COMPREHENSIVE NEWS & ANALYSIS OF THE WORLD PROCESSING TOMATO MARKET

Transcription

1 ISSUE N 2 FEB. 26, 04 TOMATO MARKET REPORT COMPREHENSIVE NEWS & ANALYSIS OF THE WORLD PROCESSING TOMATO MARKET Europe Spanish growth to compensate for reductions in other countries in 2004? California 2004 crop could not reach 11 millions short tons! Turkey Price negotiations for fresh tomatoes heating up! China Farmers asking for more money in Xinjiang because of higher revenues from cotton! Chile and South America No extra availability expected from Chile! Australia Back on track for 2004! Breaking News Chalkis from China to close a joint venture agreement in Europe! Key number 8 % : the expected price rise of fresh tomatoes for 2004 in Xinjiang! The Tomato interview Soon to be published, an interview of : Mr. Joao Ortigao Costa of SUGAL Our Sponsor LOW COST TRANSPORT FOR FOOD D PRODUCTS 1

2 Note : Exchange rates as of February 26 th. are 1.25 $ and 0.67 per Euro. EUROPEAN UNION : Spanish growth expected in 2004! Coming back to the information given in our last report, Agridoro, the Piacenza cooperative, has been officially declared in bankruptcy and has lost its processing licence for On the other hand, Boschi (Parmalat) and Cirio factories have secured the necessary financing and will run in 2004 despite the problems of the mother companies. The future of Boschi owned factories in Portugal, namely FIT and Italagro, remains uncertain at this stage; local professionals feel confident they will process next crop but most likely in reduced quantities (FIT and Italagro processed respectively MT. and MT. of fresh tomatoes in 2003). North Italian processors have closed a deal with growers OPs for the supply of 2.6 millions MT. of fresh tomatoes in 2004 at the same price of last year, 50.5 Euros (63.1 US $) per MT. ex field. Contracted volume in the south should be similar to the one of 2003 with a possible reduction as some farmers could be reluctant to grow tomatoes according to local sources, giving a total contracted figure close to 6 millions MT., down about 10 % from last year. One should be aware that contracted quantities, especially in South Italy, are well above actual ones to be processed, sometimes by up to 30 %, not to mention the weather potential impact. Local processors expect similar opening prices as in 2003, possibly slight increases in non paste products. Spanish negotiations in Extramadura are almost finalized with a price of fresh tomatoes very close to the one of last year at 50,35 Euros (63.1 US $) per MT. ex-field; one should also notice that average transport cost in Extramadura is very low, around 3.5 to 4 Euros per MT. and that Spanish farmers will only receive a 29,36 Euros / MT. subsidy (against 34,5 Euros for the rest of European Union). Although Navarra processors are facing more problems to prepare for the coming crop, Spain should contract totally 2.3 millions MT. (against 2.0 millions MT. and 1.8 millions MT. actually processed in 2003!) according to a local processor. Other EU countries are currently negotiating but no firm agreements have been closed yet according to our information. In terms of volume,; Greece and Portugal should be close to their 2003 volumes, respectively at 0.9 and 0.8 millions MT. Last, France should keep on reducing its volume, possibly below 0.2 millions MT., less than half its EU quota! By assuming favourable climatic conditions, EU could reach a record production of 9.3 millions MT. (10.25 millions short tons), up 5 % from The European market for industrial tomato products remained very quiet in February except for some isolated demands in aseptic 28/30 % paste and canned diced tomatoes. Nevertheless, prices remain quite stable from January : 28/30 % aseptic paste is offered between 630 and 660 Euros (785 to 825 US $ to 440 GBP) per MT.; exworks and 36/38 % prices range between 750 and 2

