The summer doldrums are with us and markets are quiet and slow.
The Brexit currency shock has seen prices for brazils in sterling
terms rise precipitously in the past 3 weeks.
It looks like sterling will not recover for a while so we had better
get used to levels back in the £6 something per kilo for wholes.
Back at origin, there is a two tier market developing: A premium for
the BRC or equivalent standard and a discount for those who have
not yet got there. Clearly there is now incentive for all non
certificated Bolivian factories to pull themselves up and this can
only be a good thing for the whole industry.
Sellers seem comfortable at current price and are happy to be
producing and selling steadily. There is no large stock building up
and burning a hole in pockets anywhere in the supply pipeline.
After last years’ price fall in the fall, due to an influx of raw
material before the rainy season, forward orders this year from
October are subdued because buyers do not wish to be caught for a
is unlikely to recur this season. It is a small crop and some
fairly sizeable factories are planning early closures, within the
next few weeks. They may not open again until February.
We are not
necessarily predicting that prices will go crazily upwards but we
are going to stick our neck out and say that no serious declines in
price are expected until well into next year.
If sales in the
wholesale nut business are the bell weather
for the economy at large then we may soon
have more important matters to concern us
than the price of Brazil nuts.
As we can see
from the latest California almond shipment
numbers for October 2015, much of the world
has found the recent high price of nuts too
much to bear, especially when they are
dealing with economic slowdowns in the Far
East, Strife generally in the Middle East
and deflationary spirals in the West.
We thought that
Bolivian production was just about finished
towards the end of Summer but the high price
encouraged a second harvest , production has
continued coupled with a slowdown of demand.
prices have weakened significantly lately.
We are 60 cents from the year’s High price
remains resolutely moderate. Stocks may
build until buyers return. Where do we go
We have given
up making predictions because the only
certain is that they will be wrong, however
many scenarios we try to cover.
material available for sale, ex store UK.
2014 has been a difficult time for Brazils.
Firstly the yearly rains came earlier and heavier and were more
persistent than usual.
This and perhaps a new dam further down the Amazon caused widespread
flooding in the collection and processing areas in the Pando region
We are used to the problems with roads, bridges and ferries going
down and causing long delays in shipments
but this time it really is different.
The flooding of production facilities has limited the volume of
material available for shipment and the much higher percentage of
wet damaged raw material are seriously impacting on the yield.
The upshot of all this is that with 7 months of consumption to run
before 2015 crop starts to arrive,
There are no offers and the crop is exhausted.
Very little unsold material is expected to come to the market in the
Brazil nut crop is very short this year and problems seem to be
compounded by shippers defaulting on their contracts.
That said, demand is also lacklustre considering the high prices
reigning at the moment.
However, prices are not likely to fall as the market will be
kept firm by importers scrambling to re-buy the
some time in the future, the shortage will be contained by the
very high prices and we will see more reasonable prices.
Please bear in mind, though that Many factories are closing
early or already closed and the 2014 crop will not start to
arrive before April.
This is a bad situation which seems only to worsen.
Contact us for any requirements you may have
and we will endeavour to give you a firm price.
At this point
it may be worthwhile reminding ourselves about the price
movements for 2011 crop.
The low was
around $3.20 per lb FOB origin early in the season, rising to a
high of around $5.20 during the Autumn.
Since then we
have seen a steady erosion at the price, bringing us to a point
now where we are now below the low set in 2011.
levels, considering the price paid for raw seed, no shipper can
make money. We are expecting some of the weaker producers to
throw the towel in soon. Whether their production capacity will
be taken up by others is an open question.
importer level, only the very brave or stupid who shorted
the market can possibly have made any money and there has been
zero incentive to bring in any material unsold as losses would
that the spot market, both in Europe and USA is very tight
despite appalling demand, and showing a premium of 60 – 80c per
lb over the nominal prompt shipment price from origin. This
premium could conceivably increase in the next few weeks if
demand starts to revert to anything like normal conditions.
It is likely
to persist until enough unsold stock is weighing on the market
to pull prices back in line.
But the catch
22 is that whilst the market is weak, nobody is going to bring
in Brazils unsold, so the premium lives on until we hit bottom
and turn around with prices starting to tick upwards.
prices may well start to take on some momentum as shorts and
users with inventories that they have run precariously low are
pulled in to cover.
