Market News


Brazil nut report Jan 2019

Firstly current crop:

Very limited quantities of whole brazils are available from origin.

Other grades are there but only in small amounts.

Prices are stable but unlikely to fall for the immediately foreseeable future.

We may even see a modest increase due to shortages but demand remains very lacklustre so no fireworks are ahead.

2019 crop:

Prices are starting at around parity to 2018 crop but offers are scarce because producers are waiting to see what happens to price / availability of raw material in the next few weeks.

Shellers are loathe to put a price on 2019 crop material because the rains started late and many cocos are still on the trees.

In terms of volume; again, it is still too early. Some areas are reporting an increase over last year, others the opposite.

Price prognostication: Maybe we will eventually see lower levels if there is no further uplift in demand.

As the situation clarifies, probably next month, we will keep you informed.


July / Aug 2012 Report following visit to Bolivian brazilnut factories

A normal crop, Western demand still recovering, trajectory downward but with potential upside shocks at any time.

Following a very interesting visit to Bolivia we will share out thoughts with you.

Before our trip we thought that the downward trajectory in prices may accelerate as unsold stock builds up at origin due to a continuing drought of buying interest. This may yet be the case but we should warn our esteemed clients that there are risks involved in trying to finesse a bottom to this market as we shall attempt to explain.

Raw material

Prices of inshell at the factory gate were very high as the collection season started (early) in Nov 2017. Levels were expected to fall rapidly as the high prices reigning at the time had destroyed demand in the main markets for brazils in Europe and the US. But the Koreans threw a massive curve ball into the market:

A national TV network repeatedly advised the nation the following kind of information about the superfood brazil nuts and nutrition: https://draxe.com/brazil-nuts/

The result was orders for 350 containers, or more than 5000 m.t. in a market that was already by far the shortest in history.

The Korean importers were new to the scene, knew nothing of price history and paid the ongoing highs for this material, making the shippers who actually had material for sale very happy for a change.

To put the above number into perspective, please consider that the largest crop ever exported was in 2016 with a total of 1916 containers of 16 M.T. coming from Bolivia, Brazil and Peru combined.

In 2017 the number was 1112 So the Koreans took more than 30% of a short crop, from a standing start and with no price discrimination at all!

Encouraged, the shelling factories continued to pay very high prices…. until the Asian buying recently curtailed.

They are now complaining that their shelling stock is costing them dearly if they sell at current prices and below.

Processing

Most of our suppliers are in full swing at the moment, producing beautiful product in pristine factories, using Good Manufacturing Practices. All have internationally recognised quality certification. Most have at least some automatic shelling capacity and the product is universally good looking and fresh. Some producers intend to close soon and await new market developments: Either lower inshell prices or higher kernels.

Demand

The high prices reigning over the past year have undoubtedly destroyed a large amount of demand in the West, however at the much more reasonable levels we are now seeing, interest is starting to slowly return. In a market such as this, where prices have been continually falling for a while, buyers tend to delay their buying decision looking for a bottom to the market. This may not be too far away. We urge our buyers to consider that:

The fuse lit in Korea could spread across other parts of Asia / The globe as the nutraceutical message sinks in.

The Brazil nut crop is relatively small compared to the population of the world and would not go very far if they were in universal demand.

Look at the numbers: 2000 containers x 16000 kilos = 32,000,000 kilos. average 330 nuts per kilo = 10,560,000,000 nuts per annual crop in a very good year.

Now lets consider the advice to take 1 per day so we divide the above figure by 365.25

That is 28,911,704.

Round it up to 30 million and we learn that there are only enough brazils to feed 30m people 1 nut per day (Conservatively)

Compare to the world population of 7,000,000,000 and that is 1 in 233 of the global population.

With the nutrition message going viral, shocks to the upside on this product may very well occur again in the future.

lso we should report that there are some unscrupulous players in this market who have sold short to their manufacturing and supermarket clients, something which Paragon will not entertain doing as it damages companies at origin and undermines the livelihood of the very people who are struggling to make an honest living . These shorts will need to buy their positions back in before long and at a time when demand in general is picking up, potentially adding fuel to the fire if the market is then rising.

In a nutshell:

Creeping lower, but with huge upside potential at any time. We advise taking some cover at the very least.

Other considerations

There are simmering / warming political tensions between Bolivia and Chile, from where Brazils are shipped.

This is causing ongoing problems with getting brazils shipped as Chilean product will always take precedent over

Bolivian at Chilean ports. This has caused long delays as containers hang around on the export quay looking for space on a vessel.

However there is now a new route from Bolivia, shipping through the Brazilian Amazon port of Manaus. The freight is slightly more expensive but we are proud to now be able to offer you this alternative, quicker route.

Spot

The amount of unsold material on the spot market for immediate delivery is still at very low historical levels as importers seek to avoid holding stock that is reducing in value. We currently have very limited amounts of wholes for sale, however we would be very happy to quote for container loads or less on a forward basis, arrival Aug/Sep onwards from our approved Suppliers.

Finally

Thanks for taking the time to read this report. If it has raised any questions or queries in your mind, or you would like to discuss the market in furtherdetail, please do not hesitate to call Tony on 07710 315837.

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