July 22, 2018
Anderson Exports is a Bulk Ingredients Sourcing Agency in Northern California. We specialize in sourcing the best ingredients from California, Brazil and the rest of the world. Our newsletter delivers actionable market intelligence to inform our clients' purchasing decisions.
The biggest news leading up to this year's harvest is of course the widespread sentiment of uncertainty surrounding global tariffs and the Trump Administration's trade wars. Buyers have been hesitant to book new crop walnut shipments due to the anxiety surrounding these global tariffs moving into this year’s harvest. This will be a repetitive motif this year across all of California’s agricultural products. China has been a much publicized case of retaliatory tariffs, with many other nations moving to impose similar measures in response to Trump’s hardline trade positions. Recently, India has joined the growing list of countries specifically targeting the California Agricultural industry, announcing tariffs of 120% on California walnuts.
India imported approximately 8% of California’s in-shell crop for the 2017 / 2018 year, according to data from the California Walnut Board, which will cause a meaningful impact on trade flows. Uncertain trade relations and tariffs are already causing a remarkably slow start to new crop sales. Many suppliers we work with are reporting a fraction of the forward sales seen at this time vs. in previous years. How these trade uncertainties are affecting, and how they ultimately will affect, exports in the agriculture sector in California is hard to know at this point in the season, but the evidence so far is showing there may be few winners.
Turkey, typically California’s largest in-shell trading partner in past years, reported an 18,000 MT decrease in imports for the 2017 / 2018 vs. 2016 / 2017 crop years. Chile and China also continue to grow their output, with estimates for Chile’s production around 150,000 MT and estimates for China’s production approaching 800,000 MT.
With that said, California’s new crop for walnuts is likely to be quite large, with expectations of total crop size in the 650,000 - 680,000 MT range. The California Agricultural Statistics Service (CASS) Objective Estimate, will be released in early September. This estimate will provide further clarity for the overall crop size and average nut size for this year.
As is typical with early harvest indications, there have been a number of issues raised by walnut growers and processors of which the extent of impact remains to be seen. These include a frost during the early spring which caused some growers anxiety as they projected a much smaller crop. More recently though, a wind event in the northern growing regions caused widespread broken branches. Many growers there are now reporting that this damage is due to a much larger volume of walnuts, and larger average nut sizes weighing down their trees this summer, with some growers even reportedly discussing pre-mature pruning activity in order to mitigate further damage to their walnut orchards. Thus, what was once thought to be a new crop in jeopardy is now estimated to be an almost overly robust and healthy crop.
The CASS Objective Estimate, which will be released in early September will be relied on by many buyers and sellers as the benchmark to determine opening prices.
Howard, Hartley, Bleached Hartley, Tulare, Vina, and Serr varieties of inshell walnut will be harvested first, with Chandler quick to follow. We are currently marketing new crop inshell Jumbo and Jumbo / Large Chandler Walnuts, please let us know your requirements
The latest monthly shipment figures from the Raisin Administrative Committee (RAC) showed California raisin shipments down 39% in June compared to the prior year. The damage caused by lower bunch counts and two rain events during the harvest clearly compromised California’s supply continuity for many customers. Major buyers around the world, including in the U.S., are covering with raisins from Chile or South Africa given the absence of suitable fruit from California until new crop shipments in September / October.
Due to the short crop last year, we are seeing earlier interest from large foreign buyers looking to secure their forward needs. Since the field price paid to growers by processors has not yet been established, some packers are holding off on firm offers until around September while others are already booking forward contracts for the new crop.
The new California raisin crop is developing well and is on-track for a normal crop, provided weather remains favorable. The latest bunch count reading from the Raisin Bargaining Association (RBA) showed bunch counts at 33, up 22% from last year. However, even if the new crop is strong, the total supply will be tight due to the record-low carry-in from the current crop. Demand for Chilean and South Africa raisins, particularly from Asia, has been strong in recent weeks amid low quality and volumes from California. We work with Goldens, Flames, and Thompson Seedless raisins from both origins.