Maybe we will
eventually see the shipment price rise to meet the spot premium
somewhere in the middle, depending on how aggressive the move up
Yes, this is a
little speculative but the bottom line is the following:
What harm can
buying for your October/November requirements at below the 2011
lows do? If you leave it until you need to buy on the spot you
will be paying over $1,700 per tonne more!
us with your requirements for firm prices below $7,000 / E 5,700 or
£4,500 per tonne for whole Brazils..
This years season began
with much higher than normal prices, then proceeded to rise up to
Many buyers held back
early in the expectation of a massive crop and falling prices from
Bolivia. When they eventually bit the bullet and bought, this only
added fuel to an already raging fire.
Thus we saw F.O.B.
levels start around $3.40 per lb and finish at near $5.20 per lb.
At the moment, the
price is the only bearish factor in play. Production has ceased and
new crop shipments will only start to get under way in Feb/March
2012, weather dependent. This means arrival April at earliest in
There are pockets of
spot stock available in Europe but fierce resistance exists to the
sky high prices, so not much is moving at present, however it is
very probable that 2012 crop will arrive to bare floorboards. The
lack of material in the supply pipeline is bound to keep prices high
well into Spring 2012 and maybe further.
'High prices have long
arms' so it is logical, indeed, conventional wisdom, that the volume
of raw seed collected will be abundant next year. But that was not
the case this last year. Several factors are at play: Brazil is
exporting considerable volume of in shell for cracking in the far
East, especially China. They are also protecting their own interests
by clamping down on the cross border trade with Bolivia, who need to
import Brazilian seed to keep their factories running.
Incredibly, Brazil is a
net importer of shelled Brazil nuts due to the burgeoning demand in
their healthy economy.
All of this is written
with the backdrop of a wider recession, or worse, possible in the
global economy. Only one thing is certain in these uncertain times:
People will NOT stop eating nuts!
It has been a
long cool summer for nut sales.
have felt the chill winds of demand destruction due to over-pricing
and more recently an icy blast from the falling purchasing power of
We do not
think, however that stocks have built up to unmanageable proportions
over the past weeks and with prices in dollar terms a little more
sensible than in June, we think that the nearby Christmas seasonal
demand could be lively. There is still much business to do.
been able to go on their holidays and relax. Staying away from the
market has worked and prices are softer.
Demand seems to
be off too, although patchy and hard to quantify: Organic and
Fairtrade goods seem to be the worst hit as consumers tighten their
belts and consider that 'charity starts at home' ; 30 to 40
percent off in places.
On the other
hand, Chocolate manufacturers are seeing an increase in demand.
companies, the aggression of the retail downturn has taken them by
They have been
happy to let their stocks run down over the summer and are confident
that they will be able to buy their requirements from an
over-stocked spot market this autumn.
We can tell
that this is true because many importers are stating that forward
orders for the next 6 months are down by 70 to 90 percent.
Compare this to
the actual sales slowdown of 0 to 30 percent and we can see the
possibility of an eventual shortage occurring.
something spectacular happens to change the course of events, we
believe that the above mentioned ' disconnect' will become painfully
apparent some time during the last 3 months of 2008.
importers are changing the way they behave.
suffered capital destruction on an unprecedented scale as they have
been forced to deliver cheap cashew contracts against very expensive
unclear future, not only in specific nut markets but also in the
national and international economies, they too have been loathe to
make forward commitments without a firm order from their customers.
mentioned capital destruction means that they can no longer afford
to keep such high levels of stock.
With a weak
dollar and strong Euro, importers were doing ok picking off cheap
cashew sellers, waiting for the goods to be shipped and then selling
them to industry.
But with the
resurgent dollar and weak summer demand, and especially the lack of
spare funds, all that has changed.
difficulties have forced importers into a situation where the
shipping documents for arriving goods are still unpaid at the bank.
These are goods which should really be available ex store at this
time of year but they are on the quay.
a bottleneck where cash is king. And some buyers may be able to take
advantage of this situation in the short term.
exporters are weakening their price expectations.
remember that forward orders are at their lowest levels ever. After
the financial bottleneck is cleared there will not be enough goods
to satisfy seasonal demand with a shortfall of up to 50 percent....
If we are right that is..........
FEBRUARY - 2008
Traditionally, this is a quiet time of year for
this commodity as the new crop is being collected, transported to
the shelling plants and assessed for quality and volume.
First indications are that 2008 crop will be
normal in terms of the amount collected.
