beef
MARKETPULSE April / May 2019 LAMB • Lamb exports in February rose to just over 25,000 tonnes shipped weight, an increase of 14% yearon-year • The United States drove increased demand in February which is typical for this time of year • The United States remains Australia’s largest lamb market, recording a 37% year-on-year increase to 7,000 tonnes shipped weight • The National Trade Lamb Indicator (18–22kg cwt) increased 5¢ week-on-week to 646¢ per kg cwt • Nationally, trade weight lambs are trading at a 14¢ premium to the heavy weight category (22–30kg cwt) through saleyards, while there is less competition for re-stocker lambs (0-18kg cwt) which were trading at 624¢/kg cwt) in March • While prices have not moved significantly, lamb yardings increased across most states at the end of March • The greatest concern for lamb is not the ability of Australia’s producers to re-establish their breeding flocks, but on the weather • Unfortunately, present challenges including rapidly declining feedstock and water shortages cannot be alleviated with one good fall of rain. It will take a sustained period of significantly improved conditions • While the potential timing of the autumn break is always cause for much speculation, interest this year has peaked due to the harshness of the season. The Bureau of Meteorology’s three month outlook (April – June) shows no strong indication of either wetter or drier conditions for the majority of Australia
PORK • Extreme summer weather conditions are slowing summer pig production productivity • There is unprecedented high grain costs. Feed costs are expected to have no relief until November • All producers are feeling financial pressure due to the extreme cost of pig production • Market pig prices remained firm in February and are predicted to lift if supply shortages begin to appear from March onwards • Livestock forecasted slaughter volumes for 2019 are predicted to be down on last year’s actuals based on 2018 industry-wide sow slaughter volumes and producer based forecast POULTRY • The poultry market is currently stable, although it is difficult to ascertain the pricing movements due to the drought and flood conditions that have occurred recently • Poultry producers have indicated there may be an increase in the cost of boning birds, which will result in price movements
MARKETPULSE April / May 2019
SEAFOOD SALMON Norwegian Atlantic salmon As predicted, salmon prices have increased sharply above last year as Easter approaches, following the usual annual pricing trend. As a result of the recent near-record prices, demand has dropped and a softening in prices mirroring last yearâ€™s trend may occur. It is expected that continued high prices will remain over the coming weeks.
two may see the fishery return to consistently good numbers. Expected monsoonal conditions in the lead up to Easter may impact numbers temporarily. New season pricing is expected to be moderate, but it is difficult to forecast at present.
Imported The 200/300 size continues to be the predominant size available, while raw material to process the 100/200 size remains limited. Weather conditions in the fishery are stable, which is contributing to steady numbers in most sizes. Raw material for portions has improved and supply is expected to be good for the year. Pricing is expected to remain steady until at least the middle of Q2. It is anticipated that raw material for large sizes will be available around September, leading to a possible softening in price.
Source: Statistics Norway (SSB) Export prices of fresh or chilled salmon from Norway, average price per kilo per week. Data collected from the Norwegian Customs declaration system.
BARRAMUNDI Local wild caught Wild weather conditions at season opening delayed the start of season for some anglers by two weeks. Anglers were battling the run off after the wild weather, with swollen rivers and debris from upstream making fishing untenable. The second fishing run saw improved conditions, which provided an idea of the type of yield to expect this season. Numbers were good from the second fishing run and are expected to continue.
BASA In February, many basa exporters reported a month-on-month fall in export volumes. As a result, softening prices from the record highs experienced last year will start to occur. Total global production is expected to grow in 2019. More stable production output is also anticipated, making shortages resulting in the record high prices of 2018 less likely.
Stocks have been slowly on the incline in the past two years and it is anticipated that another season or
FLATHEAD Flathead season is now winding down with smaller catches expected until October. Flathead size continues to be small to medium with the large 6/8 representing only 10% of the total catch. Prices are firming due to fluctuating exchange rates, along with processing and raw material increases.
MARKETPULSE April / May 2019 SCALLOPS Roe off Canadian – frozen at sea
shell-stock. Latest reports from Peru have announced that the areas where scallops are being farmed have suffered a ‘Red Tide’ algal bloom. This has severely depleted the oxygen levels and reduced the raw material stock available for processing. There are currently a few offers of any scallops from Peru and numerous farms are in the same situation.
