October 2016 Market Report

Sri Lankan tea prices rose due to poor production caused by dry weather. Increases in planted pepper acreage has pushed down Vietnamese prices. EU dairy prices continue to increase due to lower milk supply. Oil prices increased as OPEC cut production for the first time in 8 years.

Up Down
Carrot (PL) +27% Chicken deadweight (PL) -19%
Tea (LK) +18% Palm Kernel oil (MY) -15%
Oats CBOT (US) +16% Parsnips (UK) -15%
Rapeseed oil Rotterdam +12% Hazelnuts (TR) -13%
Lamb (NZ) +11% Propylene (EU) -13%
Brent crude oil ICE London +11% Black pepper (VN) -10%

All percentage changes in this report refer to month-on-month price changes.

Soft Commodities

Arabica coffee prices rose on ICE US (+3%), due to concerns that below average rain during the flowering stage might impact on crop development in key growing areas in Brazil. Robusta coffee prices increased on London ICE (+6%), driven by concerns that harvest in Vietnam could be delayed due to rains. Sugar prices rose on ICE US (+1%), but remained stable on London ICE (0%). Tea prices rose in Sri Lanka (+18%) on the back of lower production, down 12% y-o-y at 199m kgs in the first seven months of 2016. Dry weather conditions in September and October hampered production further. Tea prices were stable in Kenya (0%), but fell in India (-2%). Cocoa bean prices fell on the ICE US (-8%) and London ICE (-6%), due to expectations that the global market will experience a supply surplus in 2016/17. Rainfall in West Africa since August is expected to help production recover, after last season’s droughts reduced size of the crop. Both cocoa powder (+5%) and butter (+2%) rose in the UK. EU molasses remained stable (0%).

Oils & Fats

Soyabean oil prices rose in Rotterdam (+5%), on CBOT US (+5%) and in Argentina (+5%). In addition, rapeseed oil prices rose in Rotterdam (+12%), due to concerns that dry weather seen in the EU could adversely impact early crop development. Prices also rose in Canada (+2%). Palm oil prices fell in Indonesia (-4%), remained stable in Rotterdam (0%) and rose in Malaysia (+2%). Palm kernel oil prices fell in Malaysia (-15%), Rotterdam (-10%) and Indonesia (-10%) due to lower demand caused by higher y-o-y prices. Coconut oil prices fell in Rotterdam (-4%), but remained stable in the Philippines (0%). Sunflower oil prices rose in Argentina (+1%), however prices fell in Russia (-5%) and Ukraine (-2%) due to forecasted record production this season. Prices remained stable in NW Europe (0%). Extra virgin olive oil prices rose in Italy (+12%) and remained stable in Spain (0%). Lampante oil prices fell in Spain (-1%). Linseed prices rose in Argentina (+5%).

Grains

Maize prices rose on CBOT US (+7%) and Euronext Paris (+1%), despite high global supply. Elsewhere, maize prices fell in Argentina (-3%), Germany (-3%) and Brazil (-1%) due to an increase in supply. Milling wheat prices rose on CBOT US (+8%), in Germany (+3%) and the UK (+2%), remained stable on ASX Australia (0%), but fell on Euronext Paris (-2%). Prices for feed wheat rose on ICE Europe (+6%), in the UK (+4%) and Hungary (+1%) due to increased demand from millers. Durum wheat prices increased in France (+15%), ICE Canada (+12%), Italy (+10%) and the US (+3%). Barley feed prices remained stable on ASX Australia (0%), in France (0%), Germany (0%) and on ICE Canada (0%). Prices for basmati rice fell in Pakistan (-8%) but rose in India (+1%). White paddy rice prices increased on CBOT US (+7%) and in Thailand (+1%) but fell in Vietnam (-2%). Prices of oats increased on CBOT US (+16%) but fell in Finland (-1%). Rye prices rose in Germany (+2%) and remained stable in Finland (0%).