This is the wet season in the Western Amazon
and we are used to hearing stories of roads and bridges being washed
away. Transportation difficulties tend to be the norm rather than
Except: Due to the weather pattern called ‘La
Nina’ bringing large amounts of moist air from the Eastern Pacific,
The Andes are suffering unusually high rainfall. This is now flowing
into the Amazon tributaries and causing flooding in areas normally
Nobody can predict how this will disrupt the
Brazil nut crop until the story plays out in real time, but delays
are inevitable. At the moment we are looking at up to 6 weeks.
In the meantime we must humbly eat Brazil
pie because the shortage we were expecting to bite towards the end
of 2007 has not come to pass. This is because demand for xmas sales
was subdued, probably due to the supermarkets ignoring this item.
Several seasons ago, when in shell brazils became unavailable due to
aflatoxin problems, Kernels were promoted as a seasonal alternative.
Generally this did not occur during xmas 2007.
We do not, however, expect 2007 crop prices to
fall significantly as the stocks are in strong hands and we have
until at least early May – in a normal year - for the new crop to
arrive in any volume.
We understand that in times of uncertainty -
which we are certainly facing in the larger financial and banking
fields – buyers tend to be cautious.
This may explain why so little forward business
has been concluded in Brazils. However, with just about every
agricultural commodity seeing unusually large increases in price, it
is becoming apparent that the falling U.S. dollar is buying less,
making it unlikely that we will see weakness in this market any time
Brazil Kernel Market Report
Like the seas, this market is forever on
the move as the many factors that drive the price upwards
and downwards continuously change.
So far this year we have seen a
relatively quiet and orderly increase in prices by more than
35%. But it is questionable whether the calmness is set to
remain in place.
2007 crop appears to be much shorter
than last year as producers are reporting difficulty in
securing sufficient raw in shell material to meet the annual
demand of about 25,000 m.t.
Here is how the numbers compare:
Carry in from 2005 : 3,200 m.t.
Bolivian Prod/n :
Carry in from 2006: 1,600 m.t.
Bolivian prod/n 14,400 m.t.
So it is beginning to look like supply
will be down 6,800 tonnes or about 425 containers or 25%
The shortage appears genuine. Even at the
much higher prices which are reigning now,
we are finding difficulty in obtaining
offers from origin and most suppliers will not even hazard a
However, second hand sources may be
willing to take profits on their earlier purchases and with
the summer lull now fast approaching, it
is possible that we may see a cap on the market at
current levels for the next few weeks.
Price considerations aside, we think that
exhaustion of supply is a real possibility later this year.
First 2008 crop arrivals will not start
to trickle in until during April.
It may be that the rise in prices so far
will destroy demand for the missing 25% of the crop.
We saw demand destruction
during the short crop of 2005 but prices then peaked at
more than 50 % above the current level and also
the dollar was much stronger then. Although we have seen $
strength recently due to the bond market inferring higher
interest rates, we consider that the greenback will resume
its slide before too long as more central banks start to
hedge their reserves into alternative currencies.
agree, you may wish to consider keeping your forward nut
purchases in dollars .
If you have not already done so, we
suggest that a serious look at cover for last quarter 07
and first quarter 08 for your Brazil nut supply is
In our humble opinion buyers need to have a good hard think as
to whether they can continue to pay higher and higher prices for
their supply, because if they can not, someone else will.
If you want to stay in :
Book, book forward, book forward as far as you can.
Remember who told you first. Look at our previous reports. This
market has more bull in it than Pamplona. We have nothing to offer
you at the moment, if you do decide to make a move, contact us and
we will try to help.
Brazil Kernel Market Report
Forward prices have been weak until recently as shippers at origin
look to make sales to raise finance for their annual seed purchases.
But those needing to buy spot in the next few weeks will not find
themselves benefitting from this situation.
Stocks in European warehouses have never been so low and replenishment
is not on the horizon.
There is nothing unsold afloat, nothing on our books due to be
shipped for at least another week which means a continuing hole
in the supply for at least 6 weeks.
Then, for ' a while ' anything that does come afloat will be sold
whilst on the high seas. We can not predict how long that ' while '
will be, but only after the pent up demand backlog in Europe is
Expect the premium spot over March shipment to increase in the
next few weeks, even if, as now looks possible, the forwards themselves
start to firm up in the interim.
We do have very limited amounts of stock to sell.
Brazil nut Market Report
This is a market to be brave in. On a forward basis, prices in
£ have dropped considerably during the first days of 2005.
