Elisa Louis [00:00:09]:
Hey there. Welcome to get the scoop with Smirk’s podcast where bulk ingredient conversation happens. We’re sharing our knowledge and expertise as bulk ingredient importers, tapping into the latest trends we are seeing and commenting on what that means for natural food businesses as they approach ingredient purchasing, product development, and marketing. You’ll hear the latest market reports, ingredient specifications, and product applications from Smirk’s in house experts, as well as origin stories from our growers and processors around the world. Listen in for the scoop on what’s happening with bulk ingredients.
Elisa Louis [00:00:50]:
Hello, and welcome back to the get the scoop with Smirk’s podcast. My name is Elisa Louis, and I’m here with my colleague, Garrett McBride. Now as a supplier of organic and conventional bulk ingredients, Smirk’s follows the fall harvest of various items very closely. And this time of year, there’s several new crops we keep a close eye on. Those include pumpkin seeds, chia seeds, sunflower seeds, oats, and also California nuts, specifically almonds and walnuts. We’d like to do a deep dive into each of these crops to give you insights into the growing conditions, indicative crop reports at origin, as well as the weather conditions. We’ll key in on planting report estimates and anticipated volumes and other factors that may impact the crop. Finally, we’ll offer our buying and contracting recommendations based on our current intel.
Elisa Louis [00:01:45]:
After the first segment, Garrett will give us a market report featuring the latest on the coconut market, which is a big topic these days. There’s a lot to unpack with coconut, and we’ll explore flax and other items as well, not to mention how ocean freight rates are impacting the cost of a variety of items, these days. Hey, Garrett. It’s great to be with you here on this podcast today talking about the fall crops. How are you?
Elisa Louis [00:02:11]:
I’m doing great. I’m excited to chat about this year’s northern hemisphere fall harvest.
Elisa Louis [00:02:16]:
To kick it off, pumpkin seeds are a big item for Smurx in terms of volume. And a bit of trivia, this is the first item that Smirk’s started importing way back when we started in 2007. And while we primarily import both conventional and organic pumpkin seeds from China, where about 70% of pumpkin seeds are actually grown, we do source from Austria and Mexico as well. But today, we’re really focused on the major origin of China, where they grow the Shine Skin variety of pumpkin seed. Shine Skin pumpkin seeds are a light to medium green color, and Smirk’s focuses on grades a, a plus, and AA. Now a plus, in case you didn’t know, is like a mix of a and double a. And in China, there are large scale farms with high efficiency harvesting and processing methods, and the product is steam pasteurized at origin. Garrett, what are we seeing this year in terms of the volume of planting in China and the crop prediction for the fall?
Garrett McBride [00:03:18]:
Right. So far, we’re seeing a lot of very positive indications around the pumpkin harvest. Planting acreage is reported to have been significantly higher this year than in previous years. Organic yield is always a bit less plentiful than conventional and time will tell how those proportions look, you know, this particular crop year. Worth noting, the Chinese harvest started in late August and is wrapping up as we record this now in late September. So we’re in a bit of a transition period between crop years right now and global demand has been pretty quiet up to this point. With overall pumpkin seed supply looking strong and low export demand from China, markets have softened to comfortable levels and it’s a buyer’s market.
Elisa Louis [00:03:58]:
We know that every year there’s other factors that come into play with the Chinese pumpkin market, including those speculators that come in and buy a fair share of the volume and hold the product and later resell, which often increases prices. Ocean freight costs can also come into play. As of now, what are you seeing, Garrett, in terms of these factors?
Garrett McBride [00:04:20]:
So far, speculators have largely stayed away from the Chinese pumpkin seed markets. This is a significant contributing factor to the overall reduction in demand that we’ve been seeing. Ocean freight rates out of China have settled a bit over the past month. Between that and soft markets at origin, it’s a great time to contract and lock these favorable market conditions down.
Elisa Louis [00:04:41]:
Good stuff, Garrett. Hey. Let’s shift gears a little bit and talk about chia seeds. We typically source our organic and conventional chia from Paraguay. We normally keep close tabs on the weather patterns as we get closer to harvest time, often looking at the timing of the first frost, for example. And in general, the chia market has been known to be historically unpredictable. Garrett, you visited processors in Paraguay earlier this year. What can you tell us about the chia seed growing conditions, plantings for this crop cycle, and predicted volumes?
