McLane Global Market Report – November

TUNA – LIGHT CHUNK

The three month long fishing ban on Fish Aggregate Devices (FAD’s) was lifted as September ended but catches failed to produce the increase anticipated in October.  Low catches are partially attributed to management measures imposed by the Parties to the Nauru Agreement as many fleets have used up the allocated number of fishing days in certain Exclusive Economic Zones.  These fleets were forced to fish in less productive waters or stop fishing completely. This agreement has a big influence on the market because the eight signatories to this agreement collectively control 25 to 30% of the world’s tuna supply and approximately 60% of the Western and Central Pacific tuna supply.  The price of raw material crested the $2000/MT barrier in late September and cold storage holdings of raw material in Bangkok continued to decline. Usually this time of year sees an increase in processing activity in Thailand to take advantage of an EU duty quota but because of the high cost of raw material, major buyers have decided to wait for the price to drop.  In reaction, the market is buying only small quantities to cover their immediate needs in hopes of increased catches and lower prices.

McLane Global recommends customers take a “wait and see” approach in the coming weeks.  With canners in both Thailand and the Philippines struggling to secure sufficient raw material, pricing for finished product will remain firm or perhaps even increase through the remainder of the fourth quarter of 2011.

APPLES AND APPLESAUCE

The new season is just now underway and early quotes show pricing that will be much higher than last year.  Demand also continues from producers of apple juice concentrate and the raw material required for canned goods is too expensive to hold down costs.

McLane Global is urging its customers to see where this seasons pricing settles but to not wait in hopes of pricing similar to last year as surplus supply is not expected to exist.

FRUITS

The canning of Fruit Cocktail in China is just underway and there are no firm indications of pricing or crop viability.  The peach crop has come to an end with prices finishing as high as a 100% increase over last year.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012.

MACKEREL

Although total global production for 2011 will remain below historical levels, due the lack of any availability from South America, canned product is expected to be in good supply through the balance of this year. As stocks of spot inventory in the USA have been low, it is expected the market for canned mackerel will remain relatively stable, even as the main production season continues.

McLane Global suggests that customers take advantage of the attractively priced offers available from the canners at this point in time, and cover their needs through January of next year. It is unknown exactly when the current packing season will come to an end, and whether there will be any production from the South American canners beginning in early 2012.

MANDARIN ORANGES

Raw material costs are looking to be up 20% over the last packing season.  Production is scheduled to end in early January because the Chinese New Year holiday occurs earlier this year the normal.  Many buyers are waiting and buying for what they need with results pending on a court case against the anti-dumping duty in Europe.  All of this information points to a market that will be short.

McLane Global recommends buying now to avoid the coming rush when the U.S. and Japanese Brands make their pricing.

MUSHROOMS

It appears the packing season in China has gotten a later start than planned.  Early reports show that prices are up 10-15% over last year.

McLane Global is advising customers to that because of the late start it is too early to tell where the market will settle.  We will update when more information is available.

PINEAPPLE

The Thai pineapple crop is completely in flux right now as the extent of the damage from the flooding to the winter crop will not be known for weeks.  Most of the pineapple crop is grown on high ground and appears unaffected but the issues lie in getting the fruit harvested and to market on time.  All of the industries that support the canners are the most affected by the flooding.  Everything from ingredient and packing supplies, can makers, label printing facilities and cargo loaders at the port have limited or suspended operations.  Reports are that the summer crop should be ok, ironically, as long as there is enough rain from January to March.

McLane Global strongly urges that customers consider other markets besides Thailand to fill their immediate needs.  Indonesia is an option for choice quality although the bulk of their product is packed for food service sizes.  Viet Nam is another option although they have limited production and mainly in 15oz cans.  Chinese Pineapple is readily available for situations where choice quality is not the goal.

McLane Global Market Report – September 2011

TUNA – LIGHT CHUNK

The three month long fishing ban on Fish Aggregate Devices (FAD’s) will remain in effect until the end of this month. As a result, the price of skipjack raw material has once again surpassed $1800 per metric ton, with the expectation of higher pricing for September delivery to Thai canners. Catch reports continue to indicate that the overall available supply of raw material will be limited, at least through the end of September. The supply of raw material in the Western and Central Pacific fishing grounds is also expected to be adversely affected by additional restrictions being imposed in the 4^th quarter of this year by the PNA (Parties to the Nauru Agreement). The eight signatories to this agreement collectively control 25 to 30% of the world’s tuna supply and approximately 60% of the Western and Central Pacific tuna supply. Thai canners are now trying to build up raw material inventories in anticipation of this disruption in supply. With all of these factors considered, it is now unlikely that pricing for finished product will see any significant reductions for the balance of 2011.

McLane Global expects that little, if any, improvement in pricing levels will occur before purchases for October shipments. With canners in both Thailand and the Philippines struggling to secure sufficient raw material, and fishing restrictions in place for the summer, pricing for finished product will remain firm at least through the fourth quarter of 2011.

APPLES AND APPLESAUCE

Canners in China have finished production for this season on all apple products. Inventories of finished goods are virtually unavailable from packers there. However, any remaining offers have soared from the levels which were available last October, when the packing season was at its beginning. We have seen pricing for finished goods rise by a factor of over 20%.  Demand from producers of apple juice concentrate has remained strong and, as a result, the raw material required for canned goods is too expensive for producers to contain costs.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until October of 2011 at the earliest.

 

 

ASPARAGUS

Hopes for any significant improvement in the supply of raw material available for canning from the new crop season have faded quickly, as a result of an unexpectedly late harvest. The new crop will not be available to the canners at least until the end of September. The total acreage of asparagus plantings has been considerably reduced, as farmers in Peru have moved to more lucrative crops, such as fresh avocados and table grapes. In addition, the demand from both the fresh and frozen market segments has remained particularly strong. Therefore, producers of canned product are finding it an increasingly difficult task to obtain necessary raw material, measured both in volume and competitive pricing. Raw material prices are now at over a dollar per kilo, while historically growers received $0.25 per kilo for fresh asparagus. It is hoped that the canners will be able to start to receive raw material, and begin actual production by the end of this month. Canners are currently very reluctant to make any substantial or long term contracts for finished product. The entire canning season is now expected to only run from October through December.

McLane Global is strongly urging its customers to make firm commitments for all of their requirements through the end of the year as soon as possible. Importers are struggling to obtain any significant quantity of canned product from the producers. With canners unable to accept long term contracts, it is a certainty that pricing will remain strong, and serious shortages of available product will appear in the marketplace again for the next twelve months.

FRUITS

This year’s peach crop has virtually come to an end for this year. All of the growing areas in China have reported curtailed production, relative to the last few years. Packers there mainly packed for the Japanese market based on firm orders. In addition, there has been increased demand for fresh product from the local economy, as well as competition for raw material from fruit jelly packers. As a result, farmers increased the price of the raw material from approximately $1.20 per kilo to $1.45 per kilo. Although canned pear production is expected to begin later this month, raw material pricing has already risen from RMB $0.80 seen last year to its current RMB $1.50-$1.60 per kilo.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. The canning of fruit cocktail is expected to begin in late September or earlier October.

 

MACKEREL

Canners in China have been in full production during July and August. Raw material prices have moderated, which has led to significantly improved and competitive offers for finished goods. It is expected that the season will continue through the month of September. Although total global production for 2011 will remain below historical levels, due the lack of any availability from South America, canned product is expected to be in good supply through the balance of this year. As stocks of spot inventory in the USA have been low, it is expected the market for canned mackerel will remain relatively stable, even as the main production season continues.

