PJC buyers facing prospect of inadequate cover in 2010
Friday, March 12, 2010
PINEAPPLE juice concentrate (PJC) buyers who held off from placing orders when prices started climbing last year are now in trouble, according to FOODNEWS sources.
It appears that more than a few buyers reckoned that prices would fall in 2010 and so they held off from buying. The latest news from Thailand is that the shortage of PJC, if anything, is likely to worsen and some buyers are definitely not covered. "A lot of people are worried and some are starting to panic," said a prominent European PJC buyer.
Compounding the problem is the canned pineapple market. This was expected to decline, but in fact has strengthened, reducing the amount of raw material available for juice processing. The fruit price has risen to THB6.50 per kg, an exceptionally high level, although prices are usually high early in the processing season and then fall somewhat.
The weather is making things worse. "It is very unusual," said another contact. "One day, we have heavy rains and the next day it is very hot." Another contact said that rain was simply not falling at the right time in the growing cycle. The months of January and February have been significantly hotter than they were last year, and both sea temperatures and the westerly winds have strengthened.
The USA's Climate Prediction Centre has said: "These oceanic and atmospheric anomalies reflect a moderate-to-strong El Niño episode ... expected impacts during March-May 2010 include drier-than-average conditions over Indonesia and enhanced convection over the central and eastern equatorial Pacific ocean."
Less raw material
The Thai Food Processors' Association has released its figures for last year's pineapple production. In 2009, Thailand produced 1.9 million tonnes of pineapple. Crucially, for this year, the association is predicting a 10-15% cut in the first-half production, which accounts for the larger part of pineapple output and which last year was 1.14 million tonnes.
The problem for buyers of Thai PJC is not necessarily one of price. Levels of US$1 950 per tonne fob are being quoted, which equates to around US$2 100/tonne c&f Rotterdam, and Thai PJC is duty-free now. Rather, the problem is of availability. There seem to be no free stocks anywhere. "Our people are sold out and are not committing to anything until the third and fourth quarters of this year," a buyer told FOODNEWS. "A lot of people are going out to Thailand to see for themselves. All the signs are that people are not getting their shipments and are not covered."
FOODNEWS has heard estimates that Thai processing plants have over-sold their PJC production by half, which would mean serious shipment delays for some buyers. Other sources reckon this is an exaggeration, but are unanimous that 100% of production (at least) has definitely been contracted. One buyer said that he had recently received an offer of US$1 850/tonne c&f for 65 brix PJC for delivery in the last quarter of this year which, given the current situation, sounds almost too good to be true.
Ratio problems persist. This season's PJC seems to be around 18-20 ratio ("not very exciting," commented one buyer), whereas 20-22 would be more desirable. In order to improve the ratio, much Far Eastern PJC may need to be blended with sweeter juice, such as smooth Cayenne from Costa Rica, but this too is in short supply and is presently priced at US$2 100/tonne c&f Rotterdam for 60 brix product. Much is apparently being processed into NFC juice for the US market. Some bottlers companies are reported to be adding Chinese Queen PJC to their blends, which smacks of desperation.
© 2010 Informa UK Ltd