June 2012 Market Report

 

Sharp price increases were seen in grains supported by the persistent drought affecting the US corn belt, while rains in the EU have delayed the wheat harvest in some countries. Crude oil rebounded amidst worries over instability in the Middle East and also after an import ban on crude oil imports from Iran.


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Maize (CBOT) 26+% LDPE (EU) 15-%
Potatoes (FR) 18+% Iron Ore (CN) 10-%
Lampante Olive Oil (ES) 17+% SMP (NZ) 8-%
Wheat (LIFFE) 14+% Peanuts (AR) 8-%
Sugar (LIFFE) 12+% Testliner (EU) 4-%
Brent Crude (London) 11+% Frozen Orange Juice Conc. (ICE) 4-%

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

Soft Commodities

Extreme weather affected a large number of soft commodities last month causing prices to rise. World sugar prices strengthened on both LIFFE in the UK (+12%) and on ICE in the US (+12%) following very heavy rain in the south of Brazil. This caused damage and delays to the current harvest and resulted in worries about the potential effect on future world sugar supply. Rises were also seen for both Arabica coffee (+10%) on ICE and for Robusta coffee (+2%) on LIFFE, again in large part due to the poor weather affecting current coffee harvests in Brazil. Extreme weather has also damaged tea production, this time with drought concerns raising prices for both Kenya (+6%) and Sri Lanka (+7%). Cocoa beans were unchanged on LIFFE (0%) but rose slightly on ICE (+1%). Cocoa powder fell (-3%) in the UK although cocoa butter in the UK was sharply up (+17%) on lower supply. Molasses ended slightly down (-1%) in Belgium but rose (+1%) in Germany.

Oils & Fats

Soyabean oil prices rose on CBOT (+2%) and in Rotterdam (+3%) despite an improvement of US soyabean crop prospects which led to a partial correction to the high prices seen earlier in the month. In Rotterdam, sunflower oil was up (+3%) while rapeseed oil fell slightly (-1%) due to higher than expected production in the EU. Palm oil declined in Rotterdam (-2%) and Malaysia (-1%) as global output is expected to reach a record high in 2012/13. The most recent forecasts peg world production at 52.3m tonnes, a 4% increase on 2011/12. Both palm kernel oil (-7%) and coconut oil (-9%) continued to weaken in Rotterdam. Philippine coconut oil production is expected to recover in the coming months. In Spain, Lampante virgin olive oil futures rose sharply (+17%) as Spanish production is forecast to decline by 37% year-on-year to 1.1m tonnes in 2012/13, as olives trees were stressed by poor rainfall between December 2011 and April 2012, and again in June. Fish oil was up (+3%) in Europe while linseed oil fell slightly (-1%) in Argentina.

Grains

Maize futures rose sharply on CBOT (+26%) as US maize production forecasts for 2012/13 have been reduced further following the drought seen in the US corn belt over the past three months. As of 29th July 2012, 24% of the US maize crop was considered to be in good to excellent condition, sharply down from the 62% estimates from the same period last year. Milling wheat futures also rose sharply on CBOT (+22%) and LIFFE Paris (+14%), with prices supported by a considerable decline in output in the Black Sea region and delays seen in the EU harvest. Feed wheat prices rose (+10%) on LIFFE London, supported by the reduction of feed availability expected for next season as a result of lower maize supply. Feed barley prices were up in France (+22%) and Germany (+16%). Prices for malting barley in France were up (+13%). Oat prices rose on CBOT (+11%). Durum wheat prices rose in the US (+12%), while prices were unchanged (0%) in Italy. Rice prices continued to weaken in Vietnam (-1%) and Thailand (-4%) on good supply, but rose on CBOT (+6%) for US paddy rice. Basmati prices were unchanged (0%) in Pakistan.