We can now offer at £ 2.75 per kilo ex store for June onwards
In the meantime spot, also is a little easier at £3.90 per
kilo ex store.
Prices for the first half of this year are on a sliding scale between
Do not be fooled, however into thinking that these prices will
continue into the coming months, there are specific reasons for
the current weakness which have the potential to disappear like
the morning mist.
Firstly look at the situation from the shellers point of view.
They only have eyes for the supply side scenario and with seed
prices at an all time high, they need to make sales in order to finance
this years operations. Accordingly they have been offering lower
and lower during January in order to make a start whilst, worldwide,
buyers have been taking a breather whilst they literally take stock
of the situation. To be fair, prices were overdone in the last quarter
of 2004 and a correction has been overdue.
High prices have long arms and, accordingly, this years crop is
certain to be a large one as rainforest inhabitants break their
backs to cash in on the high seed prices.
I'm afraid that if you are looking for any further bearish news
in this report, you will be disappointed.
Last years crop was also brought in under historic high price circumstances
and it has all been sold.
The crop size is only 30 to 50,000 tonnes, compared with ten times
that amount for Hazels, for example. So even a sizeable increase
in supply is relatively insignificant compared with other major
And have you seen the price of Almonds and Hazels.?
If you normally have forward cover for tree nuts, have to have
them for your production, and are waiting, hoping, praying even,
that prices will fall in the coming months because it always has
in the past, then in my humble opinion you will be disappointed
and wrong footed.
The reason for the high prices is not poor crops but a huge groundswell
of increased global demand for these products following a plethora
of news confirming that eating nuts will improve your health.
We have heard from some customers that brazil nut sales to the supermarkets
are up by 100% year on year.
Brazil nuts, as you will be aware, are the best natural source of
Selenium. Eating 2 brazil nuts per day, as more and more people are
learning, can help to prevent cancers, heart disease and a raft
of other disorders and illnesses. In the early stages of HIV infection,
the virus neutralises Selenium in the body and it is becoming recognised
that taking a supplement of this trace element can actually conquer
Divide the largest possible Brazil nut crop by 365 and share it
out 2 nuts per person. How many people can be fed? answer about
22 to 25 million. This compares to a world population of 6.4 billion.
On a slightly less ethereal note, suppose you were a nut mixing
operation, at current forward prices, wouldn't you be planning to
put in as many brazils at half the price that Almonds and Hazels
In short, do not expect the current low prices to reign for too
long, take cover before it is too late.
Brazil nut Market Report
It is clear that the reason for the current runaway bull market
in Brazil kernels is due to greatly increased demand, perhaps 25%
on the year.
It appears that This nut has been promoted from 'Whole food' to
'Health food'. The recent and ongoing press articles encouraging
people to eat 4/5 brazil nuts per day if they want to keep healthy
is keeping sales of packed brazil nuts high at the supermarkets.
The increases in price have, until recently been absorbed to a
greater extent by suppliers to the supermarkets and a great deal
of pain has been felt.
Additionally the word on Brazil nuts' health giving properties has
spread worldwide and fresh demand is springing up in places as diverse
as Israel and Morocco.
Not that the supply has been any smaller than usual, indeed 2004
crop may be one of the largest on record as prices were historically
high when the raw nuts were collected last winter.
In other words, the jungle was scoured for nuts last year, It is
unlikely that supply can increase significantly in 2005.
The free on board price is now at $4.00 per lb. The historical
high, prior to this year was $2.10 . At the moment there is no let
up in the demand.
The big question is whether and by how much these higher prices
will dampen demand in the longer term.
Our guess is that there has been a paradigm shift in demand which
will not put healthy eating buyers off and that higher prices will
be the norm for brazil nuts.
Macadamia nuts have been selling at between £7 and £12
per kilo for many years.
The total crop size on Brazils is 30,000 m.t. Compare to Hazelnuts,
for example 500,000 m.t.
High prices will definitely rein until at least May 2005 as the
first shipments of new crop during Feb/March will be snapped into
the jaws of a market bereft of stock.
Only when the supply pipeline is refilled later in 2005 will we
see what longer term effect higher prices are having on the overall
Demand outstrips supply
All time highs are being made at the moment as the problems of
the past few months start to bite.
The small crop has been repeatedly delayed by late rains, industrial
disputes in production, civil strife, bridges down and port strikes.