McLane Global suggests that customers take advantage of the attractively priced offers available from the canners at this point in time, and cover their needs through January of next year. It is unknown exactly when the current packing season will come to an end, and whether there will be any production from the South American canners beginning in early 2012.

MANDARIN ORANGES

Canners in China are completely sold out of their production from this year’s packing season. There is little doubt that spot demand for canned mandarins will outstrip existing supplies. All available quantities of canned product have already arrived in the USA, and are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar costs and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

Although premature, early indications from the field report that there has been some damage to the flowers on the trees in the orchards from adverse weather conditions. This could hamper any attempts to increase production from the next crop.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

 

 

MUSHROOMS

Due to extremely limited available supplies of brine pack raw material, canners in China have passed on significant price increases for any finished goods still for sale. Accordingly, the current offering prices for finished goods are quite expensive. In spite of this, demand for canned product has remained strong throughout the summer months. This scenario will remain in effect until the next packing season of fresh mushrooms begins in the late fall. The first canning from the new crop is expected to begin in Hunan province sometime in October. This should be followed by new production in November and December in both Fujian and Shandong provinces. Although it is a bit premature to state for a certainty, as a result of reports of new planting of mushrooms in these areas, it is now possible that the next packing season may be accompanied by somewhat lower prices for finished goods.

McLane Global is advising customers to buy only as needed to fulfill requirements for the balance of 2011. It is expected that the first arrivals in January 2012 from the next mushroom canning season may reflect lower pricing for all sizes of canned mushrooms. New pack offerings are expected to be announced in early October. It is our opinion that customers should proceed to make their bookings for all requirements only through the end of 2011.

PINEAPPLE

Canners in Thailand finished the production from the summer crop in the middle of July. As a result, all factories have been idle through the month of August. The market situation has been difficult to assess as a result of the factory closings. It is now expected that plants will reopen in early September, and currently the fruit supply appears to be favorable. The field price for fresh pineapple being offered by the farmers is now 5.20 Thai Baht per kilo versus the 5.50 Thai Baht per kilo paid throughout most of the first half of the year. While the fruit costs may remain stable, other costs have been increased. Tinplate increased in July by 11%, sugar rose by 30 cents per pound and high oil prices are another threatening factor.

McLane Global strongly urges that customers cover their total requirements for the balance of 2011, as new crop merchandise will not arrive in the USA until January of next year. It is now expected that the pineapple factories will begin the season by offering product for October and November shipments.

 

McLane Global Market Report – August 2011

TUNA – LIGHT CHUNK

The three month long fishing ban on Fish Aggregate Devices (FAD’s) in the Western and Central Pacific Oceans began in July and will continue until the end of September. Packers in Thailand had taken a wait and see attitude, and had decided not to add additional raw material to their inventories until receiving catch reports from the purse seiner fleets. Early indications showed a sharp decline in the daily catch rates. This was been born out as the month of July elapsed. The first week of July showed a catch rate of 34 metric tons per vessel, while the catch rate by the last week of July fell to 11 metric tons per vessel. Demand for finished goods remains weak as buyers continue to remain on the sidelines, waiting for the market to decline. As a result, the price of Skipjack raw material has fallen to $1760 per metric ton from $1920 in early July. Raw material prices for both Yellowfin and Albacore remained strong, at $2660 and $3300 per metric ton, respectively.

McLane Global expects small reductions in offers for finished goods of light chunk tuna to continue due to weak demand from buyers in both the United States and Europe. However, it is not likely that we will see significant downward movement in pricing until we approach the end of the summer fishing restrictions at the end of September. It is hoped that pricing will moderate more quickly as offers for October shipments become available.

APPLES AND APPLESAUCE

The next pack season for canned apple products is not expected to begin until the end of October. There are no remaining stocks or offers of solid pack apples or applesauce available from canners in China. Stocks in the United States have begun to dwindle, as demand remains relatively strong. Although the volume and the quality of the next crop of fresh fruit is uncertain at this time, strong inflation in China as well as increases in tinplate and labor, point to higher pricing at the opening of the pack for finished goods.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until October of 2011 at the earliest.

ASPARAGUS

Canners of green asparagus in Peru are currently in the process of negotiating contracts for raw material from the growers. It is already apparent that the growers will demand significantly higher prices for fresh asparagus if it is to be directed to the canning sector. Demand continues to be quite strong in the fresh market. This is also the case from the packers of frozen asparagus. As these two industries are able to pay the growers much higher prices than the canners, the processing industry will be forced to place higher and higher bids in order to obtain their requirements. As discussed previously, the total acreage of asparagus plantings has been reduced due to farmers diverting their available fields to more profitable crops such as grapes and avocados. It is hoped that the canners will be able to start to receive raw material, and begin actual production by the end of this month. Due to the uncertainty in the raw material costs canners are, at this point, only willing to offer for August and September shipments.

McLane Global is strongly urging its customers to make firm commitments for all of their requirements through the end of the year as soon as possible. Importers will have to be decisive in moving quickly if they are to obtain any significant quantities of finished goods from the canners. With canners unable to accept long term contracts, it is a certainty that pricing will remain strong, and serious shortages of available product will appear in the marketplace.

FRUITS

The production of canned peaches began in the second half of July. The main areas of canning in China are Shandong, Dangshan and Lianyungang, with small production in Hebei province. All of these growing areas are reporting curtailed production, relative to the last few years. Packers there are, at present, mainly packing for the Japanese market based on firm orders. In addition, there is increased demand for fresh product from the local economy, as well as competition for raw material from fruit jelly packers. As a result, farmers have increased the price of the raw material from approximately $1.20 per kilo to $1.45 per kilo. Unless buyers in the USA are willing to place firm orders before the packing season ends, there will be little production available for shipment to the United States this year.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. The canning of pears and fruit cocktail is expected to begin in late September or earlier October.

MACKEREL

Canners in China resumed production of canned mackerel beginning at the end of July. Due to the new catch of fish having begun to land at the canners, we have started to see some moderation of prices now being offered for finished goods. The total global production of canned mackerel will remain well below historical levels due to the lack of production from South American packers. It is hoped that the canning season in China will continue into the fall months. However, it is still uncertain whether or not the South American canners will be able to start their production in January as is normally the case. As stocks of spot inventory in the USA have been low, it is expected the market for canned mackerel will remain relatively stable, even with the new production season underway.

McLane Global strongly urges that customers react promptly in covering any and all requirements through the balance of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict at this point what the fishing conditions will be in South America as the new season opens in January of 2012.

MANDARIN ORANGES

For all intents and purposes, canners in China are completely sold out of their production which ended in February. There is little doubt that demand for canned mandarins will outstrip existing supplies. Small quantities of retail size tins are still afloat, but these are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar costs and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

Although premature, early indications from the field report that there has been some damage to the flowers on the trees in the orchards from adverse weather conditions. This could hamper any attempts to increase production from the next crop.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

Canners in China are holding very small and limited stocks of brine pack raw material at this time. It is reported that these stocks are of relatively poor quality. Accordingly, the current offering prices for finished goods are quite expensive. As anticipated, there is currently little buying activity at the present time. This scenario will remain in effect until the next packing season of fresh mushrooms begins in the late fall. The first canning from the new crop is expected to begin in Hunan province sometime in October. This should be followed by new production in November and December in both Fujian and Shandong provinces. Although it is a bit premature to state for a certainty, as a result of reports of new planting of mushrooms in these areas, it is now possible that the next packing season will be accompanied by lower prices for finished goods.

