Market Trend

02.05.2017

MARKET TREND

GARLIC 

After a short period of slight price decrease, we are now facing an upward trend with speculative bets for new crop expected to come in the market for end may. Since last year, the price for garlic has consistently remained high - for a time it even reached the critical point

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At present price of fresh garlic stored in cold warehouse gets up to the highest level in history. It is USD3.19/KG. At the same time of last year, it was USD1.45/KG. Even in March and the beginning of April, it was around USD2.17/KG.

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The price of fresh garlic is increasing crazily. Firstly, the market is lack of materials. Secondly, the demand is very big. Thirdly, the big investors control it. Without enough profit they refuse to sell it out.

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In the end of Feb and the beginning of March, the fresh garlic from south of China was available in the market. However, its influence on the whole market is very limited. The price of dehydrated garlic didn’t fall down as what most of the people expected when it was available.

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Early-garlic will be available in the end of may. It is estimated that price will be around USD0.87/KG. While at the same time of last year it was USD0.52/KG. (Here the garlic refers to the freshly harvested crop)

GARLIC 

Therefore in the beginning of the new season, dehydrated garlic products will be still expensive. It seems no reason for its price to fall down. The earliest shipment for new crop will be in end June.

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Regarding the future tendency of the new season, it depends on the situation when a large quantity of fresh garlic is available as well as how much hot money will go into this market. Currently, the markets and stores for new garlic in Yunnan province and other regions have put their old stock in cold storerooms. The price for old garlic has remained high. Many people within the industry say that, although the market price for old garlic is still high, new garlic from the south has already hit the market where prices are rather low.

This has already made an impact, so the current high prices are only a temporary phenomenon. A price reduction is imperative.

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Statistical data on the cultivation area for garlic this year show that it has grown more than 20% compared to last year. For particular regions, it even increased by more than 30%. The high prices allow garlic farmers to get enormous profit, which substantially increases their enthusiasm to expand their plantations even more. Not only the main producing provinces of Shandong, Henan and Jiangsu have increased their cultivation area, the plantations in Yunnan province have also grown by approximately 30%. In some smaller regions, the expansion is even more obvious.

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Argentinian fresh garlic continues to be available. Rain and cold weather continues to slow the production of California Garlic. The harvest of the new crop has been pushed back to mid-June. California Peeled Garlic supplies are tight and are expected to continue as such.

SESAME ďƒ’

The natural sesame demand from China is not aggressive for now that is leading to more of a stable Indian hulled market, as factory able to buy sesame for pulling purposes other than the big natural demand. But we think once stocks get depleted in China, they will be buying again globally as they need around 800000MTS sesame import annually.

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In Africa, there are still stocks but in big hands of traders/stockiest, since they have made losses in the earlier trade of Oct/Nov 16 to China. At this moment they are not aggressive in selling which makes Indian prices most competitive for now. The large new crops are not before October that could bring down the market in any sense, and thus we believe either market can firm up quickly (or) play in this range depending on the intensity of trade in coming months. In general, these are quite comfortable levels in market and trade is good due to summer season demand & Ramadan demand from middle east countries.

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We expect slight increase up to 50-75mt per mt of the hulled sesame prices based on the depreciation of US Dollars, and on the fact that sesame summer crop is around 25,000 mt, of which 50% is black sesame seeds that cannot be used in making hulled.

ASCORBIC ACID C 

Since 2016, the price of vitamin C series products has increased monthly. Vitamin C factories are underfunded due to the low price in recent years, resulting in a strong desire to raise prices, Coal prices doubled.

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The government requested most of the chemical and pharmaceutical factories in Hebei Province stop production to reduce pollution, two major vitamin C plants are located in Hebei.

SOY PROTEIN ISOLATE 

The soybean price right now is on a high level and every Chinese ISP plants are suffering from the lack of Non-GMO soybean as well as the high production cost brought by the environment protection.

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The environment protection examination would be arranged in random this year in Shandong province which would also affect the production of all the soy protein plants here.

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Based on the current production cost, the current market prices would be stable in the following 2-3 months.

PEPPER 

Demand for pepper was rather slow during April, making pepper price decrease day by day. The price level is rather close to the bottom level set in early March. However, farmers tightly hold stock, selling activity was almost stopped in the middle of this week, then local market became firm in spite of low demand.

