Recommendation: If you need pineapple, or will need before the end of the year, buy now.
The situation in Thailand is quickly getting worse:
- Raw material prices have come up very close to last year’s high peak, with the realization that this year there will not be a “peak season” due to El Niño.
Only 3000 tons of fruit per day are coming into the canneries, and since April the temperature in plantations has been consistently over 40° Centigrade, thus burning the fruit, a situation made worse by the lack of rain.
This has reduced both the quantity and the quality of the raw material, and is also going to affect the outlook for the coming winter crop.
Factories are having to collect fruit over two or three days in order to run a single processing shift.
- In addition to the increase in prices of raw materials, the cost of empty cans has risen 10%.
- Several important packers had previously estimated incorrectly what the supply of raw materials would be during the second quarter, and are now suffering from over-commitment of orders to clients.
No relief can be seen coming out of Indonesia:
- The supply of raw material for canneries is around 130,000-140,000 tons, 45% below last year´s volume, due principally to a two-month delay in the start of the rainy season.
- Despite the situation having gotten better in the last weeks, Indonesia will close down for Ramadan during the first three weeks of July, at which time the country enters into its dry season. The estimate for the second half is production of 250,000-260,000 tons, meaning a full-year decrease of 25% from 2015.
- Indonesia is working hard to catch up on back orders to its major export markets, but a poor Choice grade pineapple yield in the first quarter has backlogged production some three months for these choice grade godos, mostly destined to the US and Japanese markets.
China has been picking up some of the pineapple demand created by Indonesia´s and Thailand´s problems, but canneries there have started to shut down for the season until November, although some product is still available.
Vietnam has also increased its pineapple sales during this period, but the situation there is also at its limits, and product is scarce and expensive.