Dried Fruit & Nuts... IEG Vu | Dried Fruit & Nuts 2017 3 Contents Cracking on regardless By Julian Gale The world political canvas has changed beyond belief over recent months. For

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Contents Cracking on regardlessBy Julian Gale

The world political canvas has changed beyond belief over recent months. For a start, we have the UK gradually making moves towards its eventual exit from the EU, and in the US we have the bizarre situation of a business entrepreneur/former reality TV star with no previous political experience now firmly ensconced in the White House. I refer of course to US president (and Twitter maestro) Donald Trump.

Okay, so what does all this have to do with the dried fruit and nut sectors, you might ask? Well, the obvious response to this is that both developments, to some degree, have implications for commodity trade flows.

For example, if we draw focus on specifics, then Trump’s tightened controls on immigration have definite ramifications for Iran, a key supplier of various dried fruits and tree nuts, of which pistachios is a key item (see pages 22-25). It now looks inevitable that trade sanctions against Iran, if anything, will become even tighter.

On a more general level it has been suggested that political risk will impact dried fruit and nut businesses through the foreign exchanges as these forward political risks play their part in the price today (see pages 30-31) .

As for Brexit specifically, there is a view that this should be beneficial for UK dried fruit and nut traders as the return to a global free trade policy should present an opportunity to remove tariffs and duty on

products from different countries including South and North America, China and Australia (see pages 32-33).

Of course, no industry sector is without its challenges and dried fruit and nut markets have frequently had to prove adept and adaptable.

Inevitably, across such a diverse range of categories there will be some that are performing better than others. For example, it could be argued that the prunes industry is raising its profile well and promoting effectively – particularly in the case of the US (see pages 4-8) and Australia. Contrasting with this, it appears that the market for dried apricots is just ticking along and would benefit from a promotional push or other means of rejuvenation (see pages 11-12).

However, the prospects for dried fruit and nut trading in general remain solid. The positive health message behind many of the products is a key part of this continued momentum.

4 Partnerships propel prune promotions

10 Ticking along slowly

12 Are the tricky times for tropicals nearly over?

16 Looking to see which way the market is heading

20 Cause for optimism

24 Another success story

28 Where there is risk there is also opportunity

30 Looking to boost sales in a post-Brexit environment

32 The problem solver

Editor Neil Murray Tel: +44 20 7017 7553 Email: [email protected]

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Specialist Reporter Cristina Nanni Tel: +44 20 7017 5174 Email: [email protected]

Deputy Editor Julian Gale Tel: +44 20 7017 7539 Email: [email protected]

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Dried Fruit & Nuts 2017 | IEG Vu 4 www.ieg-vu.com

5IEG Vu | Dried Fruit & Nuts 2017

For the UK market, in particular, the partnerships with industry users of prunes have been significant of late.

Donn Zea, executive director of the California Dried Plum Board, told IEG Vu: “The UK has become a real launchpad for our inclusion strategy, in working with various chocolatiers and bakery and other food areas that allow us to not only showcase our functionality but also to try to educate and partner with others that have their own audiences that can showcase prunes on our behalf and better their products as well.”

The board has been working closely with UK TV celebrity chef Rosemary Shrager for three years now, referring to Shrager as the “queen of prunes”.

European marketing director Esther Ritson-Elliott added: “In developing that relationship, Rosemary has enjoyed working with the product, both from an inclusion point of view, but also personally she has moved on to eating the product.”

The board also has an ongoing emphasis on highlighting the health benefits of prunes and this has also become part of the link with Shrager.

In early 2016, Shrager was clinically diagnosed as morbidly obese during her stint in India, as part of the UK TV documentary The Real Marigold Hotel. This experience and limited success with earlier weight loss diets, prompted her to seek professional counsel from consultant dietician Jennette Higgs.

Forming partnerships with chefs and bakers is an important strategy of the California Dried Plum Board and this focus is set to continue.

By Julian Gale

Partnerships propel prune promotions

“The UK has become a real launchpad for our inclusion strategy, in working with various chocolatiers and bakery and other food areas.”

6 www.ieg-vu.com

Higgs has developed a healthy eating plan and is the author of the Prune It Eating Plan from California Prunes.

Prune It is a lifestyle plan based on research undertaken by the University of Liverpool, which examined the satiety benefits of prunes – i.e. how the inclusion of prunes in the diet induced increased feelings of ‘fullness’ and helped to tackle hunger pangs.

Shrager has now adopted a healthier eating lifestyle which has resulted in a steady weight loss, causing her to drop three dress sizes and reducing her waist by 14 cm. In addition, Shrager reports experiencing a number of other health benefits, such as having more energy and no longer feeling breathless after physical activity.

In addition, she is making more use of US prunes in her patisserie.

Ritson-Elliott explained: “A lot of her indulgent recipes she has looked at again and how California prunes can give them a healthier positioning and take some of the fat out of the recipes as well. We’re working a lot with Rosemary on various different angles to our campaign over here, which we hope will give us lots of different pathways to consumers and for coverage.”

In January, California Prunes announced the appointment of award-winning baker Peter Cook as its new brand ambassador for 2017. Cook is founder of artisan bakery Peter Cooks Bread.

Cook’s role will be to drive awareness of the taste, nutritional and health benefits associated with incorporating premium

quality California Prunes into a variety of baked goods.

Meeting the need for gluten-freeThis includes a lot of development work with food manufacturers, and gluten free products is one area of emphasis. “We hope that prunes will have a pivotal role in this,” Ritson-Elliott remarked. There has already been increased use of prune purée in the production of gluten free breads, she observed.

The board is working with different manufacturers to see if it can get California prunes into Christmas puddings and other cakes and breads. This includes in the form of chopped prunes as well as prune purée.

Ritson-Elliott recalled that US prune purée featured in one of Harrods’ core ranges for Christmas 2016 and celebrity chef Heston Blumenthal used the product in Christmas cakes sold in Waitrose over the festive period.

Each individual market in Europe has its own implementation in terms of cultural nuances, she noted, but the general message being conveyed from the California Prunes brand for the whole of Europe is that of the consistent quality and versatility of the product.

The board itself is 65 years old this year and has been marketing into the UK and European markets for the last 30 years.

It is now into its third year of marketing in Poland and last year achieved a major win at the ‘Golden Clips’ PR awards run by the Polish Public Relations Consultancies Association.

“That really is a pathway that was laid down from activities that we do in the UK. The UK does lead what we do in Europe,” Ritson-Elliott explained.

Zea observed that the challenges posed by the UK market have been very similar to those which prevailed in the US for a long time. “That is that we’ve had this one dimensional reputation as a food that creates laxation. That has been both an asset to us and a liability at the same time,” he remarked.

Zea noted that the whole area of digestive health now also involves a lot of discussion about overall body health, and it is widely known that this extends well beyond laxation and many other physiological functions.

Renewed impetus“Prunes has found new energy because of its older reputation, but our efforts have been in areas to expand beyond that too, not only from a nutritional health standpoint, like the work we are doing in bone health, but in the area of inclusions and just talking about prunes in a different way, which shows we are contemporary, dynamic and have diverse application,” he said.

The bone health trial, detailed by Zea in a presentation at the IPA (International Prune Association) Congress in Santiago, Chile, in November 2016, is being conducted by Penn State University. It will assess the benefits of prunes to bone density.

Zea said recruitment of the required number of trial participants is ahead of schedule and it is envisaged that the final report will be released in November 2019. It is hoped that the results will give the Dried Plum Board enough solid data to request approval from the European Food Safety Authority for an authorised health claim on the benefits of prunes to bone density etc.

In a related development, Purdue University will be undertaking a study on the effects of prunes on gut microbiome.

Crop researchEvery year, the prune board invests more than USD300,000 on crop research. This can include advice on how best to remove the prunes from the trees during harvesting, the most effective tree spacing in orchards for optimum sunlight capture and wind resistance, and more sustainable use of water resources.

Dried Fruit & Nuts 2017 | IEG Vu


There are also guidelines on tunnel drying techniques that reduce energy consumption costs and ways to grow more consistently sized prunes. Moves on the latter are intended to eradicate the unpredictably of what is already a “very temperamental fruit to grow in the first place,” Zea explained.

“The key to a successful prune industry, not only from California’s standpoint, but from the world’s, is to look at growing prunes in a different way in which tonnage or volume isn’t necessarily about numbers of prunes. Larger prunes in fewer numbers weigh the same as smaller prunes in larger numbers. Not that only is there a market for large prunes, but there is not a great market for a lot of very small, unpittable prunes. That drives down the market for prunes overall and makes it very difficult for the prune industry to stay competitive,” Zea remarked.

Climate issues have proved particularly challenging over the last 10 years or so, he noted. For example, in one year US prune growers could be facing the problem of heat during the bloom while the next year bees are unwilling to pollinate because the weather is too cold.

Another key aim is to make prunes more

competitive with the alternative crops in California, the biggest overall category in this being nut crops, and walnuts and almonds in particular.

Zea said he was hopeful there would be further growth in the inclusions category for US prunes. As indicated earlier, this is the use of prunes in catering and food applications in general, and is effectively promoted via links with leading chefs and bakers etc.