McLane Global is advising customers to buy only as needed to fulfill requirements for the balance of 2011. It is expected that the first arrivals in January 2012 from the next mushroom canning season will reflect lower pricing for all sizes of canned mushrooms. New pack offerings are expected to be announced in early October. It is our opinion that customers should proceed to make their bookings for all requirements only through the end of 2011.

PINEAPPLE

Canners in Thailand have announced that due to favorable weather conditions since the beginning of the year, the total tonnage of raw material of pineapple from January through July reached 1.4 million metric tons, which is an increase of 37% over that harvested in 2010. Virtually all of the canneries have halted their production as a result of the current low season of available raw material. The cost of raw material remained fairly stable throughout the summer crop at 5.50 to 5.80 Thai Baht per kilo of fresh fruit. This enabled the canners to fulfill their outstanding orders on a timely basis prior to the end of the canning season. It is still too early to accurately predict the market from the winter crop which is now expected to begin at the end of October. While the fruit costs may remain stable, other costs will be increased. Tinplate increased in July by 11%, sugar rose by 30cents per pound and high oil prices are another threatening factor.

McLane Global strongly urges that customers cover their total requirements for the balance of 2011, as new crop merchandise will not arrive in the USA until January of next year.

McLane Global Market Report – July 2011

TUNA – LIGHT CHUNK

The market in Bangkok for skipjack raw material is currently stagnant, with pricing holding at $1920 per metric ton. The cold storage facilities in Bangkok are full, as packers have stocked up in anticipation of the fishing restrictions (FAD closures) which will be in effect in the western Pacific from July through September. During June, large quantities of fish were landed, partly due to good catches and partly due to the fact that fishermen wanted to unload their vessels prior to the FAD closures. For the summer, it is known that a number of fishing vessels will be dry-docked for refitting during the closure, so the total fishing effort will be reduced. Factories in Thailand have only been producing canned product for the national brands, due to the record high pricing for finished product.

The albacore market also continues to be quite firm, with raw material pricing holding at $3500 per metric ton, basis C&F Bangkok. This market is expected to remain steady for the foreseeable future.

McLane Global expects that little, if any, improvement in pricing levels will occur before purchases for October shipments. With canners in both Thailand and the Philippines struggling to secure sufficient raw material, and fishing restrictions in place for the summer, pricing for finished product will remain firm at least through the fourth quarter of 2011.

APPLES AND APPLESAUCE

Canners in China have finished production for this season on all apple products. Inventories of finished goods are virtually unavailable from packers there. However, any remaining offers have soared from the levels which were available last October, when the packing season was at its beginning. We have seen pricing for finished goods rise by a factor of over 20%.  Demand from producers of apple juice concentrate has remained strong and, as a result, the raw material required for canned goods is too expensive for producers to contain costs.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until October of 2011 at the earliest.

 

ASPARAGUS

The “short season” of canning which began in March and ran through early June has come to a finish. The next canning season is now expected to begin at the end of August or early September. At the present time, it appears certain that quantities from the next pack will remain very tight, with further price increases being foreseen. This is a result of a number of factors. A strong uptick in demand for fresh asparagus arose from all global markets. The price of raw material paid to the farmer from the last pack rose from approximately $0.20 per kilo to over $1.00 per kilo. There were also lower yields from the asparagus fields. Existing plants have matured past their prime and total tonnage per hectare was lower than normal. The total acreage of asparagus fields was also seen to be reduced. Farmers diverted a portion of their land previously devoted to asparagus to more lucrative and easier to farm items; these crops included red grapes for the European market, as well as avocados.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand for the balance of the summer months. With canners being unable to accept additional contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

The next crop of peaches is expected to be ready for harvest at the end of July, when actual canning will begin. At the present time, the outlook in Shandong Province in China is for a normal crop year. Total yields are expected to be in line with previous normal years. Initial offers for canned peaches are reflecting moderate increases of approximately $1.00 per case higher than the pack in 2010. The increase seen in pricing is the result of currency issues, higher tin plate pricing and the global price of oil.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. The canning of pears and fruit cocktail is expected to begin in late September or earlier October.

 

 

MACKEREL

With the possible exception of some small production which may yet occur from canners in Peru  there is not, nor will there be, any production of canned mackerel from South American sources for the balance of 2011. Canners in China finished their last production at the end of March. Demand remains strong, and supply is relatively low. The next packing season is expected to start this month, and run through September. Opening offers from the fish canners are reflecting significant price increases for finished product. There is currently a shortage of available product in the market here in the USA. As a result of anticipated strong demand from traditional markets, pricing is expected to remain firm for the entire canning season.

McLane Global strongly urges that customers react promptly in covering any and all requirements through the balance of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict at this point what the fishing conditions will be from the new season beginning in July.

MANDARIN ORANGES

For all intents and purposes, canners in China are completely sold out of their production which ended in February. There is little doubt that demand for canned mandarins will outstrip existing supplies. Small quantities of retail size tins are still afloat, but these are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar costs and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

Although premature, early indications from the field report that there has been some damage to the flowers on the trees in the orchards from adverse weather conditions. This could hamper any attempts to increase production from the next crop.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

The spring 2011 pack of canned mushrooms came to an abrupt halt in the month of April. Canners are continuing to attempt to utilize brine pack mushrooms in drums as a source of raw material which would allow them to pack additional quantities in the coming months. However, supplies of brined mushrooms are scarce. Another factor which is adversely affecting the packers is the fact that what brine mushrooms are available are of large sizes. This makes them suitable for packing foodservice tins, but not retail sizes. As a result, canners have continued to push their asking prices for finished product to levels not seen in recent years. As the next major growing season will not begin until November, and its subsequent canned product not arriving in the USA until next January, it is not expected that the market will see any easing in pricing for finished goods in 2011. As with other food commodities, all ancillary cost factors have also been on the rise. The best case scenario is that we will see a stabilization of pricing at current levels.

McLane Global now feels that there will be very little chance that prices will moderate from the current crop of mushrooms in comparison with present levels. It appears that market prices will remain firm for the balance of 2011. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the end of 2011.

PINEAPPLE

Unexpectedly, the raw material situation in the pineapple growing areas in Thailand has stayed at a near optimum level. This has allowed the canners to continue to produce finished goods past the traditional closure time in June. It is now expected that some of the pineapple factories will remain open until the end of July. Canners have been paying the farmers 5.40 – 5.50 Thai Baht per kilo. The factories are concentrating on completing orders from customers in both the USA and Europe before the annual shutdown. The early indications are optimistic for the winter crop which will begin at the end of September. However, tinplate costs have been confirmed to increase by 11% which adds approximately 4% to the total case cost. Therefore, it appears that the opening offers for canned product from the winter crop will not reflect lower pricing.

McLane Global strongly urges that customers cover their total requirements for the balance of 2011, as new crop merchandise will not arrive in the USA until January 

McLane Global Market Report – June 2011

TUNA – LIGHT CHUNK

Concern about the anticipated shortage of raw material due to the closure of the FAD purse seiner fishing grounds in the Western and Central Pacific, from July through September, has raised prices for June deliveries to the Bangkok market to U.S. $1870 per metric ton for main size skipjack. This contrasts with the price of $1550 in April, and $1700 in May. Some fish traders have opined that skipjack raw material will rise to $1900 to $2000 per metric ton as the summer months approach. There are very few buyers in the U.S. and Canada at the corresponding cost for canned product. The only production activity at present is being sold to the national brands.

