Oilseeds

Chinese pumpkin seeds: “Market can easily be controlled by speculators”

December 31, 2021 2:00 PM, Der AUDITOR
Play report as audio

SEEHEIM/QINGDAO. The AUDITOR's editorial team spoke to a number of different commodity trading experts. For today's interview, Tony Gu, pumpkin seed expert at Prima Farm Foods, Qingdao/China, answered our questions. He reports on the adversities and hurdles faced by the Chinese pumpkin seed market this year, but also about his positive experiences and his expectations for the coming year 2022.

What issues were the most difficult ones for the Chinese pumpkin seed market to face in 2021? Were they mainly related to the lingering threat of the worldwide pandemic or do you think they would also have occurred in a more normal year?

I think the biggest problem for all Chinese suppliers in 2021 were the high freight rates. As you know, most customers usually sign long-term contracts for half a year or a year. The freight rate used to be USD 1000 to USD 1500 for a 20’ FCL to the EMP, but over time it increased to USD 9000. To fulfil the contracts, most suppliers lost too much money due to the freight rates. Of course, some suppliers did not fulfil their contracts.

Another problem is that we also lost a lot of money due to currency conversions. I must say that the Covid pandemic has affected the world economy a lot. In 2021, demand was so slow, but the situation is getting better with time.

In most markets, prices for feed and food commodities went up significantly over the course of the past year. Pumpkin seeds are no exception to that. Do you think buyers will have to adjust to these higher levels in the long run or do you expect prices to decrease again?

Due to the impact of Covid-19, it seems that the prices of all goods have increased rapidly in the last year, not only for pumpkin seeds. I have also discussed with many customers whether they will reduce the demand for pumpkin seeds or make a cheaper substitute. But most customers said no. The demand for pumpkin seeds is still there, even though the current prices are much higher than before, but they will not change it because they use large quantities for baked goods which people have a high demand for. We see that the demand from customers is still very high and we have already received many orders from the EU market and I think the demand is higher than last year.

Did the demand situation change compared to 2020 and 2019? Do you think some buyers and processors had to readjust their needs?

Demand in 2020 was lower than in 2019 because the Covid-19 pandemic affected many businesses. As the situation worsened, most countries began closing hotels, shopping centres and bakeries, so demand is definitely lower.

Logistical issues like high freight costs, a lack of containers and truck drivers as well as closed ports were problems faced by the food and feed commodity market. Is there a lesson to be learned from that going into 2022?

For freight rates/shipping space and some related issues, yes. We learned a big lesson in 2020. To cover the risk, most suppliers were only willing to offer on FOB terms and some customers would still insist in CFR terms. But the good news for now and the future is that the situation is much better now. Freight rates are stable and slowly going down and also shipping space is easier to get for some big ports like Rotterdam, so I think this will not be a main problem for future business.

Additionally, climate change and crop concerns are real and pose a threat to all kinds of food and feed commodities around the world and will most likely continue to do so. How would this affect the pumpkin seed market in the future and what could companies in this industry do to improve this situation?

As we saw after the last harvest, demand from overseas was not good. Normally the market price should go down, but the trend for pumpkin seeds kept going up and is beyond most people's imagination. One of the main reasons is that the domestic market is strongly supporting the market price, but the situation is completely different this year: one of the most important products pumpkin seeds are being used for, oatmeal, is withdrawn from the markets in China, and as most commodity prices are rising, food factories are now staying away from pumpkin seeds, so demand for shine skins in the Chinese market is getting lower and lower.

I have to say that this pumpkin seed price is very high. Commodity prices for the 2020 crop were at CNY 12/kg, while they reached 17 CNY/kg for the new crop and most of the regular pumpkin seed suppliers are waiting for the market price to come down. But something extraordinary happened: there was a team of speculators coming to the market to push the market price up. They used to do garlic business for years and have a lot of experience in controlling the market. They bring a lot of money to the market and the price was going up to CNY 18.3/kg. The speculators are aiming to push prices even further to more than CNY 20/kg for shine skins. The pumpkin seed business is small and it is easier to be controlled by speculators which is why there are speculators every year, so human action is the key for pumpkin seed trade. Considering the current situation, I think the market price will be higher in the future.

View related articles

Go to the News Overview
Oilseeds
Jan 20, 2022
SOFIA/BEIJING. Good domestic demand before the Chinese New Year ensures persistently high prices for Chinese sunflower seeds. In the Eastern European market, high prices are again causing a lack of buying interest.
Oilseeds
Jan 19, 2022
PRAGUE/ANKARA. The Czech blue poppy seed market is still quiet after the beginning of the new year. November exports were significantly better than the year before and contrast strongly with the weak results of the previous two months.
Oilseeds
Jan 17, 2022
DALIAN. Chinese New Year is approaching and is drawing the attention of traders. In addition to the upcoming holidays, coronavirus outbreaks in some cities could, according to market players, lead to trading activity being curbed further.
Oilseeds
Jan 13, 2022
NEW DELHI. As prices in India are firm and highly competitive suppliers stand a good chance in the new sesame seed tender from South Korea. The market expects the tender to be issued at the end of January.