“It will probably never be a 50% share, but it will certainly be something that will help round out the portfolio. We hope snacking is at least stable and enjoys consistent, sustainable growth that at some point would pull through to increased plantings, slowly but surely, but not until demand justifies it,” he added.

For many consumers, particularly those in the “younger demographics”, their first experience of prunes will be as a culinary or bakery application rather than as a snack, Zea suggested.

It is also noticeable that some of the inclusion products, such as prune purée, are increasingly featuring at retail level, which

means they are now being purchased directly by consumers. Japan has proved to have a high off-take on this side. In addition, prune purée in squeezable bottles can also be found in Europe at retail level.

The board is now looking at the possibility of introducing a prune purée product into UK food outlets.

Numerous applications Ritson-Elliott noted that prune purée has many potential applications beyond its more familiar association with baking (cake and bread making). These include using it as a glaze over meats, as a recipe addition to spaghetti Bolognese or similar meals, and incorporating it into smoothies.

The UK is a big market for prune juice and US prunes are also a major part of this.

In relative terms, the use of prunes in confectionery might be regarded as niche, but the board expects further expansion in this area.

In the UK, master chocolatier Paul Young uses US prunes in a number of his products.

“He set the standard for being able to use

Left to right: California Dried Plum Board’s European marketing director Esther Ritson-Elliott, executive director Donn Zea, and European marketing manager Maxine Broderick

8 www.ieg-vu.comDried Fruit & Nuts 2017 | IEG Vu

prunes and it has given an example of things to show our other markets, so you are now seeing chocolates in Japan that are made from prune purée and diced prunes. We have great expectations for that market to grow,” Zea said.

Germany and Russia already show a big usage of prunes in confectionery so the board is keen to target these countries for further expansion. Eastern Europe in general offers good growth potential in this sector.

The board is also keen to rebuild sales in Russia on the inclusions and/or snacking use of prunes once the country’s economy has picked up again.

Growth in Asia China remains a very important market for California Prunes. Although sales have dipped of late, the US still has a market share of about 90% in China, Zea observed. “We still think there is great opportunity. We haven’t even come close to tapping into that market yet,” he added.

Vietnam is also an important market for the board and viewed as offering strong growth opportunities.

Japan remains another key destination, although economic factors have seen sales there decline from earlier volumes of more than 20,000 tonnes.

Looking to CanadaZea added: “We are for the first time as the board going to be spending some time and energy and money in Canada. It’s always been part of our overall market. Our brands have most of the work there and we’re now

going to be doing some nutrition work there, starting in 2017/18 fiscal year.”

In terms of global consumption ahead, Zea said it is probably most realistic to expect “slow growth at best”.

“Slow growth for us is good,” he said. “The category is so competitive and there is so much money flying around and there is so much choice for consumers – which is a good thing.”

Strategic selectionZea observed that the sheer scale of food marketing is such that the board needs to select its target markets carefully and strategically.

“From California’s standpoint anyway there is only so many acres that has the capability of growing something anymore and there’s a lot of speciality crops in those fields,” he added.

The general expectation this year is for a normal planted area of 45,000-47,000 acres for prunes in California. Based on this, production should be in the range of 100,000-110,000 short tons (95,000-100,000 tonnes). Currently, the US has about 60% of its supply being 60 count size prunes or larger, which Zea defined as a good position to be in.

“We continue to focus not only on growing volume but growing value and making sure the price of prunes is at a point that makes sense for our growers and consumers, and that is only possible through marketing and making known the great functional benefits and versatility of prunes,” he concluded.

Donn Zea: Background Information

Prior to joining the prune industry in April 2011, Zea led programmes in agricultural marketing, research, communications and government relations as president of the California Forest Products Commission and Northern California Water Association and Vice-President of the California Forestry Association.

An enthusiastic advocate for California agriculture for more than 25 years, he has served in a variety of industry, non-profit and university leadership positions where he has helped to guide efforts and engage influencers, trade and consumers on subjects ranging from food and agriculture’s economic and social benefits to renewable resources. Donn holds a B.A. in Political Science from California State Polytechnic University, Pomona.

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Main origin Turkey has managed to achieve a modest boost in overall sales so far this season as prices have fallen significantly from those of the 2015/16 season. However, it is felt that prices would need to decline further to really stimulate a rebound in demand.

Unlike certain other sectors, such as dried prunes, raisins and almonds, to name just a few, the world dried apricots market lacks any coordinated marketing strategy or strong promotional push. It does not have the clout of a marketing board behind it and it could be argued that this contributes to its lack of growth. Hence, the product does not have a particularly prominent brand profile among consumers.

China and Uzbekistan are other producers of dried apricots and some of these are also sold into Europe, helping to top up the overall availability.

At the end of January 2017, Turkish dried apricot exports were estimated to be 7% ahead of those of the previous season to that point at 48,639 tonnes. The general expectation is that a similar pace will be maintained over the remainder of the season, meaning a marginal rise in overall shipments when the season comes to an

end. Some industry sources might describe this as a moderate success while others maintain that it shows a relatively static market in need of renewed impetus.

Ali Sorgun Ozbalci, managing partner of Aso Food Industry and the Sudino brand in Izmir, Turkey, told IEG Vu the main reason for the gain in sales so far was the decline in prices due to the eased rate of exchange between the Turkish lira and US dollar.

In early January, Remus Food International, also a Turkish supplier, observed that the country’s dried apricot prices have fallen by an average of 24.6% from the levels of 2015/16, but the total quantity sold over the 2016/17 season to that point (January 6) was only 8.15% up. The company also noted that stocks at the time were well above the demand.

Adam Johnston, trader at Freeworld Trading said: “Demand for apricots has been majorly damaged by the exceptionally high prices of a couple of years ago.”

Similarly, Robbert Janssen of the dried fruit and nuts department of Rotterdam trader Catz International said: “We’ve seen in general that the demand for apricots has declined over the years, especially since the

Global dried fruit importers feel that dehydrated apricot prices need to decline substantially in order for there to be any dramatic upturn in sales.

By Julian Gale

Ticking along slowly

Unlike certain other sectors, such as dried prunes, raisins and almonds, to name just a few, the world dried apricots market lacks any coordinated marketing strategy or strong promotional push.


Ticking along slowly

big frost situation which made prices go up to nearly USD10.00 per kilo a couple of years ago. People switched to other products in their mixtures etc. and they didn’t switch back, because an apricot is still more expensive than a prune, for example.”

Janssen also viewed apricots as not generating appeal among younger consumers and this limits the sales potential.

Johnston noted that although the export volume for this season looks set to end higher than that of last season it remains negligible, particularly when considering that the 2016 output was in the range of 100,000-120,000 tonnes.

“In terms of pricing, a lot of eyes are looking at the Turkish lira at the moment. That is the biggest contributing factor to these weaker prices. It’s (the lira) all over the place,” Johnston added.

Johnston viewed overall demand as remaining weak, despite the declines in Turkish apricot prices. “A lot of major supermarkets downgraded the number of apricots they were using and took out some apricot lines when it reached those crazy prices of a couple of years ago. In the UK certainly, that demand isn’t recovering particularly well,” he said. “I would say you’re probably going to see a stable continuation of that volume of about 7% ahead of where we were last year. It won’t jump up any more than that.”

In the UK, much of the demand for apricots is led by the supermarkets. Unfortunately, whilst it is easy for these supermarkets to delist apricots it is very difficult for them to put them back on their shelves again. Hence, supermarkets are slow to react to any changes in prices, Johnston observed.

Johnston also revealed that he is receiving a lot of unsolicited offers on Turkish apricots, which further indicates that sales are slower than the Turkish exporters would like.

Janssen observed that every year there is debate over whether there will be any frost damage and this is used by Turkish sellers to try and push buyers to take coverage. Another element to watch is that as with other agricultural commodities in Turkey, the country’s farmers will often hold back stocks to keep prices high.

If assessing demand over the long term

then it definitely looks to be on the downward slide, based on the performance of the last eight years, Johnston observed.

Price trends aheadThere is a reported shortage of natural and organic Turkish apricots so this year the difference in price between these and the conventional fruit is much greater. This price gap might widen.

This was confirmed by Ozbalci, who stated: “Unsulphured apricots are short this year so this price differential might increase.”

Johnston said despite the lack of natural and organic apricots he does not envisage further upward price movement on these as most of the major manufacturers have already covered for the season on these so there is not much cover outstanding.

“With it being such a large crop farmers were quite keen to sulphur the material so it could be sold in 12 months’ time, whereas the natural and the organic won’t last as long,” he noted.

On February 17, Turkish supplier Sunrose warned that the small size apricots were becoming very limited in the market at this stage of the season. Sunrose managing director Yasin Durmus observed that crop 2016 goods were mostly bigger sizes such as Types 1,2 and 3, so it was currently difficult to find the medium and small sizes. As the prices were so cheap for small size apricots since September 2016, these items were exported faster than usual. Because of this, the price difference between sizes of apricots had become very small, being only USD100/tonne between Type 2 and Type 6 apricots.

In terms of the Turkish dried apricot market in general, the next main factor to determine prices is likely to be the impact of the bloom in March.

Ozbalci suggested that along with the weather, the export figures will also influence prices.