Garrett McBride [00:05:17]:
Sure. Yeah. I love Paraguay. I love chia. This crop here started out looking very good in Paraguay from a weather standpoint, from a planting standpoint. Up until June, conditions couldn’t have been more favorable and chia prices were falling in anticipation of what some were calling a super bumper crop harvest. Then came a late summer drought impacting mostly the northern growing region in Paraguay and speculation around the impact of that quickly firm markets. This year’s crop is anticipated to be between 55,060,000 metric tons, which is pretty well in line with, what we saw last year, maybe slightly higher.
Garrett McBride [00:05:58]:
However, typically the conventional to organic breakdown is 70%, 30%. This year, it’s looking to be closer to 5050 and it may be worthwhile to pay close attention to organic markets over time and and as the harvest really wraps up and and the new crop is understood fully.
Elisa Louis [00:06:17]:
Oh, that’s really interesting. And so what do you see as far as other factors that we should bear in mind with Chia?
Garrett McBride [00:06:24]:
Yeah. Paraguay is super interesting. It’s a landlocked nation. Paraguay relies heavily on its river systems to transfer goods to the ocean ports for the final shipment. The drought experienced in Paraguay this year has dropped water levels in the Paraguay River, the primary river, to the point where shipments to port have been significantly reduced and slowed. Ocean freight rates, South America have also increased dramatically over the past few months, and some packers who had initially written CIF contracts are defaulting just based on the freight increases.
Elisa Louis [00:06:58]:
Okay. Well, drought strikes again, impacting yet another important waterway. Yeah. Good to know. So to sum it all up, Garrett, what is Smirk’s recommendation in terms of contracting for Chia?
Garrett McBride [00:07:11]:
Chia is always fun. This time last year, there was speculation that Chia prices would rise after the Anewga show in Germany, and they did not. Anewga’s sister show, SIAL, which happens, in October in Paris, will be a good source of information for us and and a potential point of volatility for the Chia markets. We’ll be watching closely for global demand signals and market movement after folks, including myself, return from Paris in the CIAL show. When it comes to Chia, nothing is happening quickly right now from processing to testing, shipments, NLP certificate issuance, that’s the organic certificates. Smirk’s recommends locking in volume now to stay ahead of the demand surges that are likely to come and take advantage of the favorable market.
Elisa Louis [00:08:00]:
Well, it’s gonna be a great great timing for you to go to see all and really dive a little deeper into Chia and some of the other markets, but particularly this Chia market. That’s it’s it’s interesting
Garrett McBride [00:08:12]:
It’s always fun.
Elisa Louis [00:08:13]:
To say the least. Alright. Well, hey. Let’s move on to explore the sunflower market next. This is also a staple item for Smurcs, both conventional and organic sunflower, primarily kernels and bakery grade kernels, but other specs are available by customer request as well. Smurx imports the majority of our bulk sunflower from Bulgaria, but we also source some from Turkey and from the USA. Garrett, what are some of the key things for us to know about these different growing regions and the volume of plantings for this fall harvest?
Garrett McBride [00:08:50]:
Yeah. You said it’s first sunflower kernels generally come from Bulgaria, Turkey, and the United States. This summer was really hot in Eastern Europe and the result of that heat was severe crop damage in those growing regions. It was very, very bad. Not only did the heat impact the yield of the sunflower crop, but it’s really impacted the quality of the kernels which were able to be harvested. And that just means it takes more volume to run through the cleaning and sorting lines for us to put together quality full loads to, to import into the United States. So it’s just an added challenge and any extra salt in the wound around the conditions of this commodity. In the USA, plantings for kernel crop were estimated to be down by around 30% compared to last year.
Garrett McBride [00:09:36]:
However, still, a bit too early to tell what the US crop size will look like at this point, but we are keeping our eyes on domestic production, you know, as that situation evolves and we’ll be able to provide additional guidance, later on down the road.
