Edible oil prices have dropped sharply over the last three months

Tag : Starch & Derivatives

The suggestion of a rosier picture is compounded by thereport's assertion that "most of the food companies achieved decent price rises in2008, and [going forward] the outlook for industry margins shouldbe relatively bright" .
With doom and gloom dominating the headlines in North America, recession starting to bite in members of the European bloc, and recentfinancial turmoil erupting from the US and sending shock wavesthrough boardrooms worldwide, the report from Credit Suisseproffers a glow of optimism.
The outlook centres on the notion that prices in 2009 for key rawmaterials may ease.
And in a further note of optimism, the report states that "as cost bases stabilise or even fall, this should free upmore money to re-invest in promotions and marketing to helpmaintain revenue growth ".
Edible Oils
Edible oil prices have dropped sharply over the last three months.Palm oils alone, used in a multitude of food applications, hasfallen by 35 per cent since June after reaching a peak of $1300 aton in April this year.
Rapeseed oil is down by nearly 15 per cent over the same period,falling from about $850 a ton in April, to just over $700 a ton inSeptember this year.
And both are now down year to date, claims the report.
Grain
Derivatives of grains, such as starch, which is used byconfectioners, show some relief in price for the raw materials.Corn is "10 to 25 per cent off its early summer peak, although stillup both year to date and versus the same period last year," writes Credit Suisse.
Costs for US corn hit a high of about 700 US cents a bushel in Julythis year, since falling to about 560 US cents a bushel.
Wheat is "a more positive story" , down on price both year on year and year to date. The reportsstates: "in addition, cereal harvests look as though they will bebetter than expected in Europe, driven by good harvests in the EU,Russia and the Ukraine" .
Dairy
Dairy prices have stabilised for the last few months at prices wellbelow the peaks of early 2008.
According to the report, global skimmed milk powder prices are 35per cent lower than the highs and are about 20 per cent down yearon year. Prices reached an all time high in July 2007, rising tomore than $5000 a ton. In July this year, the price came in at justunder $3500 a ton.
The fall in costs for this valuable commodity should be aided bylower feed wheat prices going forward into 2009, and could be thekey to helping dairy farmers keep their costs down.
Cocoa
The report notes that compared to "many other agricultural commodities" the rise in cocoa prices in 2007 was "relatively modest" . But this year, increases have been far steeper - prices are upmore than 30 per cent year to date, and more than 40 per cent yearon year, "partly over worries about the political stability of theIvory Coast," says Credit Suisse.
Last week, ConfectioneryNews.com reported that while costs forcocoa have fallen from a peak of $3000 per tonne in July to$2551.33 on 29 September, reports of the damaging black pod diseasein the Ivory Coast could drive prices upwards, compounded bypolitical uncertainty that may see chocolate buyers eager to buildstocks.
The Ivory Coast is the biggest global supplier of cocoa,contributing 38 per cent of this much sought-after soft commodityto the marketplace.
But with the new cocoa campaign on the horizon, prices are set toreact to news that persistent rain in some of the country's keycocoa areas could encourage the onset of the virulent fungus BlackPod.
Contributing to the price equation are the upcoming nationalelections in the Ivory Coast, which take place on 30 November.
Packaging costs
With the fall in crude oil costs over recent weeks, Credit Suisse'spackaging index is 15 per cent lower than "a month or two ago" , despite the fact that the firm's index