Remus Food International predicted that the only factor that would trigger an upturn in prices would be if frost impacted the bloom in spring. “Otherwise, we may witness declining prices,” it concluded.

However, on February 8, Ozbalci revealed: “We are having difficulty in purchasing raw material with past prices. Farmers demand

more. I expect a steady increase in apricot prices until April.”

Similarly, on February 17 Sunrose commented that the country’s dried apricot prices were firm and rising. Durmus said: “After a long period at the bottom levels for apricot prices, the market started to increase two weeks ago. The major reasons for the rising market are the higher raw material prices at Malatya and lower US dollar against Turkish lira.”

Durmus explained that the raw material prices increased almost 10% at Malatya during the last two weeks to February 17. “The farmers are holding back the goods and not willing to sell their stocks to the producer companies these days. Their expectation is to sell the remaining stocks out of current crop at higher prices after the bloom period for new crop,” he added.

Durmus noted that the bloom for the 2017 crop apricots would start by the beginning of March and the risky period would continue until the end of April. “The weather conditions and situation at the apricot growing area will be the major factors determining the market’s direction in the coming weeks. If there will be frost damages, hail effects, extreme rains, etc., the crop quantity of next year will reduce significantly and the prices may increase rapidly in the market. If we pass the subject risky period without any serious damage, we can expect the prices to relax slightly, depending on US dollar currency movements. So the most critical days for apricot market are starting soon,” he pointed out.

Sunrose was expecting a very volatile market for apricots in March and April. As of mid-February, the prices were very much dependent on weather conditions and currency movement. Durmus viewed the prevailing price levels as “cheap and reasonable” compared with past years, so Sunrose’s buyers were being advised to take their positions against a risk of frost in the coming weeks.

Ozbalci added that at that juncture it was too early to comment on the forthcoming bloom as all the trees were in the dormant phase.

One certainty is that a lot of attention will be on the progress of the bloom and weather in Turkey and this focus could span from the time of writing (February) all the way through to April or May.


The last year has seen a supply squeeze on many of the tropical dried fruits but hopes are building that this will be alleviated, at least to an extent, over the course of 2017. The situation will become clearer over the coming months as more information emerges on the actual supply and demand outcomes.

PineappleThis category has been through a particularly problematic phase as evident in IEG Vu coverage of the markets for fresh and canned pineapple.

The main season for Thai pineapple was from late November and at that time Dutch dried fruit and nuts broker QFN Trading & Agency noted that although there was a delay of one month due to the drought in Thailand earlier in 2016, the

fruit was coming in for further processing, including for drying.

The crop was big and at the same time demand was high, particularly from canning factories, which also consume a large quantity of pineapple, the company pointed out. It added that no shortage of pineapple raw material was to be expected during 2017.

This was confirmed by data from the Ministry of Agriculture sent to IEG Vu this February. This indicated that total fruit production in 2016 topped 1.78 million tonnes, of which 1.48 mln tonnes went into processing (canning, juice and drying). This represents a year-on-year increase of 0.3% and 3% respectively, although still far below the figures recorded five years ago.

The market for dehydrated tropical fruits has been particularly challenging in the last 12 months or so due to major raw material shortages for many of the categories. It is hoped that recent and imminent new crops will help alleviate this.

By Julian Gale

Are the tricky times for tropicals nearly over?

The situation will become clearer over the coming months as more information emerges on the actual supply and demand outcomes.

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“Frequent rain during June and early November helped to stabilise volumes from November 2016 to early February this year,” a Thai professional noted, adding that this was due to La Niña phenomenon, whose wet weather effects disappeared in January.

Speaking to IEG Vu on March 6, Annelies van der Hoek of QFN Trading said it was clear that, as reported earlier, despite being delayed to November 2016 the crop had been of a decent size and quality.

She recalled that earlier in the season there had been some issues over high sugar prices, which meant that Chinwong Food – for which QFN Trading is the sole European representative – was quite reluctant to set the prices for the sugar, which has a big influence on the final price. “They (Chinwong Food) have been able to do great job so in the end where we saw that the prices would increase that wasn’t necessary because the lower price of the pineapple due to the good

crop, and the high price of the sugar, equalled each other out. So there was no necessity to increase the price,” van der Hoek explained.

Price indications as of March 6 put dried diced pineapple in the range of USD2.15-2.20 per kilo c&f.

In a report released on February 24 Rotterdam trader Catz International noted that the most important season for pineapple was over and had given a good crop with stable prices. However, the company also warned that demand from the canning industry was still high and it expected prices to stay in the current range. The next (smaller) crop will be in April to June.

A second Thai executive noted that following a good 2016 winter crop the focus now was on the output the summer crop will yield. “The weather at the moment (February 22) is neutral but there are several forecasts pointing to a dry summer,” he commented.

This second Thai source also explained that the tonnage is expected to increase by around 20% during January-May this year, compared with the same period in 2016. However, he cautioned that crop conditions after April are likely to be unstable due to the nature of fruits harvested during that period.

“If we face a lack of rainfall with high temperatures during April to the end of May, tonnage of the first half of summer is likely to be affected in a negative way. The fruit size is likely to be smaller and this will automatically reduce the tonnage,” he noted. He added that this would also lead to a delay in the winter crop, which last year ran seven weeks late.

It was clear that, as reported earlier, despite being delayed to November 2016 the crop had been of a decent size and quality.


PapayaPapaya is in short supply and factories fear that in the near future they must limit orders and only accept these in combination with other products in a container, Catz International noted.

Van der Hoek viewed the main issue with papaya as continuing to be that of avoiding genetically modified organisms (GMOs). “That is the main problem everyone is facing. Obviously for the European market it is a no go area, so either the farmers stop planting this product or they go on with GMO-infected crops. Sometimes the farmers don’t even know, but then it means the producers like Chinwong Food, will eliminate those fields and look for alternative fields. All in all, if everybody is doing that, it means you have less possibilities to buy the right raw material, so in that sense I would not be very surprised if the supply is going to be slightly difficult in the future,” she said.

MangoThai mango has limited availability and the country’s new crop started in March. “Prices appear to be on the same higher level as in the previous period, mainly due to empty pipelines,” Catz International observed on February 24.

On February 20, QFN Trading & Agency was finding that with Thailand’s main season for mango being imminent (i.e.March) very small quantities were starting to become available for production already.

These quantities would increase during the coming weeks, the company added. “The quality looks good and also the size of the crop is similar to last year,” it explained.

As in many cases the price of the raw material in the early season might be at the higher level. “However, it is the expectation of the seller the price will be at the same level as last year,” QFN observed.

The company expected to have a better overview on this by the end of March. IEG Vu is therefore likely to be issuing further updates on its website in the weeks following the publication of this supplement.

QFN Trading urged customers to let it know as soon as possible if they had a

requirement for dried mango with no sugar added and/or mango with mango juice, as these products can only be produced from fresh product, meaning at the beginning of the new crop. The company advised that it would then be able to make sure its partner company Chinwong Food reserves the necessary quantity for the customer.

From a global perspective it is also worth bearing in mind that the prospects for South African mango look positive.

In early February, QFN Trading announced that through its partner company JAB South Africa it would also be offering EU-cleared pallets of conventional hot air dried mango chunks, slices, and cheeks without added sugar (with or without SO2).

The prospects for raw material supply this year look strong. The South African Mango Growers’ Association (SAMGA) said improved fruit size and quality, along with greater volumes, would be some of the characteristics of the current season.

“Indications are that the 2016/17 harvest will be larger [than] the previous season’s crop in which severe hail resulted in a loss of 17% of the total crop,” the group said. “There has also been less disease reported this year, resulting in better quality fruit, higher pack outs and increased fruit supply.”

It also noted a decline in orders for dried South African mangoes from international buyers had also “exacerbated the over-supply situation”. This could be attributed to increased competition from West Africa, Ghana and Burkina Faso, and higher production costs associated with local fruit drying.

“There has also been a minor shift in demand, with slightly less consumer and retailer demand for mangos this season to date,” it said. “However, this is in line with traditional seasonal fluctuations, such as continued pressure on household budgets

following the festive season and the start of the new school and work year.”

Banana chipsCatz International found that although prices were not increasing any more, the situation remained difficult on this item.

“Shipments hardly touch the warehouses of the importers and are sold before arrival. There is still a huge backlog in production and we foresee a tight situation at least till after the summer,” it stated.

Van der Hoek observed that raw material supply in the Philippines looked to be acceptable at this stage. There had been the usual spate of storms but, unlike in previous seasons, the growing areas were not hit by any major typhoons. As of three weeks ago there had been no indications that prices would ease quickly, but she was waiting to see the latest pricing information.

“As always, it also depends on China a little bit. If they (Chinese importers) start buying in big quantities, prices will suddenly rise, but if they are not buying, prices will stay the same or even reduce a bit,” she added.

Sudden changeThe following day (March 7) van der Hoek issued a new market report on banana chips, stating: “A sudden and unexpected change has evolved in the availability of the banana and therefore the price for the banana chips is moving up again.”

Van der Hoek explained that after the drought of last year, farmers in the Philippines were now facing a long period of rains, which was affecting the quality and therefore the availability of the banana plants in the Manila area. This was forcing traders from that area to source their bananas from Mindanao.