Elisa Louis [00:09:50]:
Okay, definitely one to keep an eye on. And what other factors should our listeners bear in mind with the sunflower crop?
Garrett McBride [00:09:57]:
Yeah, global demand continues to rise and supply will be limited this year. Markets will continue to firm and availability will continue to be challenging. You know, for the benefit of guaranteeing coverage for your demand, you being the customer, we recommend contracting as soon as you can. Smurx has a great sunflower position right now, and please call us if you need coverage.
Elisa Louis [00:10:22]:
Alright. So thanks for weighing in on sunflower. That was super helpful. One of the growing items for Smurx in terms of volume is oats, and the oat market has moved around the last couple of years due to various factors in terms of the crop and consumer demand. One thing we can recognize, just walking down the aisles of a grocery store, is that there’s just so many more products made from oats than ever before. It’s really on trend. You know, it didn’t seem to be like that just a little bit ago. You didn’t see oat products in the refrigerated dairy section of the grocery store, but that’s all changed.
Elisa Louis [00:11:00]:
I mean, if you walk down the aisles, you see nondairy milk, coffee creamers, nondairy cheeses, vegan butters made from oats. And then, of course, you look at the energy bars, and there’s a new energy bar popping up all the time made from oats. And, of course, you go down the oatmeal aisle, and you see the usual oatmeal, but then you also see the on the go packaged oatmeal products as well. So needless to say, it’s a really important part of what Smurx offers, and we offer both organic and conventional bulk oats, and we certainly offer gluten free as well. Garrett, could you tell us about the growing conditions and plantings for the oats, which we primarily source from Canada and any weather patterns that may have an impact on the crop?
Garrett McBride [00:11:47]:
Sure thing. Yeah. Generally speaking, across the Canadian prairie, growing conditions this year were very good. It rained when it was supposed to rain. It stayed dry when the farmers needed it to stay dry. All indications up to this point are are favorable for oats this year. Happy to report.
Elisa Louis [00:12:06]:
Beautiful. Love to hear that. That’s awesome. So what are we seeing in terms of the potential volume this year in comparison to previous crops?
Garrett McBride [00:12:15]:
Yeah. Based on what we’ve been hearing about the weather and the planting in the Canadian all growing regions, the harvest yield looks to be very strong compared to last year’s crop. There are some questions around the quality of the oats, meaning they might be lightweight relative to previous years and previous harvests, but the Canadian harvest efforts are nearly complete, and we should have a a much better picture of volume and quality here in in the near future.
Elisa Louis [00:12:40]:
Great. So in light of that information, what are SMERC’s recommendations in terms of contracting and coverage on conventional and in terms of contracting and coverage on conventional and organic OATS? It’s gonna be a great year to contract OATS.
Garrett McBride [00:12:49]:
We’ve been signing customer contracts for OATS lately, and now is a great time to call Smirk’s for next year’s coverage. Send us your needs and let us get to work finding solutions and then saving you money. Worth noting, we also have very strong gluten free options and all partners with access to regenerative organic certified material, if that suits your needs.
Elisa Louis [00:13:17]:
Excellent. Okay. So to round out coverage of our fall crops, we wanted to definitely dive into California crops, specifically organic and conventional almonds and walnuts. So let’s focus on walnuts. California almond farmers experienced a very abundant crop 2 crop cycles ago, but what are we seeing this year?
Garrett McBride [00:13:38]:
The California tree nut growing conditions were largely very favorable this season. Excellent weather during the bloom, which is one of the most critical times in in the crop cycle for things to, go right. And beef flight hours, which is another metric that’s extremely important for the development of, you know, the almond trees, the almond growth, were reported to have been significantly higher this year than last. The USDA objective report for almonds indicated around 2,800,000,000 meat pounds. But with a smaller crop last year and minimal carry in, the total available this year will likely not even come close to approaching the £3,000,000,000 total that we saw 2 seasons ago. We are seeing significant increases in walnut and almond costs with growing global demand and, a slight reduction in overall supply, especially on the organic side of things.
Elisa Louis [00:14:33]:
So what does Smirk’s suggest this fall in terms of contracting and coverage on California Almonds as well as walnuts.
