China's Economic Outlook Drags Us All (Up & Down)

The last years have been a wild ride but at BPF we have been able to keep costs low by searching alternative sources while always watching quality specifications. China has one of the sources for us in key items such as Mandarins with much success and others like Artichokes with less. So many production areas can say the same in many different industries. We are more connected globally than ever before.

For the last few years, as most know, China has supplied most of the world's economic growth (International Monetary Fund sources, WSJ, etc.).

The U.S. and the E.U. are expected to expand barely for years to come, while (we hope) China's economy to keep rising at this year's at 8% growth rate or better. Is this going to happen? WSJ's Gongloff raises some interesting quotes including: "The combination of soaring investment and dwindling returns was seen in Japan in its asset bubbles in the 1980s and in the "Asian Tigers" just before their crises in the late 1990s, he (Edward Chancellor at Boston asset-management firm GMO) says."

The impact to costs of Mandarins is pretty clear. Prices are going up. How much will depend on several factors which we will watch closely...

Stay tuned as China evolves into the engine of the recovery or the latest weak link in the evolving global economic scene.

Artichokes Early

When I began in the business, there were over 170 packers of Artichokes in Spain and none in China, Peru and very few in Chile. Product was mostly packed fresh from the Spring Crop. The heat around Easter always ended the "COLMA" or large influx of raw material to auction and 90% of the years product was produced. Late November or early December production was small and used for marinated and bottoms nearly exclusively. Packing for this was only a few weeks.

This year there may be only 10 or so packers left in Spain of which only 4 or 5 are seriously adding production (for which the USA is the largest market).

This year packing of the "Winter" crop begins earlier then my memory recalls (end of October!) due to the ideal weather this fall... The importance of the winter crop increases as does the quality of the harvested material.

While the economic shake outs may continue, the turn around after the shortages of this year leaves the major producers rushing to fill the vacuum.

Olives Looking Good

The Olive Crop is looking solid in Spain... Prices should moderate. The only issue is the continued fall-out of the economic disasters in Spain and the shortage of credit.

To finance the the finished harvest is no small expense. Like with Artichokes earlier this year, fiscally responsible public (and private) companies are trying to be sure they are in balance and are not producing without buyer's contracts. Even the Coops have, albeit in different forms, problems of credit though I expect they are obliged to take in and cure material.

But the crop looks good with the exception of 240/260 calibrated Manzanilla, the most popular stuffing size of this variety. The Manz are running very small.

Short Term Olive Oil Trend

Since last market report market the trend has confirmed a continued firmness on prices of extra virgin oil due to limited stocks of last year crop.

Co-ops are doing their best to optimize value of current stocks during interim term (ie old/new crop overlap)by keeping the spigot tight.

New crop looks to be good ,therefore this trend should start turning over and heading the other way by mid November.

Buy only to spot needs until the new crop prices become apparent and the market circumstances change.

The Dollar's real Value... In Goods...

More on the impact of the falling dollar and when enough is too much by Gongloff of the WSJ. As the US $ reaches for record lows again against a Basket of currencies he holds forth the latest/greatest tools of economic wizardry of prediction that looks to prices in real goods. What does using the iPOD costing or the real effective exchange rate index compiled by the Bank for International Settlements he concludes the eventual obvious with:

"Unfortunately, this is all so much theory. In reality, the dollar is arguably underpriced against some currencies, such as the euro, and overpriced against others, such as China's yuan."

The Weakening US Dollar

"Measured in euros, U.S. per capita GDP is down 25%" ...

Transfer of wealth has been underway for a while. I saw gas prices at 1 euro per liter. That's $3.86 per gallon... I remember when the US Empire and Power has us 3 to 4 times less... Soon we'll be paying the same in the US as in Europe.

Domain Changes Take Time

We are off line at Blue Planet Foods as we switch companies for our online activities. The goal is to give us a new more flexible on line presence as well as add services to our clients.

Hopefully!

Where the US $ MAY be going...

Much guess work. The dollar will remain weak as long as the US has low interest rates.
Interest rates won't change until next year...

"Most economists think the Fed is keeping a close eye on any signs of stabilization in the labor, banking and housing sectors. When those become more obvious, the Fed will need to aggressively raise rates and end those emergency lending initiatives.

But a majority of forecasts don't show stabilization until the end of the year or beginning of 2010. Until then, the Fed is likely to keep rates unchanged so it doesn't disrupt what appear to be the underpinnings of an economic rebound." CNN Money Report Sept 21

JP Morgan Chase had predicted 1.50 by the end of the year. We appear headed that way sooner.

California Olive Crops Down, Spain Quantity Up

California's 2009 olive crop forecast is 50.0 thousand tons, down 25% from last year. The bearing acres are estimated to be 29.0 thousand acres, resulting in a yield of 1.72 tons per acre. For the second year in a row the California olive crop is turning out light. The 2009 crop which was looking promising in early spring has turned disappointing. There was a heavy bloom and set reported in spring, but conditions deteriorated as the growing season progressed. Small olives were reported with some falling off trees. The change in the outlook has been attributed to spring freezes, extreme temperatures and water stress to trees. These factors seem to have had the most severe impact in San Joaquin Valley and a lesser impact in the Sacramento Valley. The decline of the 2009 crop has led some growers to evaluate whether harvesting this year's crop will be economically feasible.

Source: Fresh Plaza.com

Container Spot Rates Volatility

As good an indicator as any of the upturn from the bottoms... And this component is the first in a inflationary trend? I think so... What do you think?

Olive Oil Prices Rising

Seems that prices have fallen so much and the Retailers in Europe have such stocks on hand that the EU (European Union) is jumping in to support prices...

Support Prices is euphemism for "get prices up". Does this sound like socialism?

Nope.

The impact on people is clear... Higher costs in a staple while unemployment is at high points along the Mediterranean sea!

What is a Low Acid Food - Stuffed Olives?

Are Spanish Stuffed Olives a low acid food? In my 30 plus years of importing them... No.

But being right is not necessarily the correct answer: Water activity and pH definitions be damned. An inspector says no... that's that. (and precious little real dialogue).

But hey, if the Spanish packing industry would only file low acid, I am pretty sure that FDA would reject the filing as not being low acid.

Here is an issue that should be resolved simply by food technologists. Does it or not need filing as a low acid food?

FDA has been under such duress that they are missing the big picture. I don't envy them their responsiblities. So fearful of mistakes...

Blue Planet Foods visits and inspects all of the packing partners we use across the world. We don't wait for FDA. We look to guarantee that we have sound, healthy, current practices in the manufaturing of our products.

With a bit of clarity, we want to work towards the goal of SAFE FOODS with any and all.

Meanwhile, the Stuffed Olive Saga continues.