Contacts in the Philippines had indicated that this situation was completely unexpected and all were trying to anticipate as well as they could.

Price indications on a c&f EMP basis and for May shipment as of March 7 put whole sweetened banana chips at USD0.93 per lb; brokens at USD0.87/lb c&f; quarters at USD0.93/lb; and dices of 5 x 5 mm at USD1.06/lb.

“Prices appear to be on the same higher level as in the previous period, mainly due to empty pipelines.”


17IEG Vu | Dried Fruit & Nuts 2017

The international cashew market started 2017 relatively subdued but seemed to be picking up from around February 20, based on trade reports released for this period.

Vietnam’s crop is expected to be late.

The Vietnam Cashew Association (Vinacas) warned that the latest survey by its experts in Dong Phu, Bu Dang, Bu Gia Map, Phu Rieng (Binh Phuoc), showed that unseasonal rains after the Tet festival on February 2 and 3 combined with fog and high air humidity have clearly affected the crop. For example, there has been significant growth of pests, meaning that young shoots are dark due to bugs and mosquitoes and in some shoots wilt pathogen enters the stems, creating anthracnose, etc.

Vinacas warned that the 2017 crop was forecast to be about 1.5 months late due to the shortened dry season, a situation which slows the bud and the flowering. The ripening time was forecast to be present from late February to mid-March 2017 and would last through to the end of April 2017 in the Binh Phuoc area.

Vinacas has suggested that this year’s Vietnam crop is likely to be smaller, but Dutch broker Global Trading said that at the World Cashew Congress (WCC) it had heard that despite being late the Vietnamese crop could be 10-15% higher than in 2016.

On February 23, Dutch trader Aldebaran Commodities stated: “Vietnam crop is not there yet, there are some areas that give fruits but some areas are still flowering. The

World cashew importers are gradually gauging the potential direction of the market as more information emerges on this year’s crops.

By Julian Gale

Looking to see which way the market is heading

Vinacas has suggested that this year’s Vietnam crop is likely to be smaller, but Dutch broker Global Trading said that at the World Cashew Congress (WCC) it had heard that despite being late the Vietnamese crop could be 10-15% higher than in 2016.


crop will start coming with small arrivals in the middle of March and the larger quantities at the end of March and early April 2017. Many people think that the crop in Vietnam should be normal, a bit better than last year but not very good due to abnormal rain and it seems more insects affected the cashew trees. Based on these current prices we think Vietnamese new crop seed should be USD2,350-2,370/tonne with quality of 54/200.”

Aldebaran Commodities also noted the Cambodian crop was coming with very small arrivals. “The crop is still not in peak season because the weather affected the cashew crop with rain and therefore the crop will last longer than normal crop, but the crop seems good from Cambodia. Cambodian seed is offered around USD2,330/tonne for dried seed, 53/150 with small quantity and immediate delivery to factory,” the company explained.

The West African crops were reported to be good. Based on this, supply should not be an issue during 2017, Global Trading pointed out. However, this was applicable only once the crops from West Africa start to arrive, and until that point supply would remain short.

Global Trading noted that as of February 13, the current supply to the processing units was from Tanzanian raw seeds. “The volume is significant but will only keep the processing units busy for four to six weeks (when all processing units are in operation). After that, the processors are dependent on the Vietnamese/Cambodian crops and after these crops the West African crops which will start to arrive in July/August,” it observed.

Aldebaran Commodities observed that Tanzanian seeds were being traded in the domestic market at USD2,330-2,360/tonne for 53-54 lbs and 195-200 nuts, delivery to the factory. It added that these prices were also impacting RCN offers from West Africa, which were at much higher levels than in January.

Aldebaran also noted that in the Eastern and mid-Western regions of Nigeria fruit fall and harvesting was under way whilst in the Western parts fruit formation was still progressing. “In both regions where harvesting has begun, deliveries to upcountry stores and prices continued their upward swing at a more rapid pace than last season,” the company explained.

Cashew is seasonal in Ghana and the business is most active from January to June. Fortunately, this year there was early picking during December, so compared with last year business started quite a bit earlier.

The Ivory Coast cashew market was boosted in the week starting February 20 and increasing volumes of stocks were being collected by village buyers. “Harvesting is gradually intensifying in all production areas and stocks are increasing in size with producers,” Aldebaran Commodities observed in its February 23 report.

In Burkina Faso, field stocks were increasing gradually but quantities remain modest.

In Mali, stocks of cashews were increasing while trade was still isolated. Harvests were becoming widespread, but the quantities of nuts available remained modest compared with what would come in the coming weeks.

“Based on the current price of Ivory Coast and Nigerian seeds, we understand that processors need to sell WW320 around USD4.45-4.55/lb to get parity, with the condition that lower grades can be sold to China as normal. In case the Chinese buy very cheap prices for lower grade then parity price for WW320 should be USD0.5-0.10/lb higher. RCN from West Africa will arrive in Vietnam in May then kernels with West Africa origin will be available in end May and more in June,” Aldebaran Commodities suggested.

The company predicted that if processors buy West Africa RCN at these prices then there is a risk that if from May onwards, buyers of kernels cannot pay high prices such as USD4.50/lb for WW320 then processors will lose money.

Guinea-Bissau expects to export more than 200,000 tonnes of cashew nuts this year, which would be higher than in 2016.

The 2016 harvest was better than in 2015

when exports were 192,000 tonnes. For 2017, the expectation is for the sector to exceed 200,000 tonnes of exports, Henrique Mendes, president of the National Cashew Nut Agency (ANCA) told the national news agency ANG.

“For this reason, we have practically concluded preparations for the first stage of the season of 2017 – in terms of the decrees for the cashew nut trading chain which will define everything to do with internal and external sales of cashews, the profile of market intermediaries and industrial processing,” Mendes explained.

Mendes also revealed that the government is keen to create the right environment for relaunching of local cashew nut processing units, adding that a visiting delegation from Vietnam would help to conduct a joint assessment of existing processing units in the country.

Aldebaran Commodities said the crops in the western states of India (Kerala, Goa and Maharashtra) were all reported to be very good and much better than last year, while some eastern states (Orissa, Andhra, Pradesh, Assam etc.) were said to be lower than expected but still better than last year.

Recently, the Kerala Development Agency (KSACC) proposed development projects worth USD04 million to grow 50,000 hectares of cashew in the state of Kerala within five years, from 2017-2022. This project will be implemented by farmer cooperatives under the supervision of KSACC. All products will be consumed by Kerala businesses as current processing needs are huge, about 600,000 of RCN, but the output of this state is only 80,000 tonnes.

Amberwood Trading said: “Although there are not a lot of stocks available in Rotterdam, the UK and/or New York, these stocks seem to be enough to take care of immediate needs. This also prevents roasters who are short covered from going to the market to buy additional cargo.”

At the same time there was no real urgency by shippers in India and/or Vietnam to go to the market to try and sell a lot of kernels.

“This situation might change the minute more and more raw material is becoming available which would definitely put pressure on prices. However, as

“RCN from West Africa will arrive in Vietnam in May then kernels with West Africa origin will be available in end May and more in June.”


mentioned in our previous report, buyers may have to come to the market prior to that moment which could lift kernel prices again. That is the reason why many are not sure what to do at the moment,” Amberwood Trading suggested.

Contrasting with this, Aldebaran Commodities was finding that as of February 23 the kernels market was very active for February and March shipments and prices were firming. It recalled that previously most buyers were waiting for lower prices before purchasing, but they did not have much stock of kernels then. “When all buyers came to buy, prices would be increased, and now we saw this is true,” the company added.

Market analyst Mintec commented in a February 10 report that buyers from quarter one 2017 who had expected to see further downward pressure on prices had now started to show their hands and this demand had actually pushed sellers’ prices higher.

Aldebaran Commodities was also seeing some buyers covering for April to June on the belief that prices should be firm until May/June and then ease in July.

Global Trading was expecting short term increases in spot prices. It predicted that prices should stabilise when the Vietnamese crop starts to come in during the end of March or early April and said prices were likely to ease when the West African crops start to arrive in the second half of 2017.

On February 23, Global Trading released an updated assessment of the cashew sector in another of its regular market reports on various treenuts.

The company observed that the price for cashew kernel remained high both for whole kernels in store and on nearby shipments. It was finding that most of the packers from Vietnam and India were fully booked for the March and April shipments, caused by a limited quantity of RCN forcing the processors to process on lower capacity.

In addition, first new crop RCN from the West African origins of Nigeria, Ghana and Ivory Coast were being purchased and offered by traders at very high levels. “Most of the Vietnamese packers are reluctant to book at these levels as the

kernel buyers are expecting the market to come down based on the actual crop forecasts for the northern hemisphere crops,” Global Trading remarked.

The company summed this up as a “very interesting situation” in which buyers continued to purchase cashew kernels for their short term needs at high prices and with prices expected to ease when sufficient RCN was coming into the market from April onwards.

Mintec added: “If short-term demand is uncovered pre-new crop and as it now appears, then we could see a technical squeeze as importer/traders did not plan to carry a surplus in their stocks and there may not be enough time to replenish the pipelines at destination.

“If this does play out in this way, then new crop opening pricing might be higher than had been previously expected but good crops from key origins should ensure that the pressure returns once new crop shipments are under way.”