3 790 Euros (940 to 990 US $ to 530 GBP) per MT. also ex-factory. Diced tomatoes in aseptic bags prices remain also unchanged during the past weeks at around 420 Euros (525 US $ GBP) per MT. ex-works. So are aseptic pizza sauce prices around 370 Euros (465 US $ GBP) per MT. for 12/14 % FOT. The expected stronger demand is still not here and processors experience delays in shipments for contracted goods according to various sources. We should have absolutely no problem to reach the new crop with existing stocks confirms a large Italian packer. Still, one should not expect prices to drop significantly before the new crop but further increases are now more doubtful, even for supposedly scarce items like aseptic diced tomatoes. Prices of retail packed tomato paste are going down under the pressure of South Italian repackers on continental markets. 28/30 % paste in 70g. can is now offered at 7.5 Euros (9.40 US $ GBP) par carton of 100 and 7.20 Euros (9.00 US $ GBP) per carton of 50 cans of 140g. Prices of canned peeled tomatoes are stable at 4.5 Euros (5.65 US $ GBP) per carton of 24 x 1/2Kg. can (add about 1 Euro per carton for easy open tins) and 4.7 Euros (5.85 US $ GBP) per carton of 12 x 1Kg. can on ex-works Napoli area. Available in the Economic Information folder : a breakdown of Italian, Spanish, Greek, Portuguese and French tomato production in 2003, factory per factory. USA : 2004 crop could not reach 11 millions short tons! California Agricultural Statistics Service (CASS) recently announced processors intention for 2004 at 11 millions short tons (9.98 millions MT.) on acres ( hectares), up acres from 2003, with a projected yield of 37.8 short tons per acre (84.65 MT. per hectare), up from 33.2 short tons in 2003 (74.35 MT. per hectare). Although it has been achieved in the past, some local professionals question this high yield value and already forecast a lower crop around 10.5 millions short tons (9.5 millions MT.). Fresh tomatoes base price should stay at US $ per net short ton (56.22 US $ or Euros per MT.) ex-field. Late season premiums range between 3.00 US $ per ton for deliveries after September 15 to 5.00 US $ per ton for deliveries after September 25. More specific arrangements are discussed on an individual basis between processors and farmers. The global agreement, driven by CTGA (California Tomato Growers Association), is to concern about 70 % of the volume to be processed in California. Latest CLFP (California League of Food Processors) figures show that a 3.3 % rise in the Monthly Disappearance, the sole indication on US consumption of tomato products. It also reveals a 12.3 % decrease of December 1 inventory from last year at millions short tons. Nevertheless, several participants to the recent CLFP Tomato Convention early February in Sacramento reported a pessimistic climate with 3

4 severe price competition among the large tomato processors and very low prices, below 27 cents per pound (595 US $ per MT.) for 31brix hot break paste in drums (!). TURKEY : Price negotiations for fresh tomatoes heating up! Turkish processors are currently deciding what price to propose to their farmers for 2004 crop. This is no easy task as the Turkish currency has gained about 25 % against the US $ and almost 10 % against the Euro in the past year when the local inflation is still above 10 % for wholesale prices and above 15 % for retail prices. To remain competitive on international markets, processors absolutely need to decrease the Turkish Lira price of fresh tomatoes when one can expect farmers to resist such a move. As an indication, 2003 official price (some volumes are also done on the free market during the crop but largest processors are exclusively working on contracted prices) was 100 millions TL, equivalent to 60.5 Euros or 75.6 US $ at today s exchange rate. Several processors are quite worried about this situation and already plan to reduce the volume of export oriented tomato paste to be processed, at least in aseptic bags. More fresh tomatoes could be used for canned tomato paste (to be sold locally and on international markets), diced tomatoes (both canned and aseptic) and possibly on low concentration products. Although still limited, one can also expect an increase in the production of finished tomato products such as ketchup and pasta sauces. Current prices remain globally unchanged over the past 4 weeks. 28/30 % aseptic tomato paste is still offered between 660 and 700 US $ (530 to 560 Euros) per MT.; between 780 and 820 US $ (625 to 655 Euros) per MT. for 36/38 % both on FOB basis. Here also, most processors report slow demand over the past month. CHINA : Xinjiang farmers asking for more! Prices from China kept on dropping over the past 3 weeks despite claims of low stocks by local processors. This is due to a low demand as well as delays in shipments of contracted products confirms a large Tianjin trader, not to mention the large stocks of 28/30 % aseptic paste but also 36/38 %. Still, the Chinese prices now seems to stabilize between 560 and 570 US $ (450 to 460 Euros 300 to 310 GBP) per MT. FOB Tianjin for aseptic 36/38 % and about 50 to 60 US$ less per MT. for 28/30 %. South Italian buyers, by far the largest users of Chinese paste in the world, seem indeed well covered for their needs in the coming months as shipments of canned paste to Africa are reported slow; Middle East and Russia are also buying little volumes at this time. Only Europe is asking for new volumes but in limited quantities reports a Chinese seller to Tomatoland. Most professionals already concentrate on the next crop. Following the steep increase of cotton prices within China (the local market is about 20 % higher than international ones and the demand is still very strong), farmers revenues from this commodity have increased significantly in past 4

