- François-Xavier Branthôme
Domestic consumption picks up slack from exports
According to a report published on 19 March by the California League of Food Producers (CLFP), total stocks of processed tomatoes as of 1 March 2018 in the United States amounted to approximately 8.78 million short tonnes (sT) (7.97 million metric tonnes (mT)) in farm weight equivalent. These volumes are down 16.2% against inventories at the same date last year: although this result (a decrease of 1.98 million mT) might seem impressive, it is merely the direct consequence of a reduction in the volumes processed during the most recent season. However, the announcement of a significant increase (+2.1%) of monthly apparent disappearance, which has gone from 1,076 million sT (976 100 mT) on 1 March last year to 1.098 million sT (996 700 mT) on 1 March 2018, is a testimony to the efforts of the US industry to relaunch consumption on both domestic and foreign markets and shows the first signs of success in these attempts. Reported for the first nine months of the current marketing year (1 June 2017 – 31 May 2018), apparent disappearance of tomato products amounts to approximately 9.89 million sT (8.97 million mT), which is 204 000 sT (185 000 mT) more than over the same period in 2016/2017.
That said, it seems that this improvement is in no way due to the foreign sales sector: over 2017 as a whole and the first few months of 2018, the general dynamics of US exports have shown some strong signs of slowing down (see the Tomato News website 16/3/2017). Over the past 12 months, 7.031 million mT (7.74 million sT) of paste for sale was shipped out of processors' warehouses, which is 1 million tonnes more than the volume produced during the last season (6.031 million mT or 6.649 million sT). But it is important to get the benefit of this positive results in perspective as far as processors are concerned, given that volumes of paste for sale still held as of 1 March 2018 are only 1% lower than they were on 1 March 2017... Over the same period March 2017-March 2018, information provided by the CLFP shows that the quantities shipped as paste for remanufacture took off spectacularly, with more than 72% growth (744 000 mT) between the periods running March 2016-March 2017 and March 2017-March 2018.
This sudden regain of interest on the part of remanufacturing operators for US paste has brought about a decrease of more than one quarter in the quantities of paste for remanufacturing recorded in inventories as of 1 March 2017, and has largely contributed to the increase of almost 4% in total tomato product sales recorded, compared to the operational results of the 12 previous months. In total, March to March sales absorbed 11.5 million metric tonnes (farm weight equivalent), of which 7.03 million mT of paste for sale, 1.77 million mT of paste for remanufacture and 2.72 million for other kinds of products.
Total inventories of tomato paste intended on the one hand for sale and on the other hand for remanufacture, were estimated on 1 March 2018 at approximately 6.5 million sT (5.8 million mT), farm weight equivalent.
This trade result indicates a clear progression of almost 4% compared to the period running March 2016-March 2017 and of more than 5% compared to the period running December 2016-December 2017 (see the Tomato News website 31/01/2018). But even more significant than the deflation of stocks, the situation as of 31 March mainly confirms the trend observed early 2018 that has seen the surplus begin to shrink. Available stocks as of 1 March 2018 correspond approximately to eight months of apparent consumption, which is slightly less than two months of surplus volumes at the current rate of disappearance. Although slightly in excess of requirements, this level of availability puts the US industry in a situation that is far less uncomfortable than it was last December. If it is able to keep up the rate of sales of recent months, the US tomato processing industry – which has seen its exports shrink – should be able to count on a theoretical trajectory for annual apparent disappearance of some 12.8 million sT (11.61 million mT), which is slightly higher than current processing intentions (12 millions sT, or 10.886 million mT, source: WPTC 13 march 2018). In other words, if the apparent disappearance rate of tomato products keeps up, it will need to call on available stocks, whose level is likely to be recorded at approximately 5.6 or 5.7 million sT (5.1 or 5.2 million mT) next 31 May. If our hypothesis is confirmed, surplus volumes at that date will only represent slightly less than one-and-a-half months of consumption at the current rate. Given the slightly more favorable exchange rate, this situation could lead US operators to be more forthcoming on foreign markets...
Neither is it unthinkable that these brighter prospects might influence the outcome of price negotiations for 2018. The expectations of the CTGA and the agreement signed in February by Stanislaus Food Products already tend to indicate an increase in the base price for raw materials. Less than four months from the start of the harvest and in the middle of price negotiations between processors and growers, the confirmation of a slight improvement in circumstances could help the agricultural upstream to argue for a better deal for their products in 2018.
Some complementary data
Stocks of tomato paste for sale in industrial pack in the USA as of 1 March 2018 were reported at 4.3 million sT (3.9 million mT), farm weight equivalent.
Evolution of apparent disappearance over the past 12 months