One European buyer of Chinese canned mandarins confirmed that China is not offering product yet as the harvest will not start until around the end of this month and packing will take place in November.
He observed that Shandong is expecting a reduced crop. This area mainly supplies premium brands in the Japanese market. The mandarin orange crop in Hubei and Hunan is reportedly good in terms of volume but poor in quality as the fruit is small. An American source highlighted that the mandarin crop is particularly good in Hunan.
It is hard to confirm whether the crop will be shorter, as some sources suggested, or similar to last year. The main factor that could determine canned mandarin output this year is not just related to supply of raw material but Chinese manufacturers' access to credit to pack.
One US importer told Foodnews that Chinese had no money to face production costs and will only produce to contracts. This was also confirmed by a German buyer. A second US buyer told Foodnews today that some manufacturers were asking for a payment upfront of up to 30% of the total cost to pack.
“Who’s going to pay that much money to the Chinese? And if you are not served after,” the US buyer from the Pacific Coast noted.
The buyer from the USA's East Coast observed: “if buyers delay orders, the Chinese will just not pack regardless of the amount of fruit on the trees”.
The German source envisages that fewer manufacturers will produce for the European market, although he noted that the fact that most supermarkets demand social and sustainability certifications reduces the number of qualifying suppliers in China.
“China will not pack without orders; they usually produce above contracted volumes to speculate with remaining volumes. This time there will be no stocks at all,” the German noted.
The predominant feeling in the market is that the price will remain at similar levels to last year.
“They can’t increase the price because nobody will buy,” the East Coast importer noted, adding that they cannot really lower the price either because they need to cover costs and fix their finances.
One source noted that the recently weakening of the yuan against the dollar could alleviate producers but not to the extent of completely offsetting rising costs, from labour to overheads.
The US buyer on the Pacific Coast commented today that he bought Chinese canned mandarins at SIAL for USD7.0 per case of 24x11oz 5% broken fob.
在太平洋沿岸的该美国买家评今天有评论说他在Sial展会上购买了24 x11oz 5%破碎的桔子罐头,价格为7.0美元每箱FOB离岸价。
According to Foodnews data the same product last year hovered between USD7.20-7.50 per case fob.根据Foodnews数据显示去年同样的产品每箱离岸价为7.20 - -7.50美元fob之间徘徊。
The same source noted that he bought in September old stocks of the same product spec at USD6.20 for prompt shipment. Foodnews’ records show that, at least in 2013 and 2014, there were purchases of old stocks in the months of October and November at prices around USD6.5 and USD6.25 per case respectively fob. A German source commented that there has been speculation in 2015 with stocks in China, which he lamented would not happen this year.
German buyers are also expecting similar pricing of Spanish canned mandarins to last year, which they described as a low price.
Spanish manufacturers noted that last year they sold below cost and that prices should be at least similar to last year.
“Spain will be the main driver for prices in the EU market,” the German buyer noted. One Spanish canner commented today that Germany had been highly interested in Spanish product yet no deals have been closed as there are no prices yet.
All canners agreed that there were no prices for canned mandarins yet as the price of raw material is still being discussed.
It seems that China’s problems and unprecedented ‘quietness’ in offers at this pre-packing stage has caught many buyers by surprise.
Foodnews could not get a quote from manufacturers on the spot, as they wanted to check with the factory first and email a price. Many buyers might be delaying taking positions in the market until they see more clearly where China stands. This, however, has not translated yet into buyers rushing to Spain, based on the reported lack of contracts closed at SIAL, compared with Anuga last year.