Ingredients

Turkish hazelnut prices have continued to fall (-13%), due to extra supply from the harvest which commenced in August. In the almond market, prices have increased in the US (+8%) due to increased shipments from California, the major almond producing state. Elsewhere, almond prices increased in Spain (+5%). Peanut prices remained stable in the US (0%) and Argentina (0%). In China, pine nut prices fell in October (-18%). For dried fruit, Turkish sultanas fell (-4%), due to favourable weather conditions, increasing this seasons harvests. In the US, raisin prices increased (+1%). Turkish dried apricot prices increased (+1%) while desiccated coconut in the Philippines also increased (+1%). For spices, black pepper prices fell in Vietnam (-10%) due to an increase in planted area increasing production. Around the rest of Asia, black pepper prices fell in Indonesia (-5%), whilst remaining stable in Malaysia (0%) and India (0%). White pepper prices also fell (-5%) on average across Southeast Asia. In India, turmeric prices increased (+2%) however, coriander (-4%) fell on NCDEX. In addition, Indian sesame seed (-4%) prices fell as did Czech poppy seeds (-4%) in Germany.

Fruit

Apple prices in the EU fell (-3%) on average as the harvest is underway. Price declines were seen in Germany (-13%), remained stable in the UK (0%), whilst increasing in Poland (+5%). German 2016/17 apple production is forecast at 1.1m tonnes, up 8% from the previous season. Pear prices in the EU were up (+1%) on average, with prices rising in the UK (+5%) whilst remaining stable in Spain (0%) and falling in Poland (-6%). EU pear production has been estimated at 2.2m tonnes in 2016/17, down 9% y-o-y. In Spain, bananas were up (+2%). Plum prices rose in Spain (+41%) due to low season end volumes, whilst remaining stable in the UK (0%) and in Poland (0%). Black grape prices were up in Spain (+11%) as were average grape prices in the UK (+7%). Apple juice concentrate in China was stable (0%). Frozen concentrated orange juice prices fell slightly in the US (-2%) on ICE. A large decrease in orange production has been forecast for the US for 2016/17, estimated down 11% y-o-y.

Vegetables

Potato prices increased on average (+2%) across the EU. However, prices were mixed with increases in Belgium (+40%) and Germany (+23%), whilst prices remained stable in France (0%) and fell in Poland (-24%), Spain (-4%) and the UK (-3%). EU potato yields are reported at 45.1t/ha, down 6% y-o-y, following adverse weather conditions throughout the growing season. Onion prices fell (-12%) across the EU, with declines seen in Poland (-38%), the UK (-20%), France (-15%) and Germany (-9%) whilst remaining stable in Spain (0%) and rising in the Netherlands (+17%). Onion production in Poland is expected to rise to 630,000 tonnes in the current season, up 15% y-o-y. Tomato prices rose on average in Spain (+22%) and the UK (+13%) whilst cherry tomato prices increased in Germany (+30%). In the EU, prices declined for cucumbers (-10%), and lettuce (-7%). In the UK, prices were down for parsnips (-15%) and turnips (-4%). In France, leeks were down (-23%) whilst turnip prices increased (+5%). Carrot prices increased in Poland (+27%) but declined in the UK (-6%) and Germany (-1%).

Meat & Poultry

Deadweight beef prices fell in the EU (-4%) in October, with the largest falls from Ireland (-3%), Germany (-3%), the UK (-2%) and France (-2%). Elsewhere, beef prices increased in Brazil (+4%), due to a new trade agreement with the US increasing exports, while Australian prices fell (-6%). EU lamb prices fell (-4%), due to a seasonal declines in the UK (-3%) and Greece (-3%). Conversely, prices increased in Spain (+6%), France (+4%) and Italy (+3%), while also increasing in New Zealand (+11%) due to lower production. In the pork market, EU deadweight prices started to fall in October (-4%) for the first time since March, due to a fall in domestic demand. Falls were seen in France (-7%), the Netherlands (-5%), Belgium (-4%), Poland (-4%), Denmark (-2%) and the UK (-2%). In the US, pork prices stabilised in October (0%). Deadweight chicken prices started to fall in Brazil (-2%) due to falling feed costs, whilst prices remained stable in the EU (0%). Within the EU, chicken prices fell in Poland (-19%), the UK (-4%), but remained stable in France and Germany (0%).