Ingredients

In India, turmeric futures climbed significantly last month (+59%) on reports that a sharp fall of around 55% was expected in the country's turmeric planted area this year. Black pepper rose in India (+3%) due to limited availability of supplies and prices were also up in Vietnam (+1%) as this year's good crop is expected to be met with firm demand. Peanut prices from Argentina (-8%) and the US (-3%) fell in Rotterdam last month. A record peanut planted area of up to 420,000 hectares is forecast in Argentina as farmers are expected to take advantage of the strong peanut market. Cashew nuts fell in Rotterdam (-8%), almonds were unchanged (0%) in Spain and hazelnuts rose (+10%) in Turkey. Also in Turkey, dried apricots (-2%), dried figs (-2%) and sultanas (-2%) were all down while raisins (+1%) rose.  Desiccated coconut was down (-3%) in the Philippines, as was Thai tapioca starch (-2%) and Chinese garlic powder (-6%). Indian cumin (+15%) and ginger (+4%) were supported by buoyant demand from both the domestic and export markets. Also in India, cardamom rose (+7%) while fenugreek (-1%) and chilli (-12%) saw declines. Honey from Argentina rose (+1%) in the US.

Fruit

Apple prices in the UK were up (+19%) and rose slightly overall in Germany (+2%) as some varieties continue to come from the southern hemisphere. Pear prices rose (+8%) in Germany on reports that yields are reported to be down as a result of earlier frost followed by unfavourable weather. Banana prices in the UK fell (-18%) as production continues to improve in all major growing regions. Grapes fell in Germany (-8%) and in the UK (-6%) due to good supply from Europe. Cherry prices in continental Europe declined overall (-8%) as Spanish produce improves. Frozen orange juice concentrate on the ICE ended down (-4%) on reports that juice production for 2011/12 in Florida is up 4% on last season, while domestic demand is expected to continue to decline. Apple juice concentrate prices in Europe were up (+2%) as supply tightens following shortages in China, Europe's leading supplier.

Vegetables

Potato prices rose in France (+18%) and the UK (+16%) as unfavourable weather across Europe has delayed crop development and has caused irregular growth, while availability of the stored crop is tight. Tomato prices saw increases in the UK (+35%) and Spain (+19%) as bad weather continues to affect production. Lettuce prices fell in the UK (-17%), Germany (-6%) and France (-4%) as good Spanish supply continues. Salad peppers rose slightly in the UK (+3%) but fell in Germany (-22%) as Dutch supply is ample and sizes are reported to be good. In the UK, prices fell for courgettes (-20%) and celery (-11%) as the Spanish supply switched to English supply. Carrots fell in the UK (-15%) and in France (-3%) as new season produce begins to come through following the wet weather in Europe.

Meat & Poultry

Liveweight cattle prices in Uruguay (+2%) and Brazil (+1%) both increased marginally, while prices fell in Argentina (-5%). EU deadweight beef prices went up in the UK (+2%) and France (+1%) as small herd sizes and tight supplies remain in these countries, while prices in Ireland (-4%) and the Netherlands (-2%) decreased. New Zealand lamb prices continued to rise (+1%) as there is a seasonally low level of lamb supplies during the southern hemisphere winter. Lamb prices in the EU remained steady (0%) on average as a large number of lambs reached slaughter weight earlier in the season due to the warm winter, so the traditional increase in supply at this time of year is not being seen. EU deadweight pork prices were unchanged (0%) on average, remaining up year-on-year as good supply was met with increased export demand. EU piglet prices fell (-8%) during July with the main falls seen in the Netherlands (-26%), Germany (-13%) and France (-10%), while prices in Denmark continued to rise (+1%). Deadweight chicken prices increased on average in the EU (+1%) with the sharpest gains seen in Poland (+13%). Chinese liveweight market prices for chicken decreased (-2%), while chicken prices in Brazil increased (+2%). Thai liveweight chicken prices fell (-4%) as the lifting of the ban on imports of uncooked Thai chicken only applies to chickens hatched after the ban which ended on the 1st July 2012. For fish, gains were seen for Norwegian farmed Atlantic haddock (+21%), EU plaice (+6%) and EU salmon (+4%).

