The market for Chinese pumpkin seeds and kernels has taken a completely different turn in the past months than was expected back in August. Just after summer, all seemed well for the coming season, with low levels which were fueled especially by a big expected crop of shine skin material. The GWS crop at that moment also seemed average and similar to last year.
However that changed when during the harvesting and drying, it turned out that a lower crop of GWS than previously would be expected. The GWS, which mainly comes from the North Western part of China, the Xinjiang province and from the Northern part, the Inner Mongolia province, was said to be only about 30% to 40% of the expected crop. This caused panic among packers in China and prices rocketed to higher levels. Speculators noticed this chance in the market and paid the farmers a high price and trucked the still wet raw materials directly from the field. With such a small volume available, they often see a chance to manipulate that part in the market and control the GWS’ prices.
So with farmers and middle men not honoring their contracts, the market panicked and some packers even defaulted their cheaper contracts, or shipments were delayed, because raw materials were not delivered at the contracted prices.
Shine skin kernel prices were dragged along to those higher levels also, although the crop of shine skin is still expected to be very big. We still expect though that shine skin prices will ease a bit, as soon as the new crop is widely available again in the market.
All this has now caused a very thin supply and a market with big price differences among packers in China. Further importers in Europe are still waiting for those first new crop containers. Besides the firmer raw material prices, the packers now also suffer from the RMB currency situation which is not in their favor, but even more the sea freight costs have gone up extremely also. Many vessels have been overbooked and the freight rates have risen to extreme levels and are expected to even firm up further.
All in all a very disturbing situation. We foresee that the market for the GWS material will remain very tough and especially the lack of enough volume of A-grade material, will keep this market firm. For the shine skin we expect and already see some release in prices, but also there we feel that the low stocks in Europe will keep the market relative firm for a while longer.