There is still strong demand for finished goods from Japan. This coupled with the weak U.S. dollar, and the increasing prices for tinplate, is expected to cause prices to move higher still. The albacore market continues to be firm, as demand also remains strong. Raw material prices in Bangkok have reached record levels, trading at $3500 per metric ton.

McLane Global expects that little, if any, improvement in pricing levels will occur before purchases for October shipments. With canners in both Thailand and the Philippines struggling to secure sufficient raw material, and fishing restrictions in place for the summer, pricing for finished product will remain firm at least through the third quarter of 2011.

APPLES AND APPLESAUCE

Canners in China have finished production for this season on all apple products. Small inventories of finished goods are available. However, the current offers have soared from the levels which were available in October, when the packing season was at its beginning. We have seen pricing for finished goods rise by a factor of over 20%.  Demand from producers of apple juice concentrate has remained strong and, as a result, the raw material required for canned goods is too expensive for producers to contain costs.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

Canners in Peru have ceased all production from the short canning season which ran from March through May. No additional quantities on canned asparagus products will be available until the next harvest, which is expected to commence in September. Total tonnage from this past season was uncharacteristically below normal. Everything that could be produced was immediately shipped, as demand has far outstripped supply during 2011. Packers are already being very cautious of making any firm commitments from the next pack, and have also expressed their belief that the pricing will be 30% higher than the same season in 2010.

Factories in China are currently packing small quantities of canned asparagus. However, the total size of this crop is limited; therefore the asking prices for canned product has been nearly double of what the USA market has become accustomed to, with product of Peru.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to accept additional contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

Production of all canned fruits has come to a halt in China. The packing of small quantities of canned strawberries came to an end in May. Canners faced challenges due to drought experienced this past winter, continuing into the spring. Additionally, there is strong demand from U.S. and European buyers for this limited crop of strawberries which is pushing prices higher as the weeks go by. Little, if any, unsold stocks remain unsold in China. The canning of peaches is expected to begin at the end of July.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

 

MACKEREL

With the possible exception of some small production which may yet occur from canners in Peru, there is not, nor will there be, any production of canned mackerel from South American sources for the balance of 2011. Canners in China finished their production at the end of March. Demand remains strong, and supply is relatively low. The next packing season is not expected to start until July. Packers in both China and Thailand have sold the balance of their production as the last fishing season came to an end. It, therefore, is apparent that shortages of canned mackerel from all global suppliers will begin to appear. No unsold stocks remain at Asian canners. With the last supplies of canned mackerel having already arrived in the USA, the supply situation will become increasingly dismal

McLane Global strongly urges that customers react promptly in covering any and all requirements through the third quarter of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict at this point what the fishing conditions will be from the next season beginning in July.

MANDARIN ORANGES

For all intents and purposes, canners in China are completely sold out of their production which ended in February. There is no doubt that demand for canned mandarins will outstrip existing supplies. Small quantities of retail size tins are still afloat, but these are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

Although premature, early indications from the field report that there has been some damage to the flowers on the trees in the orchards from adverse weather conditions. This could hamper any attempts to increase production from the next crop.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

The spring 2011 pack of canned mushrooms came to an abrupt halt during April. Currently, canners are attempting to utilize brine pack mushrooms in drums as a source of raw material which would allow them to pack additional quantities in the coming months. However, supplies of brined mushrooms are scarce. Another factor which is adversely affecting the packers is the fact that what brine mushrooms are available are of large sizes. This makes them suitable for packing foodservice tins, but not retail sizes. As a result, canners have continued to push their asking prices for finished product to levels not seen in recent years. As the next major growing season will not begin until November, and its subsequent canned product not arriving in the USA until next January, it is not expected that the market will see any easing in pricing for finished goods in 2011. As with other food commodities, all ancillary cost factors have also been on the rise. The best case scenario is that we will see a stabilization of pricing at current levels.

McLane Global now feels that there will be very little chance that prices will moderate from the current crop of mushrooms in comparison with present levels. It appears that market prices will remain firm for the balance of 2011. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the end of 2011.

PINEAPPLE

The supply of fresh fruit for canning continued to improve during the month of May. As a result, the price of raw material to the canners moderated to Thai Baht 5.3 per kilo. This allowed the canners to increase production in order to catch up with their existing commitments to global customers. It is now anticipated that canning from this summer crop will continue in Thailand through the end of June. At that time, production will cease until the next winter crop begins. Demand for finished product remains very strong from buyers in the USA, Western Europe and Japan. There is also increasing activity from buyers in Russia and Poland.

McLane Global strongly urges that customers cover their total requirements for the balance of this year. The winter crop is not expected to begin until the end of September and the supply situation is unknown at this time. Exchange rates are expected to make the Thai Baht stronger and the costs of empty tins will increase by 15% in July 2011.

McLane Global Market Report – May 2011

TUNA – LIGHT CHUNK

Prices of raw material for canning in the Bangkok market rose to near record levels in April. Current trading levels for May deliveries to the canners have reached U.S. $1650 to $1700 per metric ton for skipjack raw material. Yellowfin raw material soared to $2200 per metric ton FOB Bangkok, while Albacore (remaining short) is trading at $3000 per metric ton for May deliveries to the canneries. With the situation in Japan still evolving, the effect on world fish markets remains uncertain. Apart from the direct damage to fish production and processing facilities, a key factor as yet undetermined, is the likelihood of increased domestic consumption. If this leads to higher imports, the impact on world markets would be significant. Thai canneries have reported limited production availability through July of this year, with strong demand from Japan. The factories are expecting firm pricing as they compete for reduced supplies of raw material in advance of the seasonal fishing restrictions in the Western and Central Pacific due to FAD closure for the three months, July 1^st through September 30^th.

The canning industry in the Philippines has reported that production figures for 2010 showed an overall drop of 7% over the previous year. This trend is expected to continue as 2011 progresses. The stakeholders in the Philippine tuna industry predict a lackluster performance after the Western and Central Pacific Fisheries Commission (WCPFC) banned purse seine fishing method in tuna-rich pockets of the Pacific Ocean.

McLane Global expects that little, if any, improvement in pricing levels will occur before purchases for September shipments. With canners in both Thailand and the Philippines struggling to keep production up with demand, and fishing restrictions in place for the summer, pricing for finished product will remain firm through the third quarter of 2011.

APPLES AND APPLESAUCE

Canners in China have basically finished production for this season on all apple products. Small inventories of finished goods are available. However, the current offers have soared from the levels which were available in October, when the packing season was at its beginning. We have seen pricing for finished goods rise by a factor of over 15%.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

Canners in Peru continue to report that the price and availability of raw material for canning has not improved to any extent. There had been hopes and expectations that the “short season” of March through May would result in some relief for a canned market which has been in extreme shortage. Unfortunately, total tonnage of fresh asparagus has remained very low. In addition, due to the strong demand from the fresh market, the growers have been able to command historically high prices which have caused most of the canneries to remain idle during this season. At this point in time, it appears that the market for canned asparagus spears, as well as cuts and tips, will see no improvement until the next harvest season which begins in August. Packers are already being very cautious of making any firm commitments from the next pack, and have also expressed their belief that the pricing will be in excess of 30% higher than the same season in 2010.