The 2019 Canadian scallop quota will be slightly higher than 2018 with announcements in the United States suggesting that supply should be similar to 2018, resulting in the overall supply of scallops from North America being a similar amount.
Landings in Canada have been quite strong in the first few months and the sizes are much larger than normally seen at this time of year. This means there will be a large production of 10/20’s, with limited volumes of 20/30’s and virtually no production of smaller sizes. If this continues when the United States fishery begins its new season opening on April 1, there could be a closing of the gap in pricing of 10/20 and 20/30. 20/30 prices could trade for higher levels than 10/20’s in the next couple of months.
Roe on Japan New season stock is available and there are few offers for this stock due to sales of shell stock to China. Processing costs in Japan are a lot higher than China. Main offers ex Japan are for sashimi grade roe-off at higher levels. Since the Peru news of Red Tide, the prices of the shell stock have risen. China Reasonable stocks are available, mainly of Japanese frozen in shell. Price variations are being seen depending on the source and area. Prices have firmed since the Peru issue but sales have picked up, though, lower prices are not easily negotiated. Peru Prices softened earlier in the year since the European summer season ended with sales to European Union almost non-existent. Orders placed have been very slow in being shipped due to the slow growth of
Local scallops remain plentiful. The lower prices from the end of last season have firmed slightly, though, with previous season stock still in the market, pricing is expected to remain at the current level until these stocks are run down.
CRAB Local spanner Catches of local spanner crab have improved in recent weeks, despite a near miss from a recent cyclone which produced adverse weather for fishing while in the vicinity. The season is progressing well with good catches. However, with the substantial quota cuts, fishers are approaching their quota limits. As a result, further shortages and price increases are expected into 2019 until the quota restrictions are lifted. Imported soft shell Supply of soft shell crab remains limited in the larger sizes. Limited quantities of the smaller sizes continue to be on offer, although are most likely too small for the Australian market. As a result, prices continue to be high and are expected to remain so until the supply situation improves. CANADIAN LOBSTER Lobster fishing in Canada continues to be poor. This, along with minimal landings and continued high demand in the Chinese market for live lobster, has meant there is little remaining inventory to process. In turn, this translates to no raw material for tails, meat and splits. Shore prices remain very high as a result. It is unknown at this stage how this will impact
MARKETPULSE April / May 2019 the fishery in the Northern Spring in terms of pricing and supply.
PRAWNS Total global prawn production is predicted to remain strong in 2019. Normally this would place downwind pressure on prices. The soft prices of prawns in some cases have fallen below the production cost, resulting in some prawn producers holding off restocking until prices improve. This has not caused an immediate increase in prices, but could result in price volatility over the coming months. Prices have remained stable for the first quarter of 2019. Local East Coast tigers The East Coast tiger season has just started and catches are mainly smaller grades and demand is average for this time of year heading into Easter. It is hoped that catches will improve towards larger grades in coming months.
NEW ZEALAND FISH SUPPLY Hoki Small skinless 4/6 to medium 6/8oz size continues to be limited. As a result, pricing continues to increase. Skin on in the same sizes remains in good supply while 8/12 and larger are still being caught in very small quantities, with high demand out of the European Union market, particularly on the 8/12oz size. Pricing remains firm, with further price increases expected over the coming months. The three main owners of quota in New Zealand have voluntarily agreed to reduce their catch plans by 20,000t of the 160,000t annual quota. It is unclear the impact this will have on pricing and availability until after the commencement of the season in May.
Smooth dory Quota restrictions in New Zealand continue to impact availability of this species which remains limited, with prices firming.
Orange roughy There is good availability of excellent quality local orange roughy, caught and processed in Australia which is very competitively priced. Orange roughy from New Zealand remains short in supply and prices have firmed accordingly.
Current catches are yielding mainly 16/20 and 21/30 sizes with the larger grades being caught as a small percentage at this stage of the season. Prices are firm as a result and will remain until catches improve.
