Market Report - October 2012

MARKET REPORT Up to October 2012

EXCHANGE RATES

  • Against the $, sterling opened the month at 1.567 and is at 1.59 as of 10 th Sept.
  • Against the , sterling opened the month at 1.272 and ended at 1.26 as of 10 th Sept.

CRUDE OIL and FUEL

Crude oil prices continued to rise driven by geopolitical tensions in the Middle East. Brent crude oil was up 8% on ICE London and light sweet crude oil also rose 8% on NYMEX in the US.

Fuel prices rose, supported by the higher crude oil costs. Petrol prices strengthened on NYMEX 12% and in the EU by 9%, with diesel also up in both the US and the EU by 10%.

FATS AND OIL

Soyabean oil strengthened in Rotterdam by 4% due to a 10m tonne cut to forecasts for the US's drought-stricken 2012/13 crop. US soyabean production is now expected to reach its lowest level in five years.

In Rotterdam, both rapeseed oil and sunflower oil were also up by 4%.

World sunflower seed output is expected to fall 7% year-on-year to 36.5m tonnes in 2012/13 due to hot and dry weather in Russia, Ukraine and parts of the EU.

Palm oil was unchanged in Rotterdam but rose 3% in Malaysia.

For lauric oils, palm kernel oil rose 2% in Rotterdam while coconut oil weakened by 2%.

In Spain, lampante virgin olive oil futures continued to climb by 22% as olive trees in the country have been stressed by drought. Spanish olive oil output is forecast to decline by 38% year-on-year to 1.07m tonnes in 2012/13.

WHEAT

World wheat and maize prices have strengthened generally due to downward revisions in the forecast production for 2012/13. Milling wheat futures rose on LIFFE Paris by a further 4% as global wheat production is expected to reach 662.8m tonnes this year, down 5% from last season. Maize futures continued to rise 2% on CBOT as US production is expected to be down 13% on last season at 273.8m tonnes. The extreme heat and dryness in the US Corn Belt has significantly downgraded crop quality and yield. Feed wheat prices rose by 8% on LIFFE London.

DAIRY

EU milk production continued to decline seasonally in August and fresh milk spot prices rose 11% as a result. UK farm-gate prices were unchanged as major processors cancelled their proposed price cuts under pressure from UK farmers. With lower milk supplies now available, prices firmed in several dairy product markets.

Butter prices rose in the EU by a further 10% and shows no sign of easing. Butter Private Storage Aid (PSA) stocks totaled 133,428 tonnes on the 19th August, up 26.2% on last year. The 2012 scheme has now closed.

Whey powder prices increased in the Netherlands in the EU by 10% while SMP rose in by an average 15% all due to uncertainty over future supply availability.

WMP was also up, with prices rising by 11% on average in the EU. Wholesale egg prices ended down by 8% in London, but eggs from the Netherlands were up 5%. Liquid egg products were also up by 4% on average.

DRIED FRUIT

In Turkey, sultanas fell 3% and are expected to ease further over the next few months.

Currants from Greece remain expensive and are unlikely to fall as there is a shortage of old crop to carry over.

PACKAGING

As the price of crude oil continued to rise last month, EU plastic feedstocks also increased, with spot prices for plastic base material up around 14%.

Demand remained weak in the global pulp and paper market and prices of paper pulp fell by 4%.

Aluminium prices have fallen recently but have been trading with little movement during August.

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