Factories in China are currently packing small quantities of canned asparagus. However, the total size of this crop is limited; therefore the asking prices for canned product has been nearly double of what the USA market has become accustomed to, with product of Peru.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to accept additional contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

Production of virtually all canned fruits has come to a halt in China. The only exception is that there is currently some packing of small quantities of canned strawberries at this time. However, the canners are facing challenges due to drought experienced this past winter, continuing into the spring. Additionally, there is strong demand from U.S. and European buyers for this limited crop of strawberries which is pushing prices higher as the weeks go by.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

MACKEREL

As previously reported there is not, nor will there be, any production of canned mackerel from South American sources for the balance of 2011. Canners in China finished their seasonal production at the end of March. Demand remains strong, and supply is relatively low. The next packing season will not start until July. Packers in both China and Thailand are now in the position of selling the balance of their production as the fishing season came to an end. It, therefore, is apparent that shortages of canned mackerel from all global suppliers will begin to appear. As a result, Asian canners have raised their prices sharply. With the last orders of canned mackerel having arrived in the USA in April, the supply situation will become increasingly dismal

McLane Global strongly urges that customers react promptly in covering any and all requirements through the third quarter of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict, at this point, what the fishing conditions will be from the next season beginning in July.

MANDARIN ORANGES

With the exception of some spot offers of one to two containers at a time, canners in China are completely sold out of canned mandarin oranges from the production which ended in February. It is now a certainty that demand for canned mandarins will outstrip available supplies. Small quantities of retail size tins are still afloat, but these are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

 

 

 

MUSHROOMS

The spring 2011 pack of canned mushrooms came to an abrupt halt during April. Currently, canners are attempting to obtain brine pack mushrooms as a source of raw material which would allow them to pack additional quantities in the coming months. However, supplies of brined mushrooms are scarce. Another factor which is adversely affecting the packers is the fact that what brine mushrooms are available are of large sizes. This makes them suitable for packing foodservice tins, but not retail sizes. As a result, canners have continued to push their asking prices for finished product to levels not seen in recent years. As the next major growing season will not begin until November, and its subsequent canned product not arriving in the USA until next January, it is not expected that the market will see any easing in pricing for finished goods in 2011. As with other food commodities, all ancillary cost factors have also been on the rise. The best case scenario is that we will see a stabilization of pricing at current levels.

McLane Global now feels that there will be very little chance that prices will moderate from the current crop of mushrooms in comparison with present levels. It appears that market prices will remain firm for the balance of 2011. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the end of 2011.

PINEAPPLE

Due to unexpected cooler weather and good rains during April, canners in Thailand are now expressing some cautious optimism that the current summer crop with continue through the end of May. Since the supply of fresh pineapple has shown some limited improvement, the canners are trying to squeeze the raw material pricing to 5.50 Thai Baht per kilo. Rather than being able to reduce current offers, the packers are happy to mitigate the losses which they incurred from the last crop. As a result of continued strong demand from Russian, German and Eastern European buyers, there will not be any reduction in current offers of finished product from the summer crop season. However, the summer crop, in general, may turn out to be sufficient for packers to fulfill existing commitments.

McLane Global strongly urges that customers cover their total requirements for the balance of this year. The winter crop is not expected to begin until the end of September and the supply situation is unknown at this time. Exchange rates are expected to make the Thai Baht stronger and the costs of empty tins will increase by 15% in July 2011.

McLane Global Market Report – April 2011

TUNA – LIGHT CHUNK

Raw material costs for all species of tuna have been severely affected by the disastrous earthquake and tsunami that hit Japan. Fish suppliers have withdrawn from sale on Albacore, and do not expect to reenter the market until the end of April at the earliest. The Sandei area of Japan is a major fishing area, and has a significant number of cold storage facilities for tuna raw material. These supplies are not available for sale as there is a growing perception that the fish of Japanese origin has radioactive contamination. There is now strong Japanese demand for tuna from other global origins. Additionally, canners in Thailand had been anticipating a steep reduction in the cost of skipjack raw material as the spring season approached. However, from a high of $1550 per metric ton in March, the market has only reached a bottom of $1475 per metric ton at this time. It is expected to rebound to even higher levels in May and June. In general, fishing has been poor in the Western Tropical Pacific, and reduced yields are expected as fishing restrictions are to be implemented from June through August. As a result, canners in Thailand have been in the market for significant quantities, in order to beef up their inventories prior to further increases in the cost of raw material.

McLane Global continues to advise customers to take advantage of current offers in the spot market, as the expected decline in canned product going forward seems to have evaporated. Prices will remain firm throughout the third quarter of this year.

APPLES AND APPLESAUCE

Canners in China have basically finished production for this season on all apple products. Small inventories of finished goods are available. However, the current offers have soared from the levels which were available in October, when the packing season was at its beginning. We have seen pricing for finished goods rise by a factor of over 15%.  Demand from producers of apple juice concentrate has remained strong, and as a result the raw material required for canned goods is too expensive for producers to contain costs.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

Canneries in Peru have been sitting idle for the past sixty days. Raw material remains in extremely short supply due to the seasonal weather conditions which growers have been facing. Any available raw material, which is being harvested, is going directly to the fresh and frozen markets at prices which far exceed levels at which canners could produce profitably. There had been some hope that the traditional “short season” of April and May would bring some relief to the bare market. However, up to this point, canners have seen no increase in supplies of available raw material. If the situation does not improve by the middle of April, it is possible that the canneries will not begin to produce again until the next major crop season in September of this year.

Factories in China will begin to pack limited quantities of canned asparagus by the end of this month. However, their opening offers for spears are approximately twice the price of the last pricing seen in Peru. Small quantities of cuts and tips, as well as cut asparagus may be priced competitively.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to accept additional contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

Production of both fruit cocktail and pears has come to an end in China due to the high price, and general shortage of raw materials. Canners in China have also been faced with strong increases in all cost factors, such as labor, tinplate and currency adjustments. Canners are, however, expected to begin producing relatively small quantities of canned strawberries at the end of April through May. An increase in offering prices has resulted, but strawberries remain at attractive levels for canned fruits.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into 2012. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

MACKEREL

As previously reported there is not, nor will there be, any production of canned mackerel from South American sources for the balance of 2011. Canners in China have finished their production at the end of March. Demand remains strong, and supply is relatively low. The next packing season will not start until July. Packers in both China and Thailand are now in the position of selling the balance of their production as the fishing season came to an end. It, therefore, is apparent that shortages of canned mackerel from all global suppliers will begin to appear. As a result, Asian canners have raised their prices sharply. With the last arrivals of canned mackerel expected in the USA in April, the supply situation will become increasingly dismal

McLane Global strongly urges that customers react promptly in covering any and all requirements through the third quarter of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict at this point what the fishing conditions will be from the next season beginning in July.

MANDARIN ORANGES

For all intents and purposes, canners in China are completely sold out of their production which ended in February. There is no doubt that demand for canned mandarins will outstrip existing supplies. Small quantities of retail size tins are still afloat, but these are expected to be spoken for very quickly. Canners saw a very significant shortfall in available raw material, as well as sharp increases in sugar and transportation costs. As a result, pricing for the finished goods will remain very strong through the end of 2011. Total output of mandarin oranges from the last packing season was reduced by 30 to 40 percent from that traditionally seen.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

Currently, production of fresh pack canned mushrooms is extremely limited. Weather conditions in the producing areas of China have been consistently unfavorable this season. Additionally, consumer demand for fresh product has been increasingly strong in China. The season for fresh pack production is expected to finish by the end of this month. As a result, canners are being very aggressive in their offering prices. They have already withdrawn from sale on certain types and styles of preserved product. As the next major growing season will not begin until November, and its subsequent canned product not arriving in the USA until next January, it is not expected that the market will see any easing in pricing for finished goods in 2011. As with other food commodities, all ancillary cost factors have also been on the rise. The best case scenario is that we will see a stabilization of pricing at current levels.