BUGS Local Queensland Catches have been showing signs of slowing down since February in the Southern catchment, with prices remaining firm. Imported Slipper lobster products remain in limited supply with the majority being offered in the small to medium size range. It is hoped that supply will increase heading into the Northern summer. In most cases, prices remain very high and will continue until supply across the range of sizes improves.
NEW ZEALAND MUSSELS Harvesting is continuing in the New Zealand fishery, with volumes around normal for this time of year. Supply and pricing is expected to remain stable over the next 3 months to the end of June as the season progresses. NEW ZEALAND OYSTERS Season in New Zealand has started off well despite the higher than normal water temperature and summer rainfall. More oysters than this time last year are expected to be harvested and processed once the
MARKETPULSE April / May 2019 water temperatures are cool between March and May. The size mix of the early season product is tending to be at the smaller end of the scale, with 75-80% being in the bistro and standard sizes. However, more medium sizes are starting to come through. International demand continues to rise with Russia and China at least 20% up on the corresponding period last year. As a result, there will be little excess stock, so updated forecasting will be required to ensure a secure supply.
SQUID Argentina –illex Despite a promising start to the season, catches have tailed off with illex fishing off the Falkland zone (United Kingdom economic zone) yielding about 50% of last year’s landings.
New Zealand arrow Prices are extremely high with prices of the whole large squid higher than and more comparable to the tube prices from China who use Japan common squid, Bartrami and Gigas. Japan common (Todarodes) Large raw material remains limited with the smaller sizes being used up for European Union orders. This has resulted in an acute shortage of small grade Japan common squid. New season encompasses MayJune and it is hoped that further landings will improve this situation. Ommastrephes bartrami Ommastrephes bartrami catches remain steady over the two separate fishing seasons and prices are so far quite stable.
WHEAT MARKET DEVELOPMENTS Market developments according to Mauri ANZ:
DOMESTIC: • The climate outlooks released in March were all adverse for eastern Australian cropping belts. Most of the adverse forecasts stem form modelled developments in the Indian Ocean, not from the elevated El Nino risk status which grabbed most of the headlines though • The fall in the ASX Jan 20 for the week was probably more related to spread trading, rather than an outright bearish view
tonne. ASX East Coast May 19 eased $7 AUD per tonne to $378 AUD and January 20 is down $16 AUD per tonne to $320 per tonne. The AUD was unchanged against the USD at to 0.708 • Prices continued to firm with fixation on short term United States supply issues as wet weather is making transportation difficult. United States export sales were poor during March as was global trade
GLOBAL: • FOB PNW United States Hard wheat firmed $3 USD per tonne and French soft wheat is $1 USD per tonne. United States Futures increased $1 USD per
• Dry conditions in Australia and more El Nino chatter made international wheat market news • Russian wheat prices continue to be discounted in Q3-4 in comparison to current prices
MARKETPULSE April / May 2019
POTATO OUTLOOK Market developments according to the ANZ Agriculture Potato Crop Update: • Harvest started on time in January and February at all sites and factories are running to capacity • Hot dry weather across Australia and New Zealand during February has been ideal for sizing potato tubers and finishing crops to maturity. The only area struggling with water for irrigation to finish crops has been some farmers with limited water reserves in the Ballarat region. This has only minimal impact on yield as there has not been forecasts for any crop volume shortfalls and there is an overall surplus forecast for the Ballarat potato crop • Potato storage at all ANZ sites started circa 20th March with ideal weather conditions and all sites are storing the innovator crop • Although conditions for harvesting the crops are dry with low soil moisture levels, crops have been irrigated where required to reduce bruising of potatoes
• Potato storage intake of raw is running ahead of plan YTD with Ballarat at 34,000 tonne, Smithton at 14,000 tonne and Timaru at 34,000 tonne in storage at March month end. These are all innovator potatoes and the Russet Burbank storage in Timaru New Zealand is forecast to start from approximately the 5th April at the conclusion of the innovator storage • Potato quality overall is very good with low defects levels at all sites • Timaru defects are lower than they have been in the past two seasons with an average defect level YTD at 3.5% total deductions • Seed potato harvest is now also underway in all regions and volumes of seed for the next season’s commercial crop (2020) are forecast above plan with some surplus seed volume