Milk & Dairy

With the EU now past its peak in milk production, dairy product prices have firmed as milk supplies start to decline. Butter prices rose in the EU, with increases seen in Belgium (+4%), Germany (+3%) and France (+2%). Private storage aid (PSA) stocks have reached their highest levels for this time of year since 2009, with over 114,062 tonnes of butter put into storage as of 15th July 2012. EU dairy powder prices have been firm, supported mainly by lower than expected availability. SMP ended up (+3%) in the EU, while WMP remained relatively stable (0%). In New Zealand, as their season is about to resume with good prospects, price declines were seen for WMP (-8%) and SMP (-8%). UK whey powder fell (-11%). More activity has been seen in cheeses, with prices generally lower than at the start of the year. UK cheddar fell (-2%). In New Zealand, Cheddar prices were also down (-2%), but were up in the US (+3%). Polish emmental also fell (-9%). UK egg prices ended lower (-8%). EU egg product prices were down on average (-5%), with the largest movements seen in the whole liquid market (-15%).

Energy

Prices rises were seen for both Brent crude oil (+11%) on ICE London and light sweet crude oil (+10%) on NYMEX. High crude oil prices combined with the peak driving season in the US led to increases in fuel prices. Petrol prices rose on NYMEX US (+10%) and in the EU (+6%), and diesel prices were up in both the US (+10%) and the EU (+8%). Also in the EU, increases were seen for heavy fuel oil (+9%) and gas oil (+8%). Natural gas prices rose on NYMEX US (+10%) due to the hotter than usual weather leading to an increase in the demand for power generation, while in the UK, gas prices fell on ample supply at Bacton (-1%), but were steady on ICE London (0%). Electricity prices fell in both the UK (-11%) and the EU (-3%). Declines were also seen in EU coal prices (-1%).

Chemicals & Plastics

As the price of crude oil rebounds from the falls seen last month, the prices for EU plastic feedstocks were mixed, with spot prices for ethylene (+13%) and styrene (+12%) both up. However, butadiene (-10%), monoethylene glycol (-4%) and toluene (-1%) all continued to fall. Plastic prices are yet to react to the gains in feedstock costs with price falls seen for EU LDPE (-15%), LLDPE (-12%), HDPE (-12%), PP (-8%) and PVC (-3%). EU acid prices were mixed with sulphuric up (+30%) but hydrochloric down (-10%). US prices for urea fell (-5%), whilst US phosphoric acid increased (+4%) and diammonium phosphate remained unchanged (0%).

Pulp & Paper

World pulp prices were mixed as demand remained weak. Global pulp producer inventories stood at 34 days of supply in June, up one day month-on-month, but unchanged year-on-year. NBSK pulp prices were steady in Europe (0%), but fell in the US (-2%). BHK pulp prices rose in Europe (+2%), but declined in China (-2%). Prices for packaging produced from recycled paper continued to fall in Europe due to ample feedstock supply. EU waste-based fluting (-5%) and testliner were both down (-4%), whereas cartonboard (0%) remained unchanged. EU kraftliner continued to rise against the trend (+1%), up on the back of firm pulp prices in the EU.

Metals

Metal prices on the LME were mixed, moving in a limited range amidst uncertainty over the global economic prospects. Increases were seen for lead (+5%), zinc (+3%), aluminium (+1%) and copper (+1%), while declines were seen in tin (-4%) and nickel (-3%). Weaker industrial activity and falling feedstock costs weighed on steel prices globally. In the EU, prices fell for both cold rolled (CR) steel coil (-6%) and hot rolled (HR) steel coil (-2%), and in China, prices also fell for HR (-9%) steel coil and for CR (-5%) steel coil. Also in China, prices declined for both iron ore pellets (-10%) and iron fines (-10%). CR stainless steel prices were down in the EU (-2%) and in China (-1%). In precious metals, silver (+1%) was up, while gold held steady (0%) in London.

Others

Wool NZ (-13%), diamonds US (-3%), raw silk CN (+3%), US lumber CME (+9%), Baltic Panamax (+11%).

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