Garrett McBride [00:14:41]:
Smurx is actively closing contracts for California tree nuts for 2025 demand now as we speak. If our listeners would like to get to work on locking up a position, please let us know. It’s a great time. Even at higher costs, almonds and walnuts remain the best value in the tree nut world, you know, as markets for Brazil nuts, max, and cashews have increased at a much more dramatic level relative to the California tree nuts.
Elisa Louis [00:15:08]:
Alright, Garrett. Well, thanks so much for sharing all these crop insights with us today. This conversation has definitely shed light on the fact that Smirk’s closely monitors the northern hemisphere fall crops. So it’s really not a surprise that so many of our fall harvest items crack the Smirk’s top bulk ingredients list in terms of volume. For our listeners and friends in the industry, this is a great time to explore your fall crop needs. Whether you’re a regular user or a new user of organic or conventional pumpkin seeds, chia seeds, sunflower seeds, oats, and California almonds and walnuts, we hope this podcast has been helpful for you. Please remember, though, that these crops and markets are known to change as the season goes on. And while we don’t have a crystal ball to predict exactly what will happen, our Smurx purchasing team relies on years of experience coupled with our network of suppliers to provide updates and insights on the markets.
Garrett McBride [00:16:08]:
Yeah. Our goal is to help to provide the best possible information available to us, to help our customers make informed buying decisions. So we always invite you to call, email us at what’s new at smurks.com or send an inquiry through our smurks.com website. We’re here to help you feel as prepared as possible in navigating the the various ingredient markets. Thanks so much for tuning in to segment 1 of episode 14 of the Get the Scoop with Smirk’s podcast, but don’t leave us yet. Stay tuned. You don’t wanna miss our second segment, which is the market report featuring other key items such as coconut and flax and an update on ocean freight rates. If you haven’t already, please hit the subscribe button to automatically have immediate access to each new podcast episode.
Garrett McBride [00:16:55]:
And if you value our content, you can support us by rating our podcast and sharing it with a friend. Thanks again.
Elisa Louis [00:17:01]:
Thanks everyone.
Garrett McBride [00:17:05]:
Hello and welcome to the market update for episode 14 of Get the Scoop with Smirk’s podcast. I’m Derek filling in with Donnie and today we’re going to be reviewing markets for all things coconut as well as sunflower and cashews. Hold on tight. Here we go. Start with coconut. Current situation. In the last few months, we’ve seen very strong volatility in the coconut markets and we expect this to continue for the next few months at least through Q1 of 2025. El Nino really reduced both the size of the coconuts and the coconut crop globally.
Garrett McBride [00:17:41]:
Although global demand for coconut was soft in 2023, we have seen it pick back up in 2024. Presently, many buyers are not fully covered on coconut or were only covered through the end of 2024. The limited coverage, smaller crop, and reduced nut size have created a supply chain gap driving prices up to levels comparable to those seen during the COVID time frame. Where’s the market headed? Historically, these issues have resulted in market conditions worsening in Q4 and Q1 before the situation improves. Because SMERCs imports coconut products from multiple origins, here’s the breakdown by country. Talking about the Philippines, Philippines already facing production reductions based on the size of the nuts being smaller than normal. We’ve had some reports that expect, coconut size, physical size of the nuts to be up to half of what they usually are, which obviously contributes to a raw material constraint. One supplier expects to cut production on open orders by up to 30%.
Garrett McBride [00:18:45]:
Competition in the Philippines for raw nuts is fierce not only for those producing desiccated coconut but also for crude coconut oil. Producers anticipate that new nuts will be ready in April and they should return to normal sizes once the weather patterns normalize. Most major packers are sold out for 2024 and worry they may need to roll some of their 2024 commitments into 2025. As a result, Q1 quotes are very limited, although some producers are still offering limited quantities. In Sri Lanka, generally the annual crop in Sri Lanka is around 3,000,000,000 coconuts. Domestic annual consumption of Sri Lankan coconuts is about 2,000,000,000, leaving approximately 1,000,000,000 nuts for the export market. Challenge we’re dealing with now is that the current coconut crop is only 2,600,000,000, which reduces the available coconuts for export by 40%. Many Sri Lankan suppliers are oversold with no product to process or ship and as a result, the prices continue to rise.
