August 2012 Market Report

 

The grain and vegetable oil markets have continued to rise in price as the drought across the US Corn Belt has again downgraded maize and soyabean forecasts. EU milk production has continued to fall seasonally, leading to a rise in dairy product prices. Crude oil prices were driven up by political tensions.


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Potatoes (UK) +18% Peanuts (US) -17%
Butter (NL) +11% Natural Gas (NYMEX) -15%
Soyabean Oil (CBOT) +9% Sugar (LIFFE) -8%
Feed Wheat (LIFFE) +8% Arabica Coffee (ICE) -7%
Brent Crude (London) +8% Palm Kernel Oil (MY) -5%
PET (EU) +8% Pulp (EU) -4%

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

Soft Commodities

Better harvest progress helped lower the cost of some soft commodities in August. World sugar prices slipped back on both LIFFE in the UK (-8%) and ICE in the US (-11%) as the Brazilian cane harvest has progressed well due to dry weather throughout August and a good sugar beet harvest is expected soon in the EU. Falls were also seen for both Arabica coffee (-7%) on ICE and for Robusta coffee (-6%) on LIFFE, again due to good weather enabling better progress with the harvests in Brazil. Drought however has continued to damage tea output in many of the world's top producers, raising prices in Kenya (+2%), India (+5%) and Sri Lanka (+13%). Cocoa beans rose on LIFFE (+3%) and on ICE (+8%) due to worries about the potential of El Niño to bring dryness to West Africa and harm future cocoa supply. Cocoa powder was stable in the UK (0%) but cocoa butter continued to rise sharply (+18%) due to lower grindings causing a lack of EU supply. Molasses rose (+1%) in Germany but was down in Belgium (-1%).

Oils & Fats

Soyabean oil strengthened on CBOT in the US (+9%) and Rotterdam (+4%) due to a 10m tonne cut to forecasts for the US's drought-stricken 2012/13 crop. US soyabean production is now expected to reach its lowest level in five years. In Rotterdam, both rapeseed oil (+4%) and sunflower oil (+4%) were also up. World sunflowerseed output is expected to fall 7% year-on-year to 36.5m tonnes in 2012/13 due to hot and dry weather in Russia, Ukraine and parts of the EU. Palm oil was steady (0%) in Rotterdam but rose (+3%) in Malaysia. For lauric oils, palm kernel oil rose (+2%) in Rotterdam but fell (-5%) in Malaysia while coconut oil weakened in Rotterdam (-2%) and in the Philippines (-10%). In Spain, lampante virgin olive oil futures continued to climb (+22%) as olive trees in the country have been stressed by drought. Spanish olive oil output is forecast to decline by 38% year-on-year to 1.07m tonnes in 2012/13. Fish oil was unchanged (0%) in Europe while lard rose (+3%) in the US. Linseed oil strengthened (+9%) in Argentina.

Grains

World wheat and maize prices have strengthened generally due to downward revisions in the forecast production for 2012/13. Milling wheat futures rose on LIFFE Paris (+4%) and CBOT (+1%) as global wheat production is expected to reach 662.8m tonnes this year, down 5% from last season. Maize futures continued to rise on CBOT (+2%) as US production is expected to be down 13% on last season at 273.8m tonnes. The extreme heat and dryness in the US Corn Belt has significantly downgraded crop quality and yield. Feed wheat prices rose (+8%) on LIFFE London, with feed barley also up in France (+4%) and Germany (+2%). However, feed barley fell in the UK (-5%) due to downgrades in quality. Malting barley in France also fell (-1%). Durum wheat rose in Italy (+5%), was unchanged in the US (0%) but fell in Canada   (-3%). Oats rose on CBOT (+6%). Rice rose in Vietnam (+11%) amidst higher export demand, whilst prices fell in Thailand (-1%). Paddy rice in the US fell on CBOT (-2%). Basmati prices were unchanged (0%) in Pakistan.