McLane Global now feels that there will be very little change in the offers from the current crop of mushrooms in comparison with present levels. Market prices appear to have settled for the balance of 2011. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the end of 2011.

PINEAPPLE

Presently, canners in Thailand are facing a shortage of fresh fruit, and are being forced to pay the farmers over 7.00 Thai Baht per kilo. This is very high by historical levels. Additionally, producers have to cope with increases in transportation both to and from their facilities due to the sharp spike in global oil prices. Demand from both the USA and European buyers remains strong, despite higher pricing for the finished goods. All of the canneries have large outstanding commitments for their remaining production capacity and it is expected that the summer crop will finish by sometime in June. The next packing season from the winter crop will not begin production until October/ November of this year.

McLane Global strongly urges that customers cover their total requirements for the balance of this year. Canners in Thailand expect to be short on canned product from the summer crop, and have therefore, already announced price increases. In addition, choice quality product will be adversely affected.

McLane Global Market Report – March 2011

TUNA – CHUNK LIGHT

The landed price of skipjack raw material soared to $1550 per metric ton delivered Thailand in February, up sharply from $1200 per metric ton. An improvement in fishing conditions during December and early January allowed for delivery of raw material, enabling traders to fulfill pending contracts in a timely manner. There was an increase in January deliveries to Thai canners of about 25% over the average monthly tonnage. This was mainly a result of late deliveries on existing contracts, and the January tonnage, which together reached over 80,000 metric tons. However, the additional raw material was absorbed by higher daily production by canners, mainly for branded commitments, allowing prices to remain firm. By the end of January daily catch rates dropped, forcing many refrigerated carriers to wait for cargoes at the Western Pacific transshipment ports. This trend continued throughout the month of February. Also weighing heavily on the raw material market is the pending fishing closures/ restrictions in the Western and Central Pacific waters, where over 60% of all fish are caught. This is causing additional shortages on the raw material supply, and upward pressure on market prices.

McLane Global continues to advise customers to take advantage of any spot merchandise available which may be priced well below the replacement cost for goods for arrival from overseas. Currently the big question is whether the market will take a breather prior to the upcoming closures in the main fishing grounds, and if so to what extent. Regardless of how this plays out, at the current time a firm market is expected through September of 2011.

APPLES AND APPLESAUCE

Canners in China have resumed very limited production after returning to work after the Chinese New Year holidays. Raw material costs remain extremely high. This has resulted in current offers for finished goods of solid pack sliced apples, as well as applesauce, increasing by over 15%. The factories would prefer to remain idle, rather than to produce canned product for which they would end up selling below cost. Thus far, there has been no decline in the pricing which the farmers are able to command for the stocks of raw material remaining in cold storage.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

As anticipated, the canners in Peru finished their production from the crop season which ran from September of last year through January 2011. Any available raw material is being processed for the fresh and frozen markets at prices which far exceed levels at which canners could produce profitably. The major problem is the extreme shortage of raw material. It is now firmly established that production from the crop season, which normally runs from March through May, will be extremely limited. It is expected that virtually all of this production will be used to satisfy outstanding commitments which were left unfulfilled from the last pack. Canners have, however, insisted on renegotiating the pricing for finished goods on remaining contracts. These price increases have averaged over 15%. The most critical factor at the current time is availability of any supply, rather than the ultimate selling price for canned product. Canners are also being very pessimistic, and conservative in their projections, for the prospects of the next major canning season, expected to run from September through the end of 2011.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru, and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to fulfill existing contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

Due to the very high pricing for raw material, many canners in China of pears and fruit cocktail, which would still be in progress in a normal year, have ceased production of these products. In addition to the sharp increases in raw material, canners have been faced with an increase in sugar costs from RMB 4000 M/T to RMB 7500 per metric ton. Additionally, the costs of empty cartons, labels, tinplate, labor and inland transportation continue to escalate in China. In lieu of producing pears and fruit cocktail as usual, from February through April, Chinese canners are now considering to begin the production of canned strawberries at this early point in time. Although a small item in total production, this would allow them to utilize their near idle production capacity. It is now expected that strawberry production will commence at the end of March, though at price levels sharply higher than last year.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into the new year. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

MACKEREL

As previously reported, there is not, nor will there be, any production of canned mackerel from South American sources for the balance of 2011. Canners in China have been producing since November, and will continue production only through the end of this month. Demand remains strong, and supply is relatively low. The next packing season will not start until July. Packers in both China and Thailand are now in the position of finishing up their production as the fishing season comes to an end. It, therefore, is apparent that shortages of canned mackerel from all global suppliers will begin to appear. As a result, Asian canners have raised their prices sharply. With the last arrivals of canned mackerel expected in the USA in April, the supply situation will become increasingly dismal

McLane Global strongly urges that customers react promptly in covering any and all requirements through the third quarter of this year. Due to the current market conditions, it is a virtual certainty that pricing will remain firm at least through this time period. It is not possible to predict at this point, what the fishing conditions will be from the next season beginning in July.

MANDARIN ORANGES

The canning of the current crop of mandarin oranges officially ended with the onset of the Chinese New Year at the beginning of February  Factories did not resume production when the holidays finished, due to the seasonality of the fruit. The total output of mandarin oranges in China was 30 to 40% below that of past years due to abnormally cold weather. In 2009 the cost of the raw material for canning ranged between RMB 1.0 to 1.2 per kilo; this season the fruit cost reached RMB 4.0 per kilo in Zhejiang province, and RMB 3.0 for the canneries in Hubei and Hunan provinces. Nearly all other costs of production also spiked sharply, with labor costs up 20%. The cost of sugar doubled and the RMB currency appreciated approximately 3% versus the U.S. dollar. It has also been reported that major, branded producers of juice products purchased 30,000 to 40,000 metric tons of canned mandarin orange cell sacs, shifting several key canneries’ capacity from the production of canned segments to the cell sac.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

Due to the abnormally cold weather and harsh growing conditions in the plantation areas of China, canners there announced significant price increases for finished product, effective at the beginning of February. The majority of the annual production of canned and brined mushroom takes place during the winter months. Therefore, even if conditions improve from the anticipated spring crop season, the total tonnage of canned product will be below historic levels in 2011. As the next major growing season will not begin until November, and its subsequent canned product not arriving in the USA until next January, it is not expected that the market will see any easing in pricing for finished goods in 2011. As with other food commodities, all ancillary cost factors have also been on the rise. The best case scenario is that we will see a stabilization of pricing at current levels.

McLane Global now feels that there will be very little change in the offers from the current crop of mushrooms in comparison with present levels. Market prices appear to have settled for the balance of 2010. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the first half of 2011.