Garrett McBride [00:19:51]:
Shippers are already months behind on some orders and the risk of defaulting on contracts is real. The dry season in Sri Lanka will run from November to about March or April of 2025. The next dry season hoppers much less raw materials to process. We don’t expect much improvement in Sri Lanka until at least April. Moving on to Indonesia. Earlier this year, some regions in Indonesia sold a lot of their coconuts directly to China. It was stated the Chinese buyers came and purchased the nuts directly from the Indonesian farmers and this caught the local processors off guard. Instantaneously prices increased and we experienced several shipping delays as a result of the Chinese demand.
Garrett McBride [00:20:36]:
Suppliers are only selling now once they know their actual coconut volumes in hand for the upcoming months, which is smart on their part. For example, in early September, they offered a select number of production spots just for October, very hand to mouth. Indonesia’s dry season will be from November this year to March of 2025. Yet again, another reason things will be tighter there until Q2 of 2025. Last origin we’ll discuss is Vietnam. Vietnam has been a very reliable shipper this year from May up until the present. However, they’re now waiting for more coconut to come in and their pricing has increased significantly. The hope is that in November December of this year, we’ll see prices start to soften from Vietnam, which would add support to the coconut market.
Garrett McBride [00:21:21]:
What steps should you be considering? Here’s our take. Seek coverage immediately if you have not done so. For all of the reasons already covered, we expect the markets will remain tight and expensive. Diversify your supply chain with multiple origins. Use a combination of origins and suppliers to mitigate the risk to supply and avoid disruptions. We saw this during COVID and it’s apparent again right now. In other words, seek to onboard new suppliers. Smirk sales and QA teams are here to help if that’s a path you choose to travel down.
Garrett McBride [00:21:57]:
With Vietnam being possibly the first to offer relief to the market, their product could sell quite quickly. Currently Vietnam is still offering competitive prices on RBD and VCO coconut oil. Looking for coverage through Q2 of 2025, if the Philippines supply approves in April as hoped along with Indonesia and Sri Lanka moving out of their dry seasons at the same time, markets could recover during that time period. Making sure you’re covered through Q2 will guarantee that you have supply, but will also set you up properly if the market does decline as they normalize. You won’t be locked into long term contracts that are too costly relative to the market. This will allow you to wait and see how things progress later in 2025 as we are expecting some improvement. Key takeaways when it comes to coconut, Higher prices are expected to persist at least into the spring of 2025. Raw material supplies at origin and coconut supply stocks in the USA are both lower than they should be.
Garrett McBride [00:22:54]:
Diversifying your supply chain is a good hedge against supply disruptions. By April 2025, we hope to have a clearer picture of the direction of the coconut markets. Let’s move on to coconut sugar. Current situation, El Nino has caused serious damage to the supply chains in Indonesia. In 2023, we experienced shortages that extended into most of 2024. This year, the trees were still stressed and produced much less sap, which is required to make the sugar. Ramadan was also earlier in 2024 than in previous years and this gave the processors less time to secure raw material to process after Ramadan. The shortage of raw material prior to Ramadan triggered a surge in demand for the available supply.
Garrett McBride [00:23:39]:
This led to intense competition amongst domestic companies in Indonesia and with exporters. Adding to the problems in March of 2024, when the new NOP organic rules went into effect, it caused an even larger strain on the organic raw material supplies in Indonesia. The industry was not fully ready for the transition to providing NOP import certificates for all USA shipments. The demand for truly organic product increased the pressure and this summer we saw 30% increases in prices at the farm level. That’s for raw materials. Many shippers were still months behind on shipments from the shortages both before and after Ramadan. This added up to a shortage of Indonesian coconut sugar that we’re still dealing with. Besides the issues at origin, we continue to see new product innovations and more demand from existing customers for coconut sugar.