Aldebaran Commodities explained that in view of the fact that it sees an increase in demand for cashews, rather than a decrease, it feels that particularly for the positions to the end of April, and maybe even the end of May 2017, prices will remain very firm and could increase by another USD0.10 per lb, particularly on WW320, WW450, WW240 and WS.

The company warned that spot goods in Europe were very much under pressure and this pipeline would only gain fresh supply from March 2017 shipments, which were limited.

Aldebaran Commodities also feels there is the potential for the market to remain firm from May onwards. Most buyers were only covered to May or June and even though these buyers believe the market might decline “we feel the market will stay at current levels and only decline by a maximum of 10 cents per lb,” the company concluded.

“If short-term demand is uncovered pre-new crop and as it now appears, then we could see a technical squeeze.”


The global pistachio market looks to be starting 2017 with a favourable supply from last year’s crops in Iran and the US and over the next few months’ attention will gradually shift to the outlook for this year’s crops.

In the meantime, the US is set to gain the biggest share on world exports of pistachios. This is mainly linked to matters of supply and pricing. Moreover, the volumes exported by the US over the season so far are substantially ahead of those of the same period a year ago.

If comparing the respective crop sizes in tonnage terms the strength of the US supply position becomes clearer. Its 2016 crop was pegged at around 400,000 tonnes, while estimates on Iran’s crop have ranged from 150,000-180,000 tonnes.

Unfortunately for Iran, it faces the added challenge of ongoing trade and banking sanctions and, if anything, recent political events in the US signal that these are

unlikely to be lifted anytime soon. In particular, the firm stance taken by US president Donald Trump on immigration, while on the face of it not of specific relevance to commodities trading as such, does indicate the strong likelihood that any trading links with Iran will not be reinstated or indeed encouraged. Moreover, Tehran threatened counter measures in retaliation to Trump’s immigration clamp down, which might impact bilateral trade.

Meanwhile, it should be remembered that the long-standing US anti-dumping order on raw in-shell pistachio imports from Iran remains in place. In January, Iranian pistachio producers were preparing for renewed efforts to try and convince the US to drop this order.

The order (184.28%) was originally imposed in 1986 along with a countervailing duty order (99.52%, which was not yet subject to review). The anti-dumping duty order was meant to protect the then new US pistachio

While acknowledging that the market is not without its challenges, pistachio producers in the main origins of the US and Iran are hopeful of boosting consumption over the coming years.

By Julian Gale

Cause for optimism

The US is set to gain the biggest share on world exports of pistachios. This is mainly linked to matters of supply and pricing. Moreover, the volumes exported by the US over the season so far are substantially ahead of those of the same period a year ago.


industry from alleged dumping of Iranian raw in-shell pistachios considered harmful to the US industry.

In terms of the general trade flows, Denis Ketabi, group chief executive of The Pistachio Company, said he expects a possible 25-30% decline in Iran’s total world pistachio shipments over the current (2016/17) season due to ample supply and competitive pricing from the US.

Other sources expressed doubts over the potential for a fall of this extent in Iranian pistachio exports this season. In addition, trade estimates suggest that if there is an overall slide in Iran’s shipments it will be to a limited extent when compared with that of 2015/16.

Ashkan Mossafaian of Rotterdam importer Pistachio Investment suggested that any downturn in Iranian pistachio shipments this season would be mostly due to lower than expected availability of the smaller sized pistachios – 28-30s and 30-32s – from the 2016 crop.

A January 2017 report from Green Diamond Tree of Tehran revealed that Iranian pistachio exports between October and December 2016 were at 66,000 tonnes compared with 61,000 tonnes in the same period of 2015.

In the first three months of the 2014/15 season exports were at 89,000 tonnes; in 2013/14 the figure was 48,000 tonnes; and in 2012/13 it was 68,000 tonnes.

Based on its 2016 crop estimate of 150,000 tonnes and 2015 crop carry-in of 4,000 tonnes Green Diamond Tree put availability at the start of the 2016 crop at 154,000 tonnes.

The total usage of the 2016 crop so far was estimated at 84,000 tonnes, this being calculated from the 66,000 tonnes of exports, 8,000 tonnes of shell out for kernels and local consumption of 10,000 tonnes.

Hence, the total availability as of January 1 2017 was estimated at 70,000 tonnes, based on the total supply of 154,000 tonnes minus the usage as of that stage of 70,000 tonnes.

Tightened availability Green Diamond Tree warned that this remaining quantity of 70,000 tonnes to

see the market through to the new 2017 crop was short and it therefore expected a firm market throughout this year.

On January 8, Iranian supplier Hassas issued a lower estimate of the supply left to bridge the gap to the 2017 crop, putting this at 55,000 tonnes. Importantly, the Hassas calculation took into account the expected overall offtake for the whole of January 2017, hence its indication of a lower volume availability than that listed by Green Diamond Tree.

Hassas’ own estimate for the total Iranian 2016 crop was 165,000 tonnes and it viewed the 2015 crop carry-over as 10,000 tonnes, giving an initial availability of 175,000 tonnes. According to Hassas, 100,000 tonnes of this would have been used by the end of 2016 – 80,000 tonnes exported between September and December, 15,000 tonnes going into domestic use, and 5,000 tonnes non-commercial to make kernels.

This would have left 75,000 tonnes as of January 1 2017. Out of this volume, over the course of January as a whole a total of

15,000 tonnes was expected to be consumed domestically and 5,000 tonnes for non-commercial “dust skin etc.”, leaving the figure of 55,000 tonnes.

The same conclusion can be drawn, this being that there is a very short supply from Iran for the rest of the 2016/17 season.

In a short trading update on February 5, Hassas reported that the market was active over the past week and after the Chinese holidays there were enquiries from Hong Kong. In addition, European buyers were covering for February and March shipments to meet Easter demand.

The company expected more than 10,000 tonnes of Iranian pistachios to be consumed in the domestic market over the Iranian New Year period, with this starting on March 20.

Although it has to be acknowledged that Iran does have some solid prospects for its sales – both domestically and on the export side – the US is seen as holding the dominant position this season.

Ketabi commented: “The US will absorb any increase in consumption and on top of that they will take some market share because they are more competitive with better pricing, supply and quicker decision making.”

He calculated that the US has a total supply of around 1 billion lbs, this comprising an estimated 2016 crop of 905 million lbs and carry-over of around 120 mln lbs.

He recalled that after seeing consumption slide the US cut its prices by an average of 25-30%. “Therefore consumption has improved, mainly in Asia, but also in the US domestic market. In Europe, consumption has not picked up yet,” Ketabi observed on January 19.

He predicted a possible 20% boost in consumption of US pistachios in China this season.

Future demand growthJim Zion, managing partner of Meridian Growers, viewed the future prospects as very strong. “I see no reason why we cannot grow demand by 10-20% each year,” he told IEG Vu. “I look to the

“The US will absorb any increase in consumption and on top of that they will take some market share because they are more competitive with better pricing, supply and quicker decision making.”


almond industry that produces in excess of 2 bln lbs each year and growing and they have always been able to sell their crop. You never know what the true demand for pistachios are until you have adequate supplies. I personally believe true demand for pistachios around the world is in excess of 2.5 bln lbs so the growth is there. Consumers around the world are embracing plant based proteins and pistachios are an excellent source of so many nutrients in a portable, storable and sustainable form.”

Ketabi remarked that in promoting the fact that its pistachio shipments have been running strongly in recent months, the US fails to also mention that Chinese New Year was more than three weeks earlier this year. “So you need to ship the same volume with one month less time. Therefore, your shipment numbers look huge, earlier. So it is artificial,” he noted.

For the 2016/17 season up to the end of December, US total pistachio shipments were up 138% from the same period a year ago at almost 284 mln lbs. Export

shipments were at 206 mln lbs, which was 231% above the same period of 2015/16.

Primex International Trading Corporation said that based on the total volume of shipments to December 2016 the season should end with more than 650 mln lbs shipped. In its January 18 market update, the company viewed recent trading as slower than usual as the Chinese were off the market for the Chinese New Year. The rest of the market was also seen as waiting to see demand after this key phase in China.

China still keenZion was undeterred by the recent slowing in Chinese demand this January. “We did see a large amount of demand from China this year,” he said. “With an early Chinese New Year, all processors were pushed to keep up with demand. While most of the buyers in China are enjoying the holidays, we are getting inquiries daily from China. To me this is an indication we will see continuing demand from this market. The next large holiday is moon festival and shipments have to come from this crop

year. I have found that unless product is available at point of consumption you lose out on sales. I believe most Chinese buyers are willing to hold inventory because they know the demand is there going forward.”

Zion viewed the US as on track to ship 550-600 mln lbs this year (2016/17). “Stable pricing, adequate supply, promotions and advertising are all helping to increase these shipment numbers,” he said.

Iran’s 2016 crop was officially a short one as anticipated under the biannual cycle of pistachio production. However, it was a “good short crop” Ketabi recalled.

Ali Saber-Sheikh of the London office of Iranian exporter Hassas said he had been informed of the US having limited processing capacity this season. He viewed this lack of capacity as preventing US pistachio prices from declining substantially.