PINEAPPLE

Canners in Thailand are reporting that 2011 may prove to be another disappointing year with regard to pineapple production and volume. As previously reported, the summer harvest, which is expected to run from the end of March through June, would largely depend on the rainfall during the first quarter of 2011. Regrettably, the levels of precipitation have fallen so low that a drought warning has already been issued for the main plantation areas in Pranburi province. This will make it increasingly difficult for the farmers to utilize any water for irrigation in their fields. The situation in the East Coast of Thailand is not as critical in terms of weather. There were some rainfalls in Rayong and adjoining provinces for a few days in February. However, the East Coast represents only 25% of the total plantation of pineapple in Thailand.

McLane Global strongly urges that customers cover their total requirements for the balance of this year. Canners in Thailand expect to be short on canned product from the summer crop, and have therefore, already announced price increases. In addition, choice quality product will be adversely affected.

McLane Global Market Report – February 2011

TUNA – LIGHT CHUNK

Canners in both Thailand, as well as the Philippines, have been very short of raw material to meet their production commitments for January. However, close to 80,000 M/T of skipjack raw material is scheduled to arrive in Bangkok by early February. This is huge amount of cargo, as the normal monthly tonnage is approximately 60,000 metric tons. This is despite the fact that the skipjack raw material is now being offered by the fishing fleets at $1490 per metric ton versus the price of $1000 per metric ton back in the first week of November. The sharp increase in pricing is largely due the fact that the total global catch of skipjack during 2010 showed a decrease of 15% from that landed in 2009. Additionally, the Eastern Tropical Pacific fleets which serve canners in South America experienced a 26% decline in their total catch. This caused fleets serving the Asian canners to divert raw material to Ecuador and other countries in the east. The current rumored price in Ecuador at present is $1550 per M/T. Canners in the Philippines now expect that the price of skipjack raw material will reach $1600 to $1650 per metric ton during February if the Western Pacific canneries are to operate at capacity. However, history shows that demand for finished product will more or less stop once skipjack raw material prices reach $1500 M/T. Some break in the pricing is now expected to appear in the market by late March to April.

McLane Global advises customers to take advantage of any spot merchandise available now in the USA, as these prices are still well below replacement costs. Based on the pricing that the national brands have been paying for raw material, it seems that their market pricing must increase. Meantime, there will be no immediate relief in the pricing for canned product at least until May.

APPLES AND APPLESAUCE

As previously reported, offers for apple products have soared over the past four months, due in large measure to the high demand from apple juice concentrate manufacturers. Farmers have been withholding significant parcels of raw material in their cold storage. The producers of canned product have largely remained idle, as they cannot sell the finished products competitively with the fresh apple prices so high. There is some thought that once the Chinese New Year comes to a close in the second week of February, farmers will begin to moderate their asking prices for fresh apples to the canneries.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to remain at historically high levels, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

Canners in Peru are finishing their production from the current growing season, and expect to end activity by early February. This will inevitably leave an extremely large shortfall in the total production of finished goods until the next harvest cycle arrives sometime in March. Upon closing of the factories, the canners will have failed to deliver all of the production which was contracted for from this packing season. Whatever raw material is available is going directly to the fresh market at pricing which is prohibitively expensive for the canners. The next packing season, known as the “short season”, is expected to run from March through May 2011. Shipping instructions, which have been left unfulfilled from the current crop, are expected to be produced from the next crop. The canners do not feel at this time that there will be any additional production capacity to allow them to take any new contracts from the next packing season beginning in March. It now appears that new contracts will not be available until the main packing season, which does not begin until August 2011. Even from the main season, canners have already advised that volumes will be conservative, and price negotiations will be intense and complicated.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru, and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to fulfill existing contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

The 2010 canning season for all deciduous fruits has seen a significant reduction in total quantities available for sale. Canned peaches are already sold out overseas, with fruit cocktail also in short supply. Certain canners of fruit cocktail have now advised their customers in the USA that they can only fully complete existing contracts if the customers are willing to raise the prices above the originally contracted and agreed upon levels. The expectations for the ongoing pear pack are now pessimistic. There have been corresponding increases in the pricing for the finished product. The contributing factors have been lower fruit yields, increases in raw material prices and in the cost of sugar. Of particular impact is the continuing decline in the valuation of the U.S. dollar to the Chinese RMB.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into the spring and summer of this year. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

MACKEREL

Canneries for Jack Mackerel in South America remain idle despite the new fishing season which traditionally begins during January. In Chile, the National Fisheries Council had set the 2010 quota at 1.3 million tons of jack mackerel. However, by the end of November, only 450,000 tons of fish had been caught. The new quota set for 2011 is now set at 315,000 tons of Jack Mackerel. Although fish freezing and canning plants in south-central Chile were active for 100 days a year on average in previous years, only 45 days of activity can be expected for the entire year of 2011. The drastic reduction in this year’s quota is a direct result of overfishing and plunging stocks of jack mackerel. The Fishery Departments in both Chile and Peru have ordered that steep reductions be made in fish catches for this year as a first step in attempting to help replenish the dwindling stocks of all major species in their waters. Canners in both China and Thailand will remain closed for a large portion of February due the New Year holidays, as workers and fishermen have returned to their homes.

McLane Global advises customers to quickly react to any available offers for canned mackerel, as the immediate resolution of a shortage of finished goods remains uncertain. The next packing season from the Asian canners will not commence until the spring, and pricing levels are unknown at this point in time.

MANDARIN ORANGES

The canning of the current crop of mandarin oranges has officially come to an end with the beginning of the Chinese New Year. Factories will not reopen when the holidays have finished, due to the seasonality of the fruit. The total output of mandarin oranges in China was 30 to 40% below that of past years due to abnormally cold weather. In 2009 the cost of the raw material for canning ranged between RMB 1.0 to 1.2 per kilo; this season the fruit cost reached RMB 4.0 per kilo in Zhejiang province, and RMB 3.0 for the canneries in Hubei and Hunan provinces. Nearly all other costs of production also spiked sharply, with labor costs up 20%. The cost of sugar doubled and the RMB currency appreciated approximately 3% versus the U.S. dollar. It has also been reported that major, branded producers of juice products purchased 30,000 to 40,000 metric tons of canned mandarin orange cell sacs, shifting several key canneries’ capacity from the production of canned segments to the cell sac.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

Due to the unusually cold weather, which China has experienced in the key growing areas, overall production of canned mushrooms is lagging behind historical levels at this point in the pack season. This coupled with the lack of any significant carryover from last spring’s pack has resulted in the offers for finished product to remain firm. It is uncertain if the weather will improve when the factories reopen after the Chinese New Year. Ideally, this would keep pricing of the raw material stable, as no significant decrease in pricing is anticipated.

McLane Global now feels that there will be very little change in the offers from the current crop of mushrooms in comparison with last season. Market prices appear to have settled to levels which are in the range seen throughout 2010. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the first half of 2011.

PINEAPPLE

The canners in Thailand are currently finishing their production from the winter crop. In the major plantation area of Pranburi, the abnormally cold weather, as well as the lack of any significant rainfall, has adversely affected the yields of this season’s crop. Packers in Thailand are feverishly buying up any raw material available as the reduced output of the fruit this season has left many canneries running behind production targets. Producers of canned product in Thailand are now paying up to Thai Baht 7.00 per kg for fruit, compared with around Thai Baht 6.00-6.50/kg at the start of December. The daily tonnage of available fresh fruit is quite low, and will remain so until the next crop in the spring. The major branded canners are also having difficulty in covering a shortage of finished product which was to have been shipped from the Philippines.

McLane Global strongly suggests that customers cover all of their requirements for the first half of 2011, as availability will decrease, while prices will certainly increase. It is not expected that there will be sufficient product of canned product from the next spring pack to satisfy total global demand.

