GENERAL

Stock markets and exchange rates showed great volatility during early May due to the uncertainties surrounding the general election and the turmoil in Europe due to the debt crisis.

CURRENCY

Against the $, sterling opened the month at 1.53 and has fallen to 1.46 as of 13th May. Against the Euro, sterling opened the month at 1.14 and has continued to increase to 1.17 as of 13th May.

CRUDE OIL

In April the price for Brent crude oil rose by 5%, as strong global demand and the Gulf of Mexico oil slick outweighed the effects of high US stocks. The wholesale price of diesel followed quickly, rising by 4% in Europe.

FATS AND OILS

Vegetable Oil - prices have remained volatile but trended upwards due to increased strong demand. Prices have also been influenced by the recent strength seen in crude oil, which is supporting biodiesel demand.

Rapeseed Oil - was unchanged in Rotterdam as rapeseed crushing is expected to increase by 4m tonnes against last season’s volumes

Soyabean Oil - rose by 3% in Rotterdam as prices have remained firm due to tight supplies and strong buying. Good soya bean volumes are expected from this season’s South American harvest which should help to increase global supplies in the coming months.

Palm Oil - rose slightly to 1% in Rotterdam, while prices were steady in Malaysia.

Coconut Oil - rose by 4% and palm kernel oil continued to rise by 2%, as demand for lauric oils is steadily recovering from the economic crisis.

Olive Oil - was down by 3% in Spain.

DRIED FRUIT

Sultanas - We have seen an increase among end-users, in the UK and abroad, switching to other origins as prices from Turkey have been so high whilst Chinese and Iranian products have been more competitive. The UK, though, has the most stringent standards which limits such switching and would account for only a 10% decrease compared to other markets. Prices have been easing during the past few weeks in anticipation of a larger 2010 crop and a substantial carry in. However, there are now genuine fears that the crop will not be as large an originally thought. Reports indicate that the outturn will be in the region of 260 – 270,000 m/t and, although this is still a good crop, growers are aware that the initial expectations will not be met. Accordingly, prices have now firmed since growers are only prepared to offer small quantities of fruit, holding some quantities back in anticipation of a poorer than expected crop. Buyers who have been holding out for much lower prices will be disappointed at this news. It was initially assumed that prices would continue to fall but the outlook now suggests that prices will stabilise at these levels. Growers have had two good years with raw material prices in excess of 2.00 Turkish lira per kilo, a figure that they are unwilling to go below. They will try to get better prices if they can and it is now unlikely that we will see prices below this level.

Currants - We have seen an increase in prices being offered from the Greek packers. These increases are due to finance charges as they carry their stock throughout the season. In fact, stocks are getting shorter but there should be enough in the hands of the co-operatives to ensure that supplies will be maintained through to the new season. The initial indications concerning new crop are for a good crop, so we can expect to see this in the region of 30,000m/t, which is the same as last year. With raw material costs on the same basis as this season we do not expect to see much difference in the price apart from currency influences, or natural disaster.

DAIRY

The dairy market has seen strong gains supported by reduced milk availability and tight supply of the main dairy products in major producing regions. Sharp price increases were seen in most dairy products over the past month as supplies continued to be tight in the main markets. SMP rose steeply by 20% as milk deliveries continue to be lower so far this season. WMP and Whey powder also trended upwards by approx 15%. Butter prices also continued to rise by a further13% and the tightness on milk supply has started to impact on mild cheddar cheese which is expected to increase dramatically during May and June.