This is our new style Market Report and Product News. Through it, we hope to keep you informed and engaged about our products and services – yes, our value addition services such as Private Label and co-packing – and also about some of our exciting (and, sometimes, not so exciting) news.
2021 has started in much the same way as 2020 ended. The UK economy contracted during 2020, impacted by the lockdown due to fast spreading Covid infection and death rates. The lockdown is expected to continue over a good part of Q1 in 2021. Many businesses have closed, unemployment has risen and this will have a bearing on overall demand.
In addition, early impressions about Brexit appear to have increased regulations and costs for small business and will constrict demand in the larger EU market. Application of the Rules of Origin as per the Trade and Co-operation Agreement (TCA) signed between the UK and the EU will, in particular, have an impact on dutiable products which UK businesses import from outside the EU and then re-sell to the EU.
The last Quarter of 2020 also saw a shock in global freight rates, particularly from Asia to Europe. Freight costs went up by over 450% from certain origins to specific destinations (including the UK). This led to sharp increase in the import cost of some of the products we deal in such as desiccated coconut (see below). These cost increases were compounded by delays in shipment from origin due to a shortage of available sea containers and, in the case of UK in particular, inordinate delays in the ports caused, we understand, because of Brexit.
So much for the gloom and now for the good bits. UK’s vaccination rates have been very encouraging and one can hope that it will speed up bringing back normalcy in the economy. The demand for food has held up over these crises. With restaurants and leisure establishments closed, food demand expressed itself via increased home cooking, online and take away deliveries and innovation. There has been an interesting development in home delivered meal kits which are made up of raw, semi prepared or frozen ingredients with DIY instructions for how to finish preparing the meal at home.
- Prices have been firm since the last Quarter of 2020 driven mainly by the freight shock mentioned above but also by adverse weather, especially in the Philippines which had 4 seriously debilitating typhoons in November and an earthquake, and also by social distancing in factories after Covid lockdowns which led to per unit increases in the cost of production
- Our indicative current offers for 40 ft. full container loads of DC Fine and Medium grades from Indonesia are US$ 2900 and from the Philippines are US$3100, both on basis C&F Main European ports.
- Spot availability in both UK and the continent is very short and hence very expensive.
- Indian sesame seeds exports to Europe have resumed since early January after the EU and the IOPEPC (who monitor the Indian exports to the EU) agreedon a protocol for checking maximum residue levels of pesticides and ETO, in addition to the requirement for testing for absence of salmonella, which alreadyexisted, on every shipment to EU countries. Even though the UK left the EU on 31 December 2020, it is expected that UK importers will continue to followthis protocol.
- As a result of such extensive testing, the costs of sesame exports to Europe have increased. In addition, a 12000 mt Korean tender for sesame seeds hasbeen awarded to India and this will arrest any declining trend in prices. On the flip side there is adequate availability of raw material in India due tocompression of demand in the last quarter of 2020. So overall prices are stable.
- Indicative prices for full container loads of hulled sesame seeds from India are US$ 1945 and for natural sesame seeds US$ 1750 per mt, C&F UK and European ports. Indian shippers are currently not offering black sesame seeds to European ports due to inability to comply with pesticides protocol.
- We also offer sesame out of Nigeria. Nigerian prices are relatively firmer now as compared to India and there are some delays in shipment due to factors at port.
- Price indications for Nigerian hulled sesame seeds are US$ 1945 per mt C&F European ports.
COCONUT FANCY GRADES
- Coconut chips – raw and toasted – are very firm. Of the two main origin suppliers, Philippines is virtually not present in the spot market in Europe and Sri Lanka stocks are limited and expensive.
- Indicative prices for Raw Coconut Chips on ex works UK basis is £ 3.35 per kg and for Toasted Chips £ 3.53 per kg.
- Prices of two other speciality products we deal in – coconut smiles and sweet twine are also up to a significant degree.
- Our facilities in Indonesia offer a strategically convenient location for sourcing private label, contract packed creamed coconut for retail or for industrial use. Our factory is GFSI and organic certified and has state of art equipment. Our raw material desiccated coconut can be sourced not only from Indonesia but also from Philippines, thereby assuring security, consistency and stability.
COCONUT MILK & CREAM
- Here is a product which is dutiable and can have an impact on EU sales out of the UK. However, we can circumvent this by full container shipments directly from origin.
Thank you for reading,
Managing Director, Sumit Guha