The pineapple situation In Thailand remains very difficult, with the supply of raw material still very limited, between 3000 and 3500 MT/day, and the first quarter figures could well be the lowest ever, around 380,000 MTs, compared to an 8-year average of 640,000 MTs.
The raw material price is projected to reach a new high of 8.00-8.30 Baht/Kg. This limited supply finds great competition among 14 packers to obtain product for their canneries, which are operating at barely over 50% capacity. Some small packers are closing 1-2 days a week to try to weather the storm.
The end prices of canned products still do not reflect the surging costs of raw materials. The evolution of raw materials prices has been as follows over the last 6 months:
October 2013 5.80-6.00
November 2013 6.00-6.10
December 2013 6.10-6.40
January 2014 6.40-6.60
February 2014 6.90-7.30
March 2014 7.30-8.00
Tonnage of raw materials in the East coast areas (Chonburi and Rayong Provinces) is very low at 500-520 MTs/day. Two giant packers in this area (Siam Foods and Saico) can only get supply to process 200-250 MTs/day, and medium size packer Prime Products cannot get more than 100 MTs/day of fruit to process. Thaico and Samroiyod also have problems keeping up daily operations due to this shortage.
The South, the largest cultivated area, is also struggling with poor tonnage, at levels of 2500-2600 MTs/day, and there is very active competition among packers who need to pack products sold before the end of 2013. This heavy competition is pushing up the price of fruits to unheard of levels, and packers cannot get raw material if they don`t pay over 8 Baht/kg. Packers like Praft and Sifco were forced to give up daily operations due to this circumstance.
The situation is not expected to be better until perhaps June, although the present drought suggests that the summer crop will also be short.
Production in other countries like Philippines and Indonesia are also in big trouble due to lack of fruits, so the world market is very turbulent right now.
The recommendation is to buy.