Perhaps unsurprisingly, such concerns were downplayed by US sources contacted by IEG Vu.


Zion remarked: “I do believe the industry was a little surprised by the size of the crop. The biggest concern has always been on the ability to hull and dry the crop. Unlike other nuts such as almonds, you cannot store pistachios in stockpiles and get to them in a few weeks. Pistachios in the US need to be hulled, dried and stabilised in 12 hours or less. The industry did a great job of handling the crop size in 2016 and we have already seen plants increasing their ability to hull and dry in anticipation of expected larger crops 2018 and forward.

“On the finishing side, we are seeing more technology being employed to increase efficiencies and throughput utilising the same plant footprint. I do expect this to continue alleviating any concerns over capacity.”

However, Zion did also highlight another concern that is often overlooked, and that is the ability to ship via ocean. “We do see some tightening on container and vessel availability that has been exacerbated by the demise of Hanjin and consolidation of ocean carriers. That is one to watch,” he warned.

Taste preferencesSaber-Sheikh noted that certain global buyers favour Iranian pistachios over those from the US on taste profile.

Similarly, Mossafaian agreed that the taste difference continues to be of appeal. For example, ethnic markets in France are now purchasing the best type Iranian pistachios, such as Akbari and Amador. “There have much more taste than the American pistachio and they are willing to pay more for that,” Mossafaian said.

He added: “What we are seeing being more crystallised this year is the distance between US and Iranian pistachios. They are just different types and the market is appreciating the difference.”

Mossafaian explained that packers producing small packs of 30 g or 50 g in size are finding the small sized Iranian pistachios of appeal as they can put more nuts in these packs by using the Iranian produce than if they were just using the US large sized pistachios.

Saber-Sheikh highlighted the strength of the Iranian real against the US dollar as a

concern, as this means that the cost of production is high in terms of the Iranian real, but when Iranian exporters sell the pistachios on a dollar basis they might have a reduced or zero financial gains. “Therefore, they are very reluctant to supply to Europe, especially with this problem of banking in Europe, but they do supply to China, India, and to Russia, to some extent,” he observed.

Mossafaian said he was finding sales of Iranian pistachios to be running well. “There is more demand, especially for the small sizes of Iranian pistachios. Despite the difference in price [between Iran and the US] there is more demand than supply. That is why the price has been pushed up to levels of EUR8,050-8,200 (USD8,685-8,847) per tonne, which is quite high,” he observed.

Mossafaian noted therefore that the small sized Iranian pistachios, for which the US does not have a comparable product, are being sold at much higher prices than had been anticipated at the start of the season. “Everyone was expecting the Iranian prices to drop in ratio to the 21-25 USA prices, which were lower than last year, but it didn’t happen due to the small supply of that kind of product from Iran,” he added.

Iranian 28-30 and 30-32 sizes have been sold into China and more recently into Europe at higher levels than expected in September 2016.

Mossafaian expected Iranian 28-30 naturally opened pistachios to hold around EUR8.00 per kilo for the remainder of the season.

Looking to the next cropsAs of late January, in Iran it had not yet rained in Kerman state and the chilling was very late.

Ketabi viewed Iranian growers as unwilling to reduce their prices in part

due to these early weather concerns for the 2017 bloom and crop.

The reality is that even when this supplement is published in late March it will still be too early to gauge the likely outcome for the 2017 crop in Iran as the country’s winter is not over until the end of April, and therefore much later than California’s close of winter at the end of February.

Last year, for example, Iran had snow in the second half of March.

Improved water availability in USIn California, the water situation is looking much better than it has for a long time. There has been a decent level of rains and snowpack has been very favourable in the Sierra Nevada area.

It is said that the state of California has already received 80% of its yearly average rainfall.

Ketabi suggested that the US could be set for a 2017 crop of up to 700 mln lbs.

Mossafaian warned that even if the US sold 50% of its 2016 crop volume it would be left with around 200,000 tonnes of carry-over into the 2017/18 season.

Zion viewed the outlook as stable for the foreseeable future. “We should carry-out 300-400 mln lbs and next year (2017/18) will be an off year. As such, we expect the US supply to be somewhat smaller next year. We do expect Iran to have a better crop but overall supplies will be stable,” he said.

Zion noted that further ahead, the big issue will be the effect of the potential crop in the US in 2018.

Similarly, Mossafaian suggested that since this crop could also be of the magnitude of 400,000 tonnes it would be interesting to see what tactic the US would take then, such as would it adjust its prices downwards?

Zion concluded: “In the meantime, with stable and attractive pricing and adequate supplies we are seeing more promotions and consumer interest in pistachios. Buyers are less concerned about volatility and can concentrate on managing inventories and making sure they have adequate stocks on hand.”

“Buyers are less concerned about volatility and can concentrate on managing inventories and making sure they have adequate stocks on hand.”


This solid pace of sales applies to all the main origins and is evident when looking at the statistics on shipments reached so far over the 2016/17 season.

For example, the January shipment report from the California Walnut Board showed that total (export and domestic) in-shell shipments for the 2016/17 marketing year to date (September 1 2016-January 31 2017) reached 347.85 million lbs compared with 247.82 mln lbs in the same period of 2015/16. This represents an increase of 40.36%.

The total shelled volume was at 212.57 mln lbs versus 171.14 mln lbs previously – a rise of 24.2%.

The conversion of these statistics into an in-shell equivalent tonnage gives 415,485 tonnes shipped over the first five months of 2016/17 compared with 321,084 tonnes in the same period of 2015/16.

Domestic sales were put at 103,794 tonnes against 85,638 tonnes earlier and export shipments were at 311,691 tonnes from 235,446 tonnes.

Trade sources contacted by IEG Vu in late January estimated that California was already 75-80% sold.

Mark Benjamin of UK trader Kenkko Corporation said: “They have had phenomenal figures on in-shell sales, with the usual Turkey, China, Vietnam being buyers, but also Spain, Italy and Germany, in Europe, with strong shipments throughout.”

One US producer said: “The poor 2016 crop in Chile helped lead to strong demand at the start of the season. The health benefits of walnuts seems to be the best explanation for the continued expanding sales of walnuts. Lower prices have also had an effect on sales. However, it has

Global walnut demand is running strongly, boosted in part by ongoing recognition of the health and nutritional benefits of the nut.

By Julian Gale

Another success story

“The poor 2016 crop in Chile helped lead to strong demand at the start of the season. The health benefits of walnuts seems to be the best explanation for the continued expanding sales of walnuts. Lower prices have also had an effect on sales.”

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APC_Full Page Ad_0317_v3.indd 1 16/03/2017 15:09

http://www.peanutsusa.org.uk



been offset somewhat by a stronger dollar. The 2016 crop was an exceptionally high quality year and is a plus to sales.”

Benjamin viewed US walnuts as being reasonably priced this season. “Stocks will be running out very quickly, if they have not already with some suppliers,” he added. Benjamin noted that certain suppliers were offering only pieces or combo. This assessment was made on January 30.

Joe Alkewitz at German broker Palm Nuts & More said: “It’s like almonds. They have the biggest crop ever and certain qualities are already limited or not offered. There is a higher percentage of halves or Chandler halves. Some packers are reporting to be in the sold out position.”

Bart Stout of Dutch broker QFN Trading & Agency said he had seen a slight rise in California light halves 80% to USD3.80 per lb compared with USD3.60/lb at the beginning of the crop.

In addition, he recalled last year seeing a marked switch among European buyers to Californian walnuts from eastern Europe due to competitive pricing out of the US. “They didn’t go back to eastern Europe, even when the eastern European walnuts were becoming slightly better priced from around December. People preferred to stick to the Californian material,” Stout remarked.

Based on the total shipments out of the US so far and the size of the country’s 2016 crop it looks most likely that the US will have the biggest share of global walnut exports this season.

The US producer remarked: “There is no reason to think the strong pace of sales will not continue. However, increases all over the world is a concern and has lowered grower returns sharply since 2014.”

The 2016 California walnut production is forecast at a record 670,000 short tons, up 11% from 2015’s production of 603,000 short tons, according to the USDA’s National Agricultural Statistics Service.

Trade sources have suggested that the 2016 crop could be even higher than the indicated 670,000 tons, and possibly as much as 680,000 tons.

UK targetIn November 2016, the California Walnut Commission (CWC) announced that after a 20-year absence in the UK it was about to launch a brand new promotional and PR campaign following a huge surge in walnut consumption in the UK.

Senior marketing director and chief executive Michelle Connelly, who is spearheading the new campaign, explained: “The CWC will be launching a

programme in the UK in 2017 to showcase the health taste and versatility benefits of walnuts to both consumer and trade audiences. We look forward to the opportunity to make walnuts more available to consumers through retail, food service and processed food applications”.

Domestic pushThere is also a renewed drive to expand the sales of California’s walnuts on the domestic market, with around USD25 million being spent on US advertising. This is all part of a general push to generate increased use of walnuts to keep up with boosts in output.

Connelly explained that in the last crop year the CWC produced its first national advertising campaign. The advertisements are focused around the versatility of California walnuts and therefore feature the use of walnuts in cooking.