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It’s expected that market shall be pending till the middle of next week because there is 4 day weekend & holiday in Vietnam from 29th Apr till 2nd May.

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According to Vietnam customs, Vietnam exported about 75,000 tons of pepper in the first 4 months of the year.

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Limited activity is also taken place in India and Sri Lanka. At Kochi, pepper price dropped marginally by 1%.

TURMERIC 

NCDEX Turmeric prices fell on Wednesday as fresh selling is observed due to steady demand despite lower arrivals in the physical market. The trend is little up on lower arrivals and steady increase in demand at lower levels.

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The outlook is that turmeric may trade higher on the expectation of good demand in the physical market as prices have been lower this season. The supplies have been lower due to lower prices and there is some increase in demand which may keep the prices supported.

ONION 

The total fresh Indian onion production is considered to be only 510% lower than last year when India produced a bumper crop. As the carryover stocks from the summer (Rabi) crop are still large we expect that the supply from India will be more than sufficient to cover the world demand for the remainder of 2017. Prices for dehydrated white onion from India may have reached have bottomed out. The full harvest may expect still for a fortnight most, then the crops inflow starts decreasing.

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The next months the temperature will start to increase, which means stocks should be held in cold storage which will increase the cost.

CHILI 

Record red chili production has led to its prices falling to the lowest in over a decade, prompting the Andhra Pradesh government to announce a price support scheme. High output and low prices may trigger higher exports this season. As prices crash and with cold storages overflowing, the Andhra government has announced a price support scheme of Rs 15 kg for farmers, till June-end. They will get it for a maximum of 20 quintals (2,000 kg). High prices last year encouraged growers in Andhra, Telangana and Karnataka, the three main chili growing regions, to go for increased swing that resulted in a bumper crop.

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The all-India crop could be between 18 and 20 lakh tons, over 40% increase from the previous year. This is after the failure of 10-20% of the crop in Andhra Pradesh due to insufficient rains.

PAPRIKA 

Paprika pods from 2016 crop are in limited quantity, already stored in cold warehouse causing cost increase. The ASTA level reaches 200, with improved moisture level. For 2017 the rumors are that the cultivated area of paprika increased by 30%-now all depending and weather and pest infestation.

MILK ďƒ’

EU milk supply continues to rise, albeit at close to 2015 levels. German volumes are now just some 2.8% below last year while French volumes by the end of March were just 0.4% lower than the same time in 2016. With pre-Easter processing complete, commodity prices fell back to the lack of demand. With European butter stocks historically low and milk production expected to recover only gradually in the coming months, sellers are reluctant to negotiate and expecting prices to remain firm.

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EU production was 8.1% below the same month last year, although the product is now being offered into intervention again. Despite the heightened Easter demand now gone, there is still active demand as the summer season nears and, with supply reported to be low, prices look set to stay firm. SMP Public intervention a bit more than 1000 tons of SMP were offered into public intervention in the past week, which is less than in the previous week (1468 tones). The quantities were offered in Lithuania, the Netherlands and Germany.

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Despite fluctuations this year so far, and lower consumption growth, Chinese imports are forecast to increase 20% year-on-year, which will keep WMP markets well balanced.

PALM OIL 

Malaysian palm oil rebounded from earlier losses, rising for the third session in four as it was lifted by stronger performing soy oil and in a technical correction. Expectations of slower than forecast output growth also aided the market recovery in late trade.

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The market is riding on expectations of better performing soy oil on the Chicago Board of Trade despite a stronger ringgit, as the ringgit strength earlier contributed to the decline in palm prices. The ringgit, palm's currency of trade, rose 0.5 percent against the dollar to its strongest level in over five months. A stronger ringgit usually makes the vegetable oil more expensive for holders of foreign currencies.

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Palm oil production in Indonesia and Malaysia, which account for more than 80 percent of global output, is seen rising in the coming months, in line with the seasonal trend and as the lingering effects of a crop-damaging El Nino wear off. Cargo surveyor data from Malaysia showed weaker exports during April 1-25, despite the approach of Ramadan, a holy month of daylong fasting and feasting for Muslims across the world that begins at the end of May and spurs higher palm oil demand for cooking.

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Intertek Testing Services mentioned that shipments from Malaysia fell 3.4 percent from the corresponding period of the previous month, while Societe Generale de Surveillance reported a 1.2 percent drop.