Market Report - July 2012

MARKET REPORT up to July 2012

The Eurozone situation continues to weigh on many commodity prices with fund investors reluctant to invest. Many products are stable or in decline when the basic supply and demand dynamics suggest they should actually increase.

EXCHANGE RATES

  • Against the $, sterling opened the month at 1.61 and is at 1.55 as of 12th May.
  • Against the Euro, sterling opened the month at 1.245 and ended at 1.25 as of 12th June. 

CRUDE OIL

Crude oil prices continued to fall amidst ongoing concerns that the economic uncertainty in the Eurozone may dent global demand. Prices fell by 17% for light sweet crude on NYMEX and by 12% for Brent crude on ICE London. Wholesale petrol and diesel prices fell in the EU by 7%.

FATS AND OIL

Vegetable oil prices were weighed down over the past month by economic and political uncertainty surrounding the EU, with palm oil seen declining by 11% in Rotterdam. Soya bean oil fell 3% in Rotterdam due to expectations of a larger soya bean crop in 2012/13. Rapeseed oil prices slid by 3% in Rotterdam but rose 4% in Canada. Canadian exports of rapeseed oil are forecast to increase 5% year-on-year to 2.54m tonnes in 2012/13 as the country is expected to take advantage of global shortfalls resulting from a poor EU crop this year. Sunflower oil was down 9% in Rotterdam, as global sunflower seed output is currently estimated to be up 17% from 2010/11.

WHEAT

Milling wheat futures fell on LIFFE Paris 5% but rose on CBOT 6%. Global wheat production is forecast to reach 677.6m tonnes in 2012/13, down 3% from last season, although milling quality supplies are expected to be ample.

DAIRY

The price of most dairy products continued to fall as ample supplies were met with weak demand. Butter prices fell further in the EU 6% and New Zealand 7%. Due to the current weakness seen in the market, more EU supply has been put into the Private Storage Aid (PSA) scheme, with stocks as of mid-April up 61% year-on-year.

Dairy powder prices continued their downward trend, albeit to a lesser extent, with SMP food quality down 2% in the EU. SMP prices seem to have found a bottom and the trend for early June is upward.

WMP fell 5% in the EU, whilst whey powder ended the month up 3%.
Cheddar prices fell in the UK by 4%).

DRIED FRUIT

In Turkey, sultanas were weighed down 4% during May by the anticipated large crop this season only to bounce back higher in early June due to unseasonable rain. Greek currants remain scarce and prices high. This situation will remain until the new crop in September.

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