Milk & Dairy

EU dairy prices have continued to increase in October, due to falling milk supplies limiting dairy production and increasing costs for processors. Average EU butter prices increased in October (+8%) with the largest increases in Poland (+14%), the UK (+6%), Belgium (+5%) and France (+4%). New Zealand butter prices increased (+5%) and fell in the US (-3%). In the cheese market, increases were seen in EU Gouda (+9%), Emmental (+8%) and Edam (+7%), whilst cheddar prices in the UK remained stable in October (0%). High stocks in the US caused Mozzarella prices to fall (-6%). In the EU increases were seen in both the SMP (+5%) and WMP markets (+4%). SMP prices increased in France (+7%) and Germany (+4%) however, prices fell in the Netherlands (-3%). For WMP, prices increased in Belgium (+7%), France (+6%), Germany (+5%), whilst remaining stable in the Netherlands (0%). EU shell egg prices increased (+3%) with prices mixed across major producers. The largest movements came from Belgium (+8%), Spain (+5%) and Germany (+3%), whilst prices fell in the UK (-4%). In the EU egg processing market, liquid egg prices increased (+4%) whilst egg yolk powder prices were up (+2%).

Chemicals and Plastics

Petrochemical prices in the EU mostly decreased in October, with propylene (-13%), styrene (-12%), benzene (-10%), ethylene (-5%) and orthoxylene (-1%) going down. EU butadiene (+2%) and toluene (+1%) increased whilst paraxylene (0%) and ethylene glycol (0%) remained stable. For plastics, only PS (-3%) prices fell, while HDPE (0%), LDPE (0%), LLDPE (0%) remained stable. PP (+3%), PET (+1%) and PVC (+1%) prices all increased. There was strong demand in the Chinese market with petrochemicals prices increasing for butadiene (+36%) and ethylene (+3%), leading to LDPE (+6%), HDPE (+4%), PVC (+3%), LLDPE (+2%) and PET (+1%) prices rising, while PET (0%) remained unchanged. In the US, urea (+4%) prices rose, phosphoric acid (0%) remained stable and DAP (-1%) fell.

Pulp & Paper

Global pulp shipments increased 2% m-o-m in September at 4.2m tonnes, remaining stable y-o-y. Pulp inventories stood at 39 days of supply, stable m-o-m but an increase of 5 days y-o-y. European softwood pulp inventories increased 2% m-o-m to 204,000 tonnes, down 2% y-o-y. In days, softwood pulp inventories remained stable m-o-m but fell by a day y-o-y to 17 days of supply. In Europe, NBSK (+1%) prices increased due to higher demand, while prices for BHK (0%) remained stable. Despite an increase in feedstock cost, prices for European kraftliner (0%), testliner (0%) and fluting (0%) all remained stable. Newsprint (-1%) and coated paper (-1%) prices both fell in Europe. BHK (+2%) prices in China rose, however, NBSK (0%) prices remained stable, as did NBSK (0%) prices in the US.

Energy

Brent crude oil prices on ICE London (+11%) and light sweet crude oil on NYMEX US (+10%) rose after OPEC members agreed to cut production for the first time in 8 years. US diesel (+14%) rose as stock levels fell while EU diesel (+13%) rose as supply fell due to refinery maintenance and lower imports. Petrol prices rose in the US (+11%) and the EU (+7%) due falling supplies. Gas oil prices on ICE fell (+12%). Natural gas prices at the Bacton terminal NBP (+35%) and on the ICE London (+18%) rose due to increased demand from gas powered generators and lower supplies. Natural gas prices on NYMEX US (+7%) rose, due to supply fears as stock levels started to tail off. Coal prices rose in the EU (+22%) due to lower production and rising demand for coking coal used in the steel industry, but remained steady in the US (0%).

Metals

Aluminium prices on the LME (+3%) rose, due to an increase in demand from speculators. Prices for tin (+3%) rose on the back of reports that showed production in Myanmar is falling and deposits could be depleted within two to three years. Prices for lead (+1%) also rose, but fell for copper (-2%), nickel (-1%) and zinc (-1%). EU prices for cold rolled (CR) and hot rolled (HR) steel rose by (+6%) and (+5%) respectively, due to a decline in imports resulting from a series of trade defence measures on both CR and HR coil. As a result, supplies in the market have tightened. Prices for CR (+2%) and HR (+1%) steel also rose in China. However, prices for CR (-12%) and HR (-9%) steel in the US fell.

Others

Cotton CN (+7%), Rubber SG (+5%), Nylon CN (+3%), Polyester CN (+3%), Viscose CN (-1%), Nylon chips CN (-2%), Wool NZ (-5%).