Market developments: thickening agents
Konjac glucomannan
After last year’s harvest proved to be very poor, prices have been rising continually. While demand is increasing in both Europe and Asia, the raw material remains scarce. It is therefore very likely that konjac will no longer be available at some point over the coming months. An easing of the market cannot be expected before the coming harvest in the autumn 2019. We therefore advise you to contractually secure the quantities you need for the period up to at least November 2019 as a matter of urgency.
Locust bean gum – conventional and organic
The prices for locust bean gum continue to remain at a very high level, since all surplus stocks have mainly been sold off. Small stocks are still being held by farmers and processors so that these can be sold later for the highest possible prices. Regardless of the price, with larger quantities we can not guarantee availability at all. Currently some of our manufacturers are not able to offer them.
Whether or not the situation will ease with this year’s harvest in the autumn is yet to be seen. Since no surplus stocks can be used from the previous year, the harvest needs to be exceedingly good to cover the total demand at a lower price level.
We recommend contractually securing stocks up until autumn 2019.
Psyllium
We supply Psyllium as full seeds, seed husks or in powder form in various grades of purity and degrees of coarseness, both as a conventional and as an organic product.
Most recently, we forecasted an increase in prices, which has now come about with a 20-percent rise. Compared to 2016 and 2017 however, they still remain at a reasonable level.
Since we are currently in the middle of the harvest season, the situation is very volatile at the moment. For many farmers, the harvest was not lucrative due to the low prices for the raw material. This has led to less cultivation and therefore less psyllium being harvested. Nevertheless, in spite of rising demand the price remains stable thanks to considerable surplus stocks. Whether or not the price will rise again highly depends on the weather over the next few weeks. Experience tells us that part of the harvest will always be damaged by rain and humidity. Due to the uncertain price development, we recommend signing medium-term contracts and biding your time for the moment.
Guar gum – conventional and organic
After the start of the year saw appealing prices for purchasers, levels have now risen again. The market for guar gum is very speculative and currently it is not possible to predict the development of prices. Stock-keepers could attempt to drive up prices in order to be sure they make only minimal or no losses on goods for which they paid a high price. We expect to see higher prices even if the coming harvest is good, so we recommend covering your needs for the long term. Since the price of guar gum fluctuates on a daily basis, you should wait for the right day to do so.
Organic guar is currently virtually sold out, so we recommend covering your needs as quickly as possible if available.
Tara
Due to the high prices for locust bean gum, the demand for tara has increased considerably. In general, availability is limited, so we assume that prices will rise here too in parallel. In spite of what looks to be a good harvest, it might not be possible to cover every buyer’s needs due to high demand. If you have requirements here, then you should cover them for as long a term as possible.
Xanthan
A price war among manufacturers between 2015 and 2017 has meant the trade has not been very lucrative for them. Since the end of the price war, the pricing situation has remained stable and there is no urgent need for negotiation.
Agar – conventional and organic
For agar the prices are currently stable, too. For the organic product in particular, prices are currently very attractive for buyers.
Carrageenan
The availability of carrageenan is currently very limited. Some manufacturers had to stop their production because they were unable to acquire any raw material. Historically the prices tend to improve around the middle/end of February because the Chinese buyers are on holiday around this time due to Chinese New Year. China is one of the primary sales markets for carrageenan. At the same time, the drying of the algae begins in the main areas of cultivation, although this unfortunately hasn’t taken place as planned this year. The buyers’ strategy of waiting until prices fall has not worked out, since their stocks are almost at an end and they are now forced to purchase at the currently very high prices. This, in turn, is leading to prices remaining at a high level. Furthermore, there are initial suspicious that demand cannot be covered.
We expect to see prices continuing to rise up until the end of Q2 2019 and then stabilizing again. If you have any requirements here, we recommend you cover them for the long term.
Any questions? Please do not hesitate to contact me!
Benjamin Dux
Head of Sales
Tel: +49 (0)40 - 300 501 8118
b.dux@tergroup.com