Eastern EuropeMeanwhile, remaining 2016 crop supplies out of eastern European origins are becoming increasingly tight. “Very limited volumes of good quality material are left to offer,” Benjamin observed. “So it leaves a big space. Obviously, we’ve got Chile that will come on board hopefully in May or June. As always, they (Chile) will be there with their better overall quality to look after any shortfalls that America can’t offer.”


Stout warned that eastern European light coloured walnuts are best avoided after April or May as the walnuts from these origins tend to turn darker more quickly than those from California. “The control of the material is also less and you need good fumigation during summer to be able to do something, so light material will be more difficult in the next months,” he said.

ChileChile has been hit by extreme hot weather early this year, which resulted in a spate of severe forest fires. However, the country’s walnut producers remain unperturbed over the prospects for the 2017 crop.

Andrés Rodríguez, executive director of the Chilean Walnut Commission, told IEG Vu: “We had good weather conditions during last year, good chilling hours and good conditions during spring for a favourable blossom, that will allow a normal quality production. The volume forecast for this crop is around 90,000 tonnes. The high temperatures won’t affect much the crop, only it will be a little bit earlier. The orchards were well prepared for these conditions, with good availability of water.”

Currently in Chile there are around 44,000 hectares of walnut orchards of which 60% are fully productive, Rodríguez noted.

He recalled that the new markets opened for Chilean walnuts during 2016 were China and India, so the first results of these will be seen during this season. “In existing markets we have to maintain the strong position that Chile has in Europe and the Middle East and increase the market share in markets where we still have a lot to grow, mainly in Asia, in markets such as Korea and Japan, and now adding the newest markets in China and India,” he added.

Poor crop in IndiaBenjamin recalled that India had a bad crop in September/October 2016. “Typically what happens with India, and this applies to a few of their locally grown crops, such as cashews as well, is that the local market is definitely an emerging, if not a superpower economy, and the middle classes are actually paying the price to support higher prices on the Indian walnuts,” he remarked.

Benjamin suggested that due to the smaller crop there will be more Indian

exporters of the light amber grades as opposed to the extra light and lights.

Massive crop in ChinaContrasting with India, China had the benefit of a large 2016 crop. Harvesting in China is also usually over September and October.

“We have done business on Chinese walnuts and we have done business on US walnuts cracked and produced in China as well,” Benjamin explained.

The UK has traditionally been a keen buyer of Chinese walnuts and this season so far has also shown decent sales into other European markets, reflecting the fact that the Chinese material is competitively priced, Benjamin noted.

Price trendsBenjamin summed up current international walnut prices as firm with the potential to increase further.

Alkewitz commented: “There are robust sales globally, so I don’t see prices declining. I don’t see any price increase either.”

Stout noted that with current supplies tightening ahead of new crops later this year he did not see any justification for a lower market over the near to medium term.

The US producer said: “Packers are starting to run out of product and I expect prices to be firming even further.”

He noted that another factor that could influence the market over the next few months is that the South American crop will become available. “However, most of the California crop should be committed by then,” the US producer added.

Based on developments over the season so far it looks as though prices from California will set the tone for the market as a whole. If this does prove the case, the next likely turning point could be early speculation on the next US crop. This implies the possibility of bearish pressure if the outlook is favourable.

In theory at least, there could be some upward potential in US walnut prices ahead of this – and possibly those from other origins also – once it becomes clear that the US has completely sold out of its 2016 crop.

To the casual observer, it seems that the pace of change is increasing all the time. My aim here is to try to guess the categories of change that have immediate bearing on our day to day trading in dried fruit and nuts. Then I have suggested some ways of trying to control these dangers.

Political change Trade is a peacetime activity and therefore international trade diminishes when peace diminishes. The rise of populist politics will affect the stability of supranational organisations such as the European Commission (EC). In the coming year we have Dutch elections, the French presidential election, German election, the possibility of a serious Italian banking crisis, the ongoing trauma for Greece which may never recover from the enforced austerity programme, not to mention the question of hard Brexit and how much economic stability the UK is prepared to sacrifice in order to prevent immigration. If the EC fails, then ipso facto the euro disappears. This is a completely new class of event in the world of currency

trading and we have no idea what it will look like. It is unlikely to happen in the next 12 months, but within this period we will have a pretty good idea of whether it will happen.

Turkey appears to making a rapprochement with Russia. This is of significance, as historically, a lot of dried fruit from Turkey ends up in Russia and the softening of this border further will mean higher prices all round. Ukraine is a grains and seeds basket and also a major source of in-shell walnuts. Where the border ends up will have significance for these markets. Political risk in the main will impact our business through the foreign exchanges as these forward political risks play their part in the price today.

Credit risk Currency volatility can be a killer. For the packers who are working on slim margins, with little choice of customer and therefore the inability to say “No”, and in many cases being forced to sell at fixed price unknown demand and currency devaluation of 20%

Sanjoy Das, chairman of UK company Freeworld Trading, outlines his expectations for trading conditions in the world of dried fruits and nuts over the coming year.

Where there is risk there is also opportunity


29www.ieg-vu.com IEG Vu | Dried Fruit & Nuts 2017 29

is almost bound to lead to loss. Of course, they can hedge their risk one way or the other but the point is that all of this will eventually increase their cost of sales. The supermarkets which have systematically built over capacity are also trading on thin margins in some cases, getting price increases from them is not easy, and a reliance on sales invoice financing means, in some cases, the packers cannot say “No” to business.

Weather risk We are seeing extreme weather, particularly on the shores of the Pacific, due to El Niño and La Niña. Already it seems clear that the Amazon rain forest has not had much of a rainy season, and there is a drought which may reduce the output of Brazil nut kernels by 30% or more.

There is a Californian “weather bomb” which is dumping huge quantities of water at the time of the almond bloom. Though we doubt this will make difference to the 2017 crop, that will not prevent the perception of the growers affecting the price.

In Vietnam, people are holding their breath as extended rain affects the first flowering of the cashew crop and delays the main body. There is uncertainty and there are fears that insect infestation due to wet conditions might sharply reduce output, and the market is continually moving up and has reached record highs.

Product risk Supermarket claims are increasing in size, and frequency. In many cases, it’s a question of guilty until proved innocent. Don’t think caveat emptor; think mea culpa. Make sure you are working with responsible people who are aware of the risks and have implemented a food

safety system such as BRC, make your customers aware of the risks in the foods you are selling.

Dear reader, you might be wondering where the positives are. Well, the good news is really that that these risks may not manifest. Those of us who made it so far are in a strong position in that event. Essentially, we are middlemen and therefore volatility is our lifeblood, where there is risk there is opportunity. When the environment becomes too risky and capricious, we have to reduce and spread our risk. To mitigate political risk look at new markets, open doors. Hedge currency. Work within insured credit limits. Work with suppliers who are transparent and long term in their thinking. Have confidence in your perception, if your buyer is signalling an unrealistically low price, check if they are comparing like for like and retain the possibility of saying “No”.

Spring is coming, the sap is rising, blossom budding and the birds will surely start to sing. The golf course beckons.

Already it seems clear that the Amazon rain forest has not had much of a rainy season, and there is a drought which may reduce the output of Brazil nut kernels by 30% or more.

© Informa UK Ltd 2016 I FOODNEWS® Global Outlook 2016 21www.foodnews.co.uk

through a major clean-up will not have any trouble getting ready for the 2016 harvest, so the feeling among industry insiders is still a positive one, Burnett noted.

Ultimately, while there have been some crop losses, it is impossible to quantify whether the 2016 harvest will be significantly down on 2015. “There are still three months to go before harvest and a few weeks left of what is considered ‘storm’ season, so it is too early to be making firm pronouncements on the 2016 crop,” Burnett said.

On November 9, Alex Whyte, sales manager for Europe and the Middle East, for Green & Gold Macadamias, explained that he was in the Mpumalanga area of South Africa, which is the main macadamia producing area in the country, and this had received no rain for many weeks.

“It’s 38 degrees (Celsius),

bone dry and the trees are just in the process of flowering, or have just finished flowering. In this heat, the flowers just get dehydrated and burnt off the trees,” Whyte said.

Moreover, the whole of South Africa was now in a drought and water crisis, he noted.

“This will certainly have aneffect on the (2016) crop,”Whyte warned.

In December the trees ‘decide’how much of a crop they can carry and based on this they will drop a proportion of the nuts early. If a lot of the nuts have not set then the trees will probably keep many of these and not drop so many.

“That might offset this dryweather as it stands, but the dryweather is certainly not a goodthing and will definitely have animpact on the crop,” Whyte noted.

A lot of the orchards in South Africa are on dry land and not

irrigated. “Those orchards are going to be well down on production from normal,” Whyte stated.

Another potential slight offset to this is that new plantings are coming into production.

As a result, Whyte suggests that the net result could be a 2016 crop that is slightly down from that of 2015 or at a similar level. Any earlier expectations of a decent increase in output can now be ruled out though.

“Next year we would like to have hit 50,000 tonnes but with this dry weather I don’t think it’s going to go much over 47,000 tonnes again,” Whyte said.

These figures are in-shell tonnes at 1.5% moisture and 47,000 in-shell tonnes is the expected final volume for the 2015 crop.

Harvesting starts in March/April and flowerings for the next crop are in September/October.

