End to political uncertainty brings cheer to UK trade
Today, January 31, the UK leaves the EU. The UK dried fruit industry looks forward to the future. It is certainly good news that the long period of uncertainty has passed but the transition period is only for one year.
Turkey remains the main supplier of dried vine fruits to the UK with recorded exports to date up to January 25 of 33,420 tonnes, more than double that of the next largest exporter, which is Germany with 13,650 tonnes.
Overall sales of sultanas and raisins from Turkey to date have reached 117,985 tonnes, approximately 10,000 tonnes less than in the same period last year. The reduction reflects higher prices, particularly at the start of the season when government intervention increased the cost of raw material to over TRY10 per kilo (USD1.67/kg). This strategy was supposed to bring stability to the market but may bring the opposite result, as there is likely to be a significant surplus of Turkish sultanas and raisins at the end of the season.
Prices of Turkish RTU No. 9 sultanas have fallen to between USD1,850-1,900 per tonne fob Izmir. Prices of Turkish raisins are at a premium of USD100-150/tonne on this figure. Demand, however, is relatively limited at present as most major UK buyers have already covered their requirements for this year.
Another factor affecting prices is the continuing weakness of the Turkish currency against the US dollar as well as the increasing strength of sterling.
The decision by the UK not to cut interest rates this week and the optimism surrounding the UK’s departure from the EU may result in a significant rise in the value of sterling against both the euro and the dollar, which may help to further reduce dried fruit prices.
Sales of Greek currants have been steady and reports are that much of the remaining stock in Greece is now in the hands of the Union. Local farmers are expected to receive payment of their subsidies from the EU at the end of next month so there is little incentive to reduce the selling prices despite the large amount of raw material remaining.
As an indication, good quality Greek provincial currants are available between EUR2,400-2,450/tonne (USD2,645-2,700/tonne) fob Piraeus for shipment through until September. It is difficult to see however, how all the raw material will be sold by the end of the season unless prices reduce from today’s levels.
South Africa is predicting a much larger crop of dried vine fruits this year with an overall anticipated crop of 80,000 tonnes. There was some frost damage at the end of last year in the upper river area of the Orange River but this only resulted in a loss of 4,500 tonnes.
The good news is that this year’s crop of South African currants is expected to exceed 7,500 tonnes compared with only 1,200 tonnes last year. It is estimated that farmers will dry a larger percentage of their fruit as golden raisins this year, with a figure of between of 20,000-25,000 tonnes suggested, up from just 11,000 tonnes last year. This decision is due to the global price of Thompson seedless raisins reducing and the expectation of a better return for golden raisins.
The US has a significant quality of Thompson seedless raisins to sell and the differential between the price of US raisins and the Turkish equivalent has fallen dramatically. This should encourage those countries who have traditionally purchased US raisins to increase their volumes in the months ahead particularly Japan and perhaps Europe.
Overall therefore, the start of the new year seems very positive for the UK dried fruit industry with a reduction in political uncertainty and an increase in the supply of raw material, which should in turn lead to an increase in demand following lower raw material prices.