Tomato Paste production down, what about prices ?
As explained in our recent articles, world production is almost 12 % down from last crop at 33 Millions MT.
Is this very low output turning into higher prices already ?
In China, the answer is YES ! We are now reaching 800 US $ / MT. for crop 2018 aseptic 36/38 % on FOB Tianjin basis. Moreover, this price is only valid for shipments till the end of 2018. It is indeed very difficult to close a contract for shipments crop to crop.
This is about 80 $ / MT. or 11 % higher than a year ago ! The trend up does not stop and we clearly expect it to go on !
2018 crop prices in Europe enjoyed a small recovery from last year but only 2 to 3 % up from 2017. However, one can easily feel a strong movement since Mid September. Most processors, including large ones in Spain and Portugal, have decided to increase their prices and even reduce the volume of their offers. « We clearly need to push prices up; the first target is to be above 700 € / MT. ex-works for double paste » told us a European processor. On the buying side, we have also felt some tension, with average bids up 6 to 7 % on tomato paste from a month ago ! It is not clear whether pizza sauce and diced have followed the same trend yet but they likely will in the near future.
Turkish prices were already very high as local processors fear not to satisfy their domestic market; sellers have withdrawn from any export markets. The very low crop in Iran, down more than 60 % from 2017, will push the country to import tomato paste in coming weeks and months. Local officials are already considering imports from China. Such a move will put additional pressure to the Chinese prices !