Tomatoes will be cheaper in 2016

Industry insiders told SUCCESS FOOD in Santiago that at least two European tomatoes are expected to fall in prices this year, and China will also reduce the price it pays to farmers.

In the context of the high production of the European Union in 2015, the intentions of the major producers seemed to be trying to avoid another harvest, if too big, it could become difficult to manage and the market would be negative.

Anicav, the Italy's industrial and Commercial Association, called for a reduction of at least 15% of the country's output a few weeks ago.

According to the latest forecast released last week by the World Conference on processing tomatoes (WPTC), Portugal aims to produce 1 million 500 thousand tons, down from 1 million 660 thousand tons last year.

Spain has set its target of 3 million 200 thousand tons, about 200000 tons more than last year.

Outside Europe, China and California are predicting a reduction in production, despite doubts about whether such a goal can be achieved.

At last week's Chilean World Conference on processing tomatoes, most of the people who talked to SUCCESS FOOD think that raw material prices may be lower than in 2015. This is expected to be true in Spain, Italy and China.

For 2015 Spain, the grade range of EUR76 - 78 - 78 euro (84.70 --86.93 dollars) farmland delivery price (Extremadura and Andalusia - Navarra and Aragon tend to be expensive), it is said that this year the price range is EUR72 - 75 euro / ton of farmland delivery price. This is equivalent to a reduction of 4 - 5%.

Italy processors are also confident that they will achieve a lower base price for new season tomatoes, though there is still a lack of precise estimates.

As we reported in February, negotiations on the price benchmark rate in 2016 began at a lower level after two years of EUR92 / T farmland delivery prices in northern Italy, as well as EUR95 / ton farmland delivery prices in the South and EUR105 / ton for small round long varieties.

As for the latest information, local industry insiders estimate that the new base price may fall to EUR82 - 84 euro / ton farm delivery price.  Once an agreement is reached between growers and processors, the official price will be announced, but this is estimated at EUR8-10 below 2014/15 (9 - 11%).

SUCCESS FOOD has also been told that the goal of China's factories is to reduce the price they will pay for the new season tomatoes in local tomato farms in Xinjiang and Inner Mongolia.

China does not have a formal price benchmark for raw materials, but most of its production in 2015 was delivered to factories at 420-430 yuan / ton. At that time, the coverage we reported ranged from US $61-68 to tonnes at that time.

According to industry sources, this level may be reduced to about 380 yuan / ton to the factory price. At today's exchange rate, this is equivalent to $59 / ton.

In 2014, the raw material payment in China was 400-450 yuan / ton.

As previously reported, manufacturers in California will pay their growers a price of $72.50 per ton (short) of farmland in 2016, almost 8 dollars per ton. The basic price, equivalent to $80 / ton, is 9.4% lower than that of last year, when it was set to $80 / ton. In 2014, it was $83 / tonne, higher than the US $70.5 / ton in 2013 