Visitors to the SIAL Trade Fair in Paris would have been impressed by the Brazilian Frigorifico stands and the number of visitors they attracted. Buyers from all over the world were placing long-term contracts, pushing up raw material costs. Brazilian cattle prices are now at all-time highs. Last week they reached US$30 per Arobba with an expected US$31 ($2.74/kg) in November. Further pressure on prices has been exerted by the re-opening of the Russian market. Canners are buying at higher prices to enable them to secure raw material supplies. South American freight rates have gone up 30% as the demand for space outweighs availability. Some delays have occurred due to a lack of containers but shipping companies don't expect serious problems.
Pork prices tend to ease at this time of the year but hot weather throughout Europe led to a drop in pig numbers from the previous year. Increased demand from the new EU members, Romania and Bulgaria, has pushed up prices. Direct material costs have added to the pressure on prices as well as logistical increases forced on the industry by freight operators. A threat to pre-Christmas supplies may result in a reduction in promotional activity. "We have been told by our suppliers that pork meat inventory levels are well below normal, so some delays could occur in production schedules," an importer said.
Spanish canners will start packing mandarin oranges in three weeks, against predictions that competition with the fresh market will be even more intense than last year. Pre-pack raw material prices were negotiated, but had to be renegotiated when the fresh market took off. Sources in Murcia say it could be worse this year but canners are likely to be more circumspect in pre-season contract negotiations. Poor weather in China's main growing regions will restrict their ability to make further inroads into the European market. This will add to the pressure on Spain, where capacity has been reduced by closure of some canning lines.
The effect of higher pink salmon prices is being seen at retail level as new season stock arrives. Raw material costs are 50% higher due to the Alaskan run failure, with 213g cans on shelf at well above £1, assuming margins are maintained. Canners have sold out, leaving US and Canadian distributors short of requirements. "We have a good demand for pink salmon in the Southern States, which we will not be able to satisfy," said a Seattle source.