Ingredients

Black pepper prices fell back slightly in India (-2%), but continued to rise in Vietnam (+3%). White pepper was down in Vietnam (-3%). Chilli (+19%), fenugreek (+13%), turmeric (+8%), cumin (+6%) and ginger (+2%) all rose in India last month as crops across the country have been affected by poor rainfall this year. Turmeric and ginger prices were also supported by a reduction in planted area as the relatively low prices of both spices encouraged farmers to switch to more lucrative crops. Indian cardamom bucked the trend, falling (-6%) amidst weak demand, particularly from the Middle East. Peanuts from the US (-17%) and Argentina (-6%) continued to fall in Rotterdam last month as record crops are expected from both countries in 2012/13. Turkish hazelnuts weakened (-4%) due to expectations of an improved crop in 2012/13. Cashew nuts fell in Rotterdam (-2%) and almonds were down (-1%) in Spain. In Turkey, sultanas (-3%) and dried apricots (-3%) fell on the back of good crop expectations in 2012/13, but dried figs rose (+1%) and raisins were unchanged (0%). Desiccated coconut was down (-1%) in the Philippines, as was Chinese garlic powder (-6%). Thai tapioca starch was unchanged (0%).

Fruit

Apple prices fell in the UK (-18%) and Germany (-5%) as French supply is now available and is of good quality. Pear prices rose overall in the UK (+6%) and Germany (+5%) on reports that pear yields across Europe are down due to the bad weather over summer. Bananas rose (+21%) in the UK after bad weather in Costa Rica and the Dominican Republic led respectively to flooding and disease. Grapes fell in Germany (-8%) and the UK (-3%) as European supply is good. Plums fell in Poland (-33%) and the UK (-18%) due to good availability from Portugal. Frozen orange juice concentrate on ICE in the US finished up (+7%) as fears over an active hurricane season remain, despite Florida largely escaping the path of Hurricane Isaac. In Europe, blackcurrant concentrate fell (-37%), as did pineapple concentrate (-8%) as a decline in the quality of fruit has resulted in greater availability for processing.

Vegetables

Potato prices rose in the Netherlands (+40%), the UK (+18%), Germany (+5%) and France (+5%) due to a fall in production and quality following the wet weather over summer. Tomato prices fell in the UK (-10%), and Germany (-9%) as production from the Netherlands is underway with excellent quality. Lettuce in the UK fell (-3%) as production increased. Salad peppers fell in the UK (-23%) and Germany (-2%) due to good Dutch supply. Broccoli prices rose in the UK (+36%) and France (+15%), as did cauliflower in the UK (+21%) and Germany (+15%). Carrot prices fell in Poland (-28%), the UK (-20%) and Germany (-15%) following better supply and quality. Courgettes continued to fall on average in the EU (-22%) as did leeks (-19%) and spinach (-10%) due to better European availability. Onions fell in Europe overall (-15%) as the Spanish, Dutch and UK seasons are now underway.

Meat & Poultry

Liveweight cattle prices in Argentina (+6%) and Uruguay (+5%) both increased, while prices fell in Brazil     (-3%). EU deadweight beef rose in Germany (+3%), the Netherlands (+2%) and France (+2%) as a result of the drought in the US pushing global feed costs higher. New Zealand lamb prices fell (-1%) due to low global demand, particularly from the EU, New Zealand's biggest market for sheep meat. Lamb in the EU remained steady (0%) as poor weather in the main producing regions made it difficult to finish lambs, reducing the available supply. EU deadweight pork prices increased (+8%) on average, mainly due to large gains seen in Germany (+12%) as high demand is being met with low supply. EU piglet prices remained steady on average (0%) during August with falls seen in France (-16%), and Spain (-12%), while prices in the Netherlands (+13%) and Germany (+12%) continued to rise. Deadweight chicken prices increased on average in the EU (+3%) with the sharpest gains seen in Spain (+6%). Total EU poultry production is forecast to grow 1% in 2012, rising to 12.3m tonnes (of which around 9m tonnes are broilers) from 12.2m tonnes in 2011. Chinese liveweight market prices for chicken increased (+7%), while Thai liveweight chicken fell (-4%). Chicken in Brazil increased (+15%) as the higher cost of feed pushed prices up. For fish, Norwegian farmed salmon (+3%) and EU plaice (+6%) both rose.