Garrett McBride [00:24:32]:
Overall, we’re facing many challenges with coconut sugar, including lack of supply, increased pricing, and no really clear idea as to when the supply chain will catch up in Indonesia. However, we’ve seen this situation before and rest assured, processors have consistently managed to adapt and catch up. Information from the field in Indonesia suggests that domestic demand has slowed down and we may expect things to normalize by the end of 2024. Where’s the market heading you asked? Indonesia owns the coconut sugar supply chain for most major markets. Philippines has never been able to compete with Indonesia so most customers are relying on Indonesia to solve these issues. Most major suppliers are sold out for 2024 now. It is not easy to secure large volume orders offers from the main suppliers in Indonesia. Prices have increased dramatically and show no signs of decreasing as of yet.
Garrett McBride [00:25:25]:
Ramadan is earlier in 2025 than it was in 2024 so this could be one of the last speed bumps before recovery of this market. Note that Ramadan is approximately February 28th to March 29th, 2025. So keep that in mind when planning your demand for coconut sugar. Additionally, there’s very little sugar in the USA available for spot sales right now. We do not anticipate that importers will be able to catch up in 2024. It may take until q2 of 2025 before the supply chain stabilizes. NOP import certificate issuance continues to cause delays with the timing of loads even after they’re prepared in Indonesia. Certification bodies are slow in inspecting prepared loads, which contributes to the delays we experienced once the loads were ready to ship.
Garrett McBride [00:26:15]:
Ocean freight remains an obstacle from Indonesia and we do not yet have a clear idea of rates November and beyond. There are some reports that rates could start to drop, which is very welcome news, but we have yet to see that in reality. And for now, we don’t know if the market conditions will improve until producers can reliably access more raw materials. There’s a chance we won’t have a clear understanding of how this will unfold until after Ramadan in 2025. Q2 remains the best estimate for when things might return to normal in the coconut sugar world. Weather in Indonesia has improved compared to a year ago and raw material production is starting to get back on track. Processors have indicated that a significant amount of raw material should become available in the next few months and they expect to be 2 to 3 times greater than it was in 2024. What steps should you be considering? We suggest getting coverage through Q2 of 2025.
Garrett McBride [00:27:14]:
If we do see price decreases, it will be after Ramadan as the supply chain catches up. However, this material will not hit the USA until summertime. Getting coverage through early next year will still leave the door open to take advantage of price decreases if and when they come around in 2025. Exercise caution if you’re being pressured into an annual contract for 2025 as the market is at an all time high. We believe securing partial coverage and waiting out the supply challenges will be to your benefit. Let’s talk about cashews. Cashew markets remain firm. 1st week of October has been quite active in Vietnam and we continue to see prices increase on the raw cashew nuts.
Garrett McBride [00:27:57]:
We’ve also seen the FOB prices increase this week as well on 3 20 counts by about a dime per pound. On the organic side, processors are running out of nuts to process and prices continue to increase on these as well. Smurx is booking some contracts for customers for the first half of twenty twenty five, depending on where your needs are. Call us for more information and we’ll keep you up to date as this volatile market evolves on a daily and weekly basis. Let’s talk about sunflower. Price of the United States have risen sharply already due to the near instantaneous demand for USA sunflower kernels as east coast pork port strikes have taken shape this week. 1 of our main suppliers is already tight on domestic bakery kernels as a result of this demand. This is a market that’s going to be worth keeping an eye on.
Garrett McBride [00:28:47]:
Reach out to us as your demand becomes apparent and we’ll be able to advise you as this market evolves and what your steps should be with regard to USA Sunflower Colonels. Well, that’s about all the market information we have on the episode 14, get the scoop with Smirk’s podcast market update. Please don’t hesitate to reach out to us for solutions and supply chain advice as your needs become apparent moving out of 2024 and into
Elisa Louis [00:29:16]:
- Thanks a lot.
Garrett McBride [00:29:19]:
So that’s it for this episode of Get the Scoop with Smirk’s podcast,
Elisa Louis [00:29:23]:
where we bring you the latest market reports, insights into bulk ingredients and their origins, as well as in-depth product information. So if you have any questions, feedback, or just want a sample to taste for yourself, visit the smirks.com website or email us at what’s new at smirks dotcom. Never miss a future episode. Be sure to hit the subscribe button wherever you listen to your podcasts. Thanks so much for tuning in.