All this comes at a time of unprecedented fresh demand from the
U.S.A. (healthier eating) and many other countries with developing
middle class economies and populations looking to eat and snack
The Sunday times recently listed Brazil nuts as the top anti - ageing
food of all.
Raw seed arrivals from the primary rainforest will soon slow dramatically
as the Amazon rivers, currently filled with Andean snow melt and
seasonal rains starts to drop. No self respecting commercial barge
owner will sail on a falling tide, especially if the tide is annual.
So the situation is difficult to say the least. Spot prices are
around $2.60 per lb ex store. Afloat around $2.35 per lb F.O.B.
In our earlier report we suggested that when the supply pipeline
started to fill, prices would start to fall. At the time of writing
the shortages are still reigning with only a few containers afloat
unsold to ease the situation.
The big news is on the forward market where the discount on future
months is rapidly reducing into the future, now higher prices have
been established through till the end of this year as it becomes
apparent that supplies will dry up completely before the end of
this year. This will inevitably affect 2005 crop in a similar way
as no material will be arriving between December and April. So 2005
prices are now beginning to firm in line.
Thinking forward, raw nut prices will be very high at the start
of 2005 crop. This may force some, or maybe more than some of the
smaller shippers out of business as they do not have the funding
to buy. This may, again, cause problems but this time in production
All in all, the two major Bolivian producers have played a clever
hand of cards, they are in the driving seat for the foreseeable future,
the only question marks being:
1) How much more will be collected since high prices have long
2) How much will the high prices rein back demand?
To answer Q1: There will be more collected, no doubt but this is
limited by the non existent communications infrastructure in the
jungle. A normal crop is around 30,000 tonnes. Compare to the Turkish
hazelnut crop of 500,000 tonnes. Lets say a miraculous 50% increase
in Brazil supply is achieved, this is still only 45,000 tonnes.
Q2: £1000 per tonne increase is only 10 p on a 100g supermarket
pack where they are charging £1.37 per pack. inelastic when
people are looking for the healthiest of foods.
Today We see a confused situation with high prices remaining in
place for spot material, whilst forward prices decline sharply as
we move forward.
The question is, how much material will it require to refill the
supply pipeline and when will the pressure be relieved?
Shipments have been made in March. These will start to arrive in
the next few weeks, however we believe that they will all be spoken
for until late April/early May.
At origin, there are two conflicting stories depending upon the
availability of raw nuts from the jungle.
Firstly, In Riberalta, Bolivia, due to the high prices paid by
the strongest two shippers, many of the smaller processors are not
able to procure green nuts and are asking for extensions across
the board for deliveries from March/April to Sept/Oct to go forward
to 2005 crop.
However, the stronger (and larger) two shippers have paid fancy
prices for their material and appear to be holding prices up in
the hope that they can control supply.
They may be successful, but the odds are against high prices remaining
in place throughout this season as 'high prices have long arms'
meaning that the collectors in the jungle have every reason to find
and sell as many nuts as they can find whilst prices at the factory
goods inwards door remain high.
Brazil will play a more active part in this years scenario as they
gear up to produce more brazil kernels and sell into the higher
We expect prices to go into serious decline from May/June onwards
as buying interest fades into the summer and the supply pipeline
All the above assumes a steady pattern of demand
with a tailing off of new orders as the price increases. We think
this may be the curve ball in traders expectations in the future
as more and more exports to the hugely populated countries of China
and Russia continue.
We have stock in all positions and would be glad to assist with
any specialist grades which you may require.
Prices are steady at the very low levels they have been at
for some months.
Demand has been lacklustre whilst supply is increasing due to increased
yields from new types of tree.
We are not expecting any large increases in price in the
future. The cashew trade worldwide needs to find new places to sell
to and to promote increasing sales in it's traditional markets.
As prices fall, the pro rata processing cost becomes a higher percentage
of the overall cost. This will serve to put the brakes on further
The Californian crop is estimated to be 920 million lbs, this is
slightly more than earlier predictions of 880 million but has not
changed market sentiment.
April shipments were high, continuing the trend for increasing
exports helped by the weakening dollar.
Although dollar prices are considerably higher, due to the decline
in the U.S. currency, almond prices remain the same in Europe as
Prices remain stagnant whilst demand is lacklustre.
2003 crop is expected to be normal. No big changes are expected
in the market.
Always a high priced item due to its popularity with the American
domestic market and long delay between planting and reasonable crop
yield. No fall in prices is expected imminently. Buy now to secure