McLane Global Market Report – January 2011

TUNA – LIGHT CHUNK

The cost of tuna raw material in Thailand took a dramatic turn in December, with main size skipjack raw material prices rising to $1350 per metric ton. It is now expected that prices will reach $1400 per M/T shortly. The odds are high that packers in Thailand will be forced to pay $1450 per metric ton by the end of January.

Most Thai packers had been anticipating a drop in the December raw material prices. Catches, however, did not support a price decline. Raw material sellers reacted to the Bangkok canners’ intention to push pricing downward by selling several carrier loads to other markets, such as Ecuador, Peru and Mexico. In those markets, the raw material from the Western and Central pacific fishing grounds exceeded the $1450 M/T level. Additionally, the fishing companies have seen very strong demand from European canners. The diversion of fish from the Thai market had the effect of exaggerating the shortage from the overall slow catches. Fishing for tuna in most major areas continues to produce less available raw material.

McLane Global continues to urge customers to cover all of their requirement through the first quarter and beyond, as no easing of prices is foreseen in the near future. Prices of finished product which is arriving in the USA in early January will be at least 10% lower than replacement costs based on current offers for February shipment from both Thailand and the Philippines.

APPLES AND APPLESAUCE

The conditions that the canners in China are facing continue to deteriorate. Raw material, although available, is now being priced by the sellers of the raw material at levels which make the finished goods uncompetitive on the world market. As a result, several of the large apple canneries have suspended production until they see the possibility of a reduction in the price of raw material. Unless that comes to pass, the packers have taken the position that they would rather close their facilities for the rest of the season, rather than produce canned product at a net loss.

McLane Global is strongly urging its customers to cover all requirements for canned apple products as far ahead as possible. Pricing is certain to continue to increase, and a shortage of available product will result, as the next canning season for apples will not begin until end September of 2011 at the earliest.

ASPARAGUS

The raw material situation in the growing regions in Peru has now reached a critical juncture. Canners expect that they will be forced to cease operations by the second week of January, rather than through the end of the month, as they do in normal years. This, coupled with the extremely reduced tonnage from the overall crop, has put the packers well behind schedule in their overall production. It is now certain that they will be unable to fulfill the contractual obligations made to importers in the USA and other global customers from this packing season. The next packing season, known as the “short season” is expected to run from March through May 2011. Shipping instructions which will be left unfulfilled from the current crop will be produced from the next crop. The canners do not feel at this time that there will be any additional production capacity to allow them to take any new contracts from the next packing season beginning in March. It now appears that new contracts will not be available until the main packing season, which does not begin until August 2011. Even from the main season, canners have already advised that volumes will be conservative, and price negotiations will be intense and complicated.

McLane Global continues to stress that there are absolutely no uncommitted inventories in Peru, and stocks in the USA are extremely limited. It is now a certainty that there will be a shortfall in supply versus demand. With canners being unable to fulfill existing contracts, there is no doubt that the market in the USA will see significant shortages in available product.

FRUITS

The 2010 canning season for all deciduous fruits has seen a significant reduction in total quantities available for sale. Canned peaches are already sold out overseas, with fruit cocktail also in short supply. Certain canners of fruit cocktail have now advised their customers in the USA that they do not intend to fully complete existing contracts. The expectations for the ongoing pear pack are now pessimistic. There have been corresponding increases in the pricing for the finished product. The contributing factors have been lower fruit yields, increases in raw material prices and in the cost of sugar. Of particular impact is the continuing decline in the valuation of the U.S. dollar to the Chinese RMB.

McLane Global is advising that customers be aggressive in purchasing their requirements of all canned fruits, as availability will tighten, and prices are certain to increase as we move into the new year. All current supplies will need to last until the next canning season which will not begin until late summer of 2011.

MACKEREL

Supplies of canned mackerel from all origins are reaching a point of critical shortage. Canners of Jack Mackerel in South America have not been in production for the past six months, and have no available stocks. The best case scenario is that packers in Chile and Peru will begin production in February of 2011. Buyers have been forced to purchase Pacific mackerel from canners in Asia. Packers in both China and Thailand are now in the position of finishing up their production as the fishing season comes to an end. It, therefore, is apparent that shortages of canned mackerel from all global suppliers will begin to appear. As a result, Asian canners have raised their prices sharply. With the last arrivals of canned mackerel expected in January, the supply situation will become increasingly bleak.

McLane Global strongly urges customers to place orders immediately for all requirements through the first half of 2011. It is certain that pricing will only continue to increase, as demand from customers in the U.S. will continue to be strong.

MANDARIN ORANGES

The outlook for this packing season of canned mandarin oranges continues to be extremely grim. With the season now more than two thirds over, canners continue to grapple with shortages of raw material, a sharply reduced labor pool, high sugar prices and a continuing appreciation of the Chinese RMB versus the U.S. dollar. As a result, firm offers have been unexpectedly difficult to obtain, and all offers from the canners have reflected increases of nearly 25% for finished goods. With the canning season coming to an end by the arrival of  the Chinese New Year in early February, there is no way for canners to recoup lost production time and lack of raw material. Additionally, mandarin packers are basically offering on a spot basis with very few willing to extend the shipment period. Offers which are available today may not be there tomorrow. It appears certain that the market will experience ever higher prices and a severe shortage of available stocks from this mandarin season.

McLane Global continues to stress to its customers that they should immediately take advantage of any available offers and stocks of canned mandarin oranges. It is now a certainty that supplies will not be ample enough to cover all requirements for 2011, as the next packing season will not begin until November of 2011.

MUSHROOMS

The new mushroom crop in China began in the middle of October. Compared with the serious shortfall in the previous pack, the mushroom growing acreage has recovered in most areas. Optimistically, it was hoped that the overall harvest from this season would see an increase of 40,000 to 50,000 metric tons. However, early in the packing season, the northern provinces were hit by unseasonably cold weather. In addition, the major growing region of Fujian province was hit by typhoon Megi. The total impact on the size of the harvest is still being evaluated. From the early crops beginning in Henan, the cost of the raw material has been fairly stable at 7.00 RMB per kilo which is slightly higher than the crop from last year at this time. This trend is expected to continue through the early spring. As the economy recovers, the demand for canned mushrooms is expected to increase. Due to the severe shortage in the last crop, demand is now very strong from both the European Union and Russia. China has also seen a significant increase in consumption from the local market.

McLane Global now feels that there will be very little change in the offers from the current crop of mushrooms in comparison with last season. Market prices appear to have settled to levels which are in the range seen throughout 2010. The question that remains is whether the total tonnage from this crop will be sufficient to meet demand from all the various global markets. It is our opinion that customers should proceed to make their bookings for all requirements through the first half of 2011.

PINEAPPLE

The peak of the pineapple growing season in Thailand has now come and gone. The total production of all the canners was reduced during this winter crop, as they were forced to intensely compete for available raw material, driving the price of fruit to 6.40 to 6.70 Thai Baht per kilo. Another factor which the processors have had to face is the overall poor quality of the available raw material. As the demand from canners was keen, fruits from some of the plantations were not fully mature before being harvested, and brought to the canneries. This will have a strongly adverse effect on the supply of Choice quality pineapple.

McLane Global recommends that all requirements be satisfied promptly, as the winter pack in Thailand will begin to wind down during January. This crop season did not yield the tonnage anticipated and the next spring crop is quite uncertain at this point in time.

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