5 years. Xinjiang is the main region for cotton growing in China and the only one that offers good quality raw materials. Local growers are consequently asking for much higher prices for fresh tomatoes, the second largest agricultural output of the province; as much as 270 Yuans per Kg. or 32.5 US $ per MT. (26 Euros), when 2003 opening prices were below 30 US $ for North Xinjiang and even lower for the Southern part. This price seems motivated by the market price for cotton and also by the higher prices processors accept to pay at the end of last crop while fresh materials were missing. Processors, mainly Tunhe and Chalkis are trying to resist these higher prices but negotiations are reported difficult with possible intervention of the local authorities. Farmers perfectly now that the installed capacity is now exceeding the fresh tomatoes availability and do not foresee any problem to sell their outputs. It is therefore reasonable to think that Xinjiang processors will face a price increase of at least 5 % on the costs of fresh tomatoes, a 15 to 20 US $ per MT. increase in the cost of 36/38 % aseptic paste. In terms of new capacity, Xinjiang will only install one new line (Ing. Rossi at factory Y14) according to our information. On the other hand, 2 new lines shall be installed in Gansu as well as 7 new lines in Inner Mongolia by Tunhe, F20 and F21, thus doubling the production capacity of this growing province. Early estimations for 2004 crop stand between 3.5 and 3.7 millions MT. for China : with similar planted surface as last year, Xinjiang could achieve total output around 2.75 millions MT. if it enjoys normal weather conditions; Gansu should slightly increase its production and reach 0.35 millions MT. when Inner Mongolia output could jump over half a million MT. Pls. read in the Economic Information folder : a breakdown of China tomato production in 2003, factory per factory. CHILE : No extra availability expected! 2004 crop runs normally under favorable climate conditions according to local sources. The expected volume still range between and MT. of finished products, mainly aseptic 30/32 % paste. Most of these products are already booked with traditional users mainly in South America; an estimated 12 % is consumed domestically. With no significant availability, prices remain unchanged around 750 US $ (600 Euros) per MT. for 30/32 % paste FOB Valparaiso port. After a severe restructuring, Chile has managed to consolidate its tomato industry with more efficient production units and is ready to expand with any future opportunity. Possibly in European Union when Chile enjoy a 0% duty starting from 2007 as it can take advantage of its counter season production and excellent quality. The expected 2004 Brazilian crop is expected at around MT. of fresh tomatoes, similar to the level of That should cover the internal consumption which is estimated at MT. of 28brix equivalent paste. Self sufficiency seems to satisfy local players, not to mention that the 5

6 Brazilian tomato production is hardly meeting international standards of quality according to local traders. AUSTRALIA : Back on track in 2004! It is now estimated that Australia will process MT. of fresh tomatoes in 2004, up from the drought affected harvest of MT. last year. 96 % of this output should be processed by the four major processors. The crop is slightly delayed and scheduled to start very shortly. BUYING ZONES : - Middle East : No news. - North Africa : Quiet market. - Central Europe and Russia : Slow sales reported in Russia; prices tend to go down in Poland and Czech Republic according to local players. - South East Asia : No news. OUR CONCLUSION : 2004 crop could exceed 29 millions MT. like in 1999! Market conditions remain quiet with low demand in most regions, not to mention reported delays in shipments from EU processors. Although this situation is not uncommon for this period of the year and worldwide processors hold limited stocks, this is no good news for sellers. Various reasons are given to understand this apathy : Many buyers of Chinese paste have shipped large volumes during the first months following the crop as they feared shortages of products told us an Italian broker who also explained that easing prices in most regions push buyers to delay their purchases as long as possible. Nevertheless, it seems quite obvious that users are well covered and should not call for significant extra quantity before the new crop. However, thanks to limited stocks free for sale, this should not impact significantly next crop opening prices. Early projections for 2004 crop volumes show a 5% increase in European Union (outside the 10 new countries) inducing a 2% increase in the Mediterranean basin, a 15% rise in North America, a 17 % rise in the Asian Pacific zone (including China) and stability in South America and other smaller processing zones. Globally, the world production could reach 29 millions like it did in 1999 when both California and Europe achieved record crops. This is of course only a projection figure and the real output could be significantly less; as an example, 2003, with an early projected volume of 29.5 millions, finally ended with a total production of 27 millions MT.! Although we have no reliable data, our cross calculations tend to show that the world consumption stands between 27.5 and 28 millions MT. from which about 10 millions are taken by North America (11.5 millions short tons as expressed by the latest CLFP data). Except for that part of the world, one can reasonably assume that we will enter the new crop with less than one month of stock; a 18.5 millions MT. production (world production outside North America) should therefore cover the world needs in tomato products but not lead to any stocks build-up. These global projections obviously need 6

7 to be adjusted by zone and by products family, something we will be able to do once we obtain more detailed information about the next crop. Visit now the Tomato Trading Board!! Efficiency and savings in sales and supplies!! The Tomatoland Team 7