We expect California raisin prices to remain elevated and buyers to act early to secure new crop material and welcome your inquiries for dried-on-the-vine (DOV) and tray-dried California Thompson Seedless, Selma Petes, Flames, Goldens, and others in Jumbo, Select, and Midget sizes.
The market for Sweetened Dried Cranberries (SDCs) continues to be tight, with fruit shortages keeping prices elevated. Processors are fully booked in the near-term so there is still no material available for prompt shipment. We are offering forward contracts with shipment period of September and onwards.
Pistachio inventories in California are at their lowest levels all year as we approach the new crop harvest. As with walnuts, trade tariffs are causing some uncertainty in California’s pistachio growing regions as China purchases some USD $530+ million worth of the nuts each year. This year’s additional 15% tariff will impact California’s ability to compete with other major growing regions like Iran and Turkey. Pistachios are California’s largest nut import for China, with Almonds as a close second.
Post-Ramadan, most coconut processing factories in Indonesia have only now started production with more labourers reporting back for work. Factories are now fulfilling orders made just before Ramadan and have some slots still available for prompt shipments. However, the raw material supply is tighter because most raw coconuts were harvested before the Ramadan holidays. This is normally the case just after the factories reopen after Ramadan. Weak prices of Coconut Oil is keeping prices of Desiccated Coconut in check. On the demand side, with the summer holidays in Europe and the U.S., demand is soft. We feel this is a temporary situation and come end of July / August, prices will firm as demand for Christmas heats up. We are seeing most of the demand coming from the Middle East for prompt shipment.
Overall, supplies are plenty and prices attractive for Brazil sugar, especially as the industry recovers from freight and transportation disruptions in recent weeks. The pace of Brazil sugarcane crushing in the first two weeks of July continued at the same pace. Given the dry spell -- from July 1st - July 15th, almost no rain fell on the five main cane growing states -- some were expecting an uptick in cane crushing which never materialized, likely due to operational downtime for maintenance.
We supply Brazil origin ICUMSA 45 Sugar by the vessel on a spot (MOQ: 50,000 MT) or forward contract basis including long-term contracts of 300,000 MT / month x 12 months. Payment by SBLC, BG, or DLC from global top 50 bank.
With low global prices for sugar and excess supplies, the European Union’s sugar industry continues to face competitiveness pressures. In October of 2017, production quotas and minimum beet prices were removed, opening the door for major growth for the E.U. sugar industry, albeit in a challenging environment. Beet production in the E.U. is benefiting from favorable weather conditions and improved management of irrigation.
We supply German Beet Sugar (MOQ: 1 FCL) as well as Thai Sugar (MOQ: 10 FCLs).
Despite escalating trade tensions between the U.S. and China in recent weeks, Brazil’s soy exporters have been grappling with uncertainty over freight costs and unable to fully capitalize on the opportunity to take global export share in soybeans. Estimates for freight cost increases range from +25 to 40%, but the exact increase is not yet known. Brazil had a record large crop in soybeans and the U.S. is poised for a bumper crop as well so excess supplies may keep prices soft in the weeks ahead. On the demand side, tariffs for major global importers will be in focus, as with all major agricultural commodities.
We supply GMO and Non-GMO certified Soybeans from Brazil. MOQ: 50,000+ MT. Payment by SBLC, BG, or DLC from global top 50 bank.
The safrinha corn harvest in Brazil is well under way. In the state of Mato Grosso -- Brazil’s largest safrinha corn producing state -- ~60% of the corn has been harvested compared to ~5% in Parana, the second largest producing region. The warm and dry weather is favorable for the safrinha corn harvest which is anticipated to produce ~56 million metric tons of corn, down 17% from the prior year.
We supply GMO and Non-GMO certified Corn from Brazil. MOQ: 50,000 MT. Payment by SBLC, BG, or DLC from global top 50 bank.
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