Gauging demand Global Trading & Agency in Holland said it was seeing signs of a recovery in the macadamia market. In late October and early November the company cited improved buying interest in recent weeks and noted that most of the stocks had been depleted.

The company feels that the macadamia market needs to change to prepare for the future.

It finds that the Chinese market is among those that are changing very fast and this is particularly the case with the Hangzhou/Lin’an market. From a bulk market in which quality took second place, it has very quickly developed into a quality sensitive market, the company observed. “This is a very good development and you see it happening all across the board in China,” Global Trading & Agency added.

The company noted that itwill be interesting to see how

mACADAmIA mARKET hEATS Up I DRIED FRUIT & NUTS

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Dried fruits have long been one of the staple food ingredients for the UK. History records shipments of raisins and figs from the Ottoman Empire and dried fruit became a luxury, particularly in the cold winter climate of Britain and its near neighbours.

Since then, the growth of the British supermarket and the increase in international trade has seen the arrival of every type of fresh fruit imaginable and their availability at virtually all times of the year. It would be thought therefore, that demand for sultanas and raisins and dried plums/prunes would gradually diminish and perhaps all but disappear. However, in recent years the converse has been true with an explosion of new products and a huge range of natural cereal bars, cereals and other dried fruit based snacks.

The move away from sugar-based snacks

to foods with less sugar has though, started a debate on the health benefits of dried fruits. Dried vine fruits have a relatively high natural sugar content, something that has made them a favourite for those seeking energy, with these consumers ranging from athletes to explorers. This has caused a fierce debate on whether they should be seen as healthy and the UK’s National Dried Fruit Association is at the forefront with an international study into the benefits of eating dried fruits.

The reality remains that every major UK supermarket continues to stock dried fruits, as like traditional cereals and pulses, demand has been increasing as consumers follow trends which include a return to home baking and more adventurous global cuisine.

Dried fruits also benefit from their long shelf life – in some cases more than two

Andrew Ciclitira, managing director of Demos Ciclitira, explains why he views the UK dried fruit industry as relishing the opportunity for an increase in trade post-Brexit.

Looking to boost sales in a post-Brexit environment

Every major UK supermarket continues to stock dried fruits, as like traditional cereals and pulses, demand has been increasing as consumers follow trends which include a return to home baking and more adventurous global cuisine.


years – and their flexibility for storage, with cool, dry conditions often sufficing, and convenience of use. A handful of raisins can be sprinkled on a dish or eaten as a snack.

Importers generally divide dried fruits into two broad types: tree fruits, which include apricots, dates, prunes and figs; and vine fruits which encompass currants, raisins and sultanas. The UK has traditionally purchased vine fruits from the sun-drenched areas around the Mediterranean and tree fruits from further afield with Chile supplying prunes, Iran and Pakistan dried dates, and Turkey, dried apricots and figs.

The EU has without doubt helped to provide regulations for the overall quality which include maximum residue levels (MRLs) for pesticides and maximum levels for residues such as sulphur dioxide (SO2) and mycotoxins, such as aflatoxin and ochratoxin. It is to be hoped that the UK legislature will adopt the same standards, as international trade is without doubt

helped by common agreed quality standards just as much as by the much talked about free market.

The return to a global free trade policy for the UK should provide a welcome boost for the UK dried fruit industry as there will be an opportunity to remove tariffs and duty on products from different countries including South and North America, China and Australia.

Turkey continues to be the major provider of dried vine fruits to the UK and has seen year-on-year growth. However, the

imposition of a new MRL for chlorpyrifos last year did threaten to prevent imports of Turkish sultanas and raisins, and the poor communication with the trade and retail sectors has hopefully provided a lesson for the implementation of future changes.

The UK dried fruit and nut industry is therefore in good heart with unrivalled expertise in the products handled and an opportunity to continue to develop new innovative natural products which can be exported as well as imported. The realignment in the value of sterling against the US dollar has raised costs, but an increase in supply from countries such as Turkey has helped to soften the impact of the change.

Dried fruits do therefore continue to be both a staple ingredient and, depending on the type and origin, a luxury product eaten at Christmas and on other special occasions. Hence, the UK will continue to be at the centre both of demand and trade, and it is an exciting opportunity for all those involved in the industry.

The realignment in the value of sterling against the US dollar has raised costs, but an increase in supply from countries such as Turkey has helped to soften the impact of the change.

YEARS

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JG: What are the main challenges currently being presented in the sectors for dried fruit and nut sorting?

SH: In our opinion there are many difficulties and challenges. If you look at the seasonality of the products that our customers are processing, then you have a lot of variation in the quality of the raw materials, which of course has an influence on the pricing of the raw materials. These unknown factors form big hurdles for customers. Most of the companies know that in order to maximise profit they have to be able to maximise the value of the products they have. This translates to different requests in terms of sorting criteria in different positions of the line. To differentiate themselves, companies want to be able to offer different quality grades and maximise yields.

JG: Can you give us specific examples of how these firms differentiate themselves then?

SH: This could be in terms of offering products according to different sizes, the appearance or the colour. With nuts for example, they might also want to offer further quality guarantees concerning the absence of moulds and toxins such as aflatoxin.

The maximisation of the profit and dividing product into different categories is a strong trend in the almonds and walnuts industry where the different grades, sizes or shapes of the product are being sold accordingly. They know that some markets require the perfect shape as well and they know that they can get a premium price for that.

A lot of it is about yield maximisation and

TOMRA states that its sorting solutions help its customers optimise the value of their products by resolving many of the major problems posed in the handling of various food products. Julian Gale spoke to TOMRA Sorting’s sales manager Steven Hiel about the specifics of this in terms of the company’s work across the dried fruit and nuts sectors.

The problem solver

Steven Hiel, TOMRA Sorting’s sales manager


providing good grades of product in general. So we see that companies are investing accordingly. Why? They feel that if they can satisfy a particular quality criteria, it might open up markets such as Japan, or elsewhere.

JG: Is there a particular area or product that poses particular challenges at the moment?

SH: This comes back to the seasonality and weather conditions. Now in California for example, they have rain and they expect that the drought problems of the past might be solved a bit. Meanwhile, in Turkey recently they had lots of rain during harvest, which means more risk of moulds. This with an increasing quality demand of the consumers.

JG: What are among the other main changes you see taking place?

SH: Most of our customers already have sorters so what we now see is the next level of investment. For example, quality improves, so the demands or requirements to remove the next level of defects are becoming increasingly stronger. Again, it comes back to processors seeing the need to sort product in differing stages. Stage one is focusing on one specific defect, whereas stage two looks at another defect, and so on. In the past, customers might accept a higher reject, but now they see high value in avoiding that. Customers want to avoid cases of cross contamination, for example.

The technologies developed so far are often focused on visible defects and the separation of foreign material from the incoming product, but what we now see is an increasing trend in the requests we get, about the nutritional value of the products. This could, for example, be the relative acidity of the product, which is hidden from the human eye. Some customers demand that level of sorting technology in order to invest in our solutions. This is the next step in what customers want from us: going beyond what is visible.

JG: What is the current state of demand?

SH: It is increasing. A big part of the industry already has a level of automatization and they have invested in the first stage of sorting, but to remain

competitive they must keep investing in the next stages of control.

The first investment will often be a labour saving one. The second will be a line automatization in order to separate some defects in different steps. This means that the defects or problems that are left to be resolved are becoming trickier. Their final customer requirements are becoming higher and this translates to the customers requiring more from us.

JG: Are you finding there is increasing competition in your sectors?

SH: The number of competitors is quite steady, but the pace of developments is getting faster, so the technologies to be applied also should speed up.

JG: What are some of TOMRA Sorting’s key plans for 2017 and beyond?

SH: For us, as technology providers, investment in R&D is the only way to survive. In order to do so the company allocates around 10% of the yearly revenue to the R&D department and 20% of the employees are involved in this R&D.

Three aspects they are focused on is seeing how the machines can be mechanically improved to guarantee

a better product flow, reducing the cleaning time and cleaning procedures of the machine and sorting out defects more accurately.

The other two aspects are new optical technologies, ease of use and retrieval of data.

We are investing in the Middle East region. At the end of last year we opened new offices in Istanbul, Turkey. The reason behind that is that in these regions there is a lot of production of nuts and dried fruits, so we wanted to be closer to these markets to be able to present them with technology much faster and more easily. We also wanted to be able to offer them a bigger service station, which is critical.

In addition, for many years we have been investing in our testing centre and service station in Sacramento, California.

It is part of our general philosophy to bring ourselves closer to our customers’ facilities so that we can more easily present them with new technologies. This is also part of what we are trying to do with exhibitions as that is one way of getting in touch with the customers and explaining to them what is new. We also organise roadshows and product demos at customers’ facilities. This is not only for us to present our technology but also to better understand their needs.

JG: In addition to these promotional avenues, what other means of promotion do you use?

SH: We advertise in relevant magazines and we want to become more visible through social media.

“To differentiate themselves, companies want to be able to offer different quality grades and maximise yields.”

TOMRA Sorting opened new offices in Istanbul, Turkey, at the end of last year

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Dried Fruit & Nuts... IEG Vu | Dried Fruit & Nuts 2017 3 Contents Cracking on regardless By Julian Gale The world political canvas has changed beyond belief over recent months. For

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