MARKETPULSE April / May 2019
DAIRY Market developments according to Fonterra’s Global Dairy Intelligence Group
IMPORTS AND EXPORTS: New Zealand • Total New Zealand dairy exports increased by 10%, or 40,000 MT, in December compared to the same period last year • Exports hit a record level of 449,000 MT, the highest volume recorded. This was primarily driven by WMP, up 26,000 MT • Fluid products, AMF and infant formula were up a combined 18,000 MT and butter declined 8,000 MT • Exports for the 12 months to December were up 2%, or 54,000 MT, on the previous comparable period, this was driven by fluid products, WMP, infant formula and AMF up a combined 120,000 MT. This was offset by declines in SMP, cheese and cultured products down a combined 67,000 MT
China • China dairy import volumes increased 17%, or 34,000 MT in December compared to the same period last year • This was driven by increases across a broad range of products, particularly WMP, SMP, and fluid products but offset by small declines in whey powder, butter and infant formula • December WMP exports from New Zealand to China hit a record level of 150,000 MT • Imports for the 12 months to December were up 8%, or 213,000 MT, compared to the same period last year • Strong demand out of China continued across all key categories in particular, WMP and SMP which are up a combined 82,000 MT
Australia • Australian dairy exports increased 3%, or 2,000 MT, in December compared to the same period last year • Infant formula and whey powder were up a combined 5,000 MT. This was offset by a decline in WMP of 2,000 MT • Exports for the 12 months to December were up 5%, or 37,000 MT, on the previous comparable period • Infant formula, fluid milk and whey powder make up most of the growth in Australian exports, up a combined 34,000 MT
Middle East and Africa • Middle East and Africa dairy import volumes decreased 6% or 20,000 MT in November compared to the same period last year • Small growth in infant formula and cultured products was offset by declines in most other product categories, totalling 25,000 MT • Imports for the 12 months to November were down 5%, or 212,000 MT, compared to the same period the previous year • The reduction was driven by fluid and fresh dairy and cheese, down a combined 229,000 MT. This was offset by a small increase in SMP
MARKETPULSE April / May 2019 Pricing • February prices for butter remain mixed. CME Spot remains flat with USD 4,996/MT, whilst Dutch Dairy Board drops -2.3% reporting USD 4,830/MT • GDT reports a 6.8% increase to USD 4,467/MT, as well as USDA Oceania jumping 5.8% to USD 4,475/ MT • Futures and forecasts over the next 6 months report average prices ranging from USD 4,208/ MT to USD 5,099/MT
• It appears the tables have turned for cheese prices as there was a second month of growth across the board in February. With GDT reporting a 4.9% growth to USD 3,641/MT and CME Spot saw a 10.7% increase to USD 3,437/MT. European Union Commission reported a 2.5% uplift to USD 3,630/ MT and USDA Oceania saw a slight 1.7% increase to USD 3,550/MT • Futures and forecasts for March to August 2019 are pricing similar to the current market. With average prices ranging from USD 3,520/MT to USD 3,600/MT
REFERENCES Anchor Food Professionals. (2019). Professional Prespective. The latest insites in global dairy markets , 1-13. High sheep slaughter to cut into lamb supply (2019, March 14). Retrieved from MLA Meat & Livestock Australia: https://www.mla.com.au/prices-markets/market-news/high-sheep-slaughter-to-cut-into-lamb-supply/# Jackson, J. (2019). McCain Foods ANZ Agriculture Potato Crop Update. 1. Statistics Norway (SSB) Export prices of fresh or chilled salmon from Norway, average price per kilo per week. Data collected from the Norwegian Customs declaration system. World Potato Markets. (2019). Agri Markets Limited, 1-26. Yardings spike fails to budge lamb prices (2019, March 21). Retrieved from MLA Meat & Livestock Australia: https://www.mla.com.au/prices-markets/market-news/yardings-spike-fails-to-budge-lamb-prices/
All information provided is correct at time of publication and is subject to change due to unpredictable circumstances. Adverse weather conditions, currency fluctuations and other market influences which are difficult to predict accurately, that can impact pricing and supply. E&O.E
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