Milk & Dairy

EU milk production continued to decline seasonally in August and fresh milk spot prices rose as a result (+11%). UK farm-gate prices were unchanged as major processors cancelled their proposed price cuts under pressure from UK farmers. With lower milk supplies now available, prices firmed in several dairy product markets. Butter prices rose in the Netherlands (+11%), Germany (+9%) and France (+9%). Butter Private Storage Aid (PSA) stocks totalled 133,428 tonnes on the 19th August, up 26.2% on last year. The 2012 scheme has now closed. Whey powder prices increased in the Netherlands (+13%) and the UK (+9%). SMP rose in the EU, with the UK (+4%), Germany (+14%) and the Netherlands (+16%) all up due to uncertainty over future supply availability. SMP rose (+15%) on CME in the US. WMP was also up, with prices rising (+11%) on average in the EU, with the Netherlands increasing most (+13%). Wholesale egg prices ended down (-8%) in London, but eggs from the Netherlands were up (+5%). Industrial eggs for breaking rose (+19%) in the EU. Liquid egg products were also up (+4%) on average.

Energy

Crude oil prices continued to rise driven by geopolitical tensions in the Middle East. Brent crude oil was up (+8%) on ICE London and light sweet crude oil also rose (+8%) on NYMEX in the US. Fuel prices rose supported by the higher crude oil costs. Petrol prices strengthened on NYMEX (+12%) and in the EU (+9%), with diesel also up in both the US (+11%) and the EU (+9%). Increases were seen for EU naphtha (+12%), gas oil (+8%) and heavy fuel oil (+7%). Natural gas prices fell on NYMEX (-15%) weighed down by the high inventory levels in the US, while gas in the UK rose both in Bacton (+4%) and on ICE London (+3%). Electricity prices were also up in both the EU (+19%) and the UK (+2%). Coal fell slightly in both the EU      (-2%) and South Africa (-2%).

Chemicals & Plastics

As the price of crude oil continued to rise last month, EU plastic feedstocks also increased, with spot prices for ethylene (+21%), propylene (+18%), toluene (+10%), styrene (+9%), butadiene (+5%) and xylene (+4%) all up. Despite weak demand for plastics in Europe, plastic prices have followed these gains in feedstock costs with rises seen for EU LLDPE (+15%), HDPE (+14%), LDPE (+13%), PP (+11%), PS (+9%), PET (+8%) and PVC (+5%). Most producers in Europe have run at reduced capacity in recent months. US prices for urea fell (-6%) along with US phosphoric acid (-2%), while diammonium phosphate (0%) remained unchanged.

Pulp & Paper

Demand remained weak in the global pulp and paper market. Pulp inventories at European ports were 1.12m tonnes in July 2012, up a significant 23% from June 2012, but still down 8% compared to July 2011. NBSK pulp prices fell in Europe (-4%). Prices also fell in the US with declines seen for both physical prices  (-3%) and futures on CME (-2%). BHK pulp prices also fell in Europe (-3%) and in China (-2%). Good feedstock supply continued to weigh on prices for recycled paper-based packaging in Europe with waste-based fluting (-2%) and testliner (-2%) both down, while kraftliner prices were steady (0%). Newsprint prices also remained unchanged (0%) in Europe.

Metals

Metal prices continued to be mixed as uncertainty over the global economic prospects prevailed in the market. While increases were seen on the LME with tin (+8%), lead (+4%), nickel (+4%), copper (+2%), zinc (+1%) and aluminium (+1%) all up, falling raw material costs weighed on steel prices globally. In China, prices continued to fall for hot rolled (HR) steel coil (-7%) and for cold rolled (CR) steel coil (-4%), while in the EU, prices remained steady for both CR steel coil (0%) and HR steel coil (0%). Also in China, prices fell sharply for both iron ore pellets (-24%) and iron fines (-21%). CR stainless steel prices were down in both China (-3%) and the EU (-1%). In precious metals, prices rose for gold (+10%), platinum (+9%), palladium (+8%) and silver (+3%) in London.

Others

Baltic dry index (-18%), wool AU (-9%), nylon CN (-1%), raw silk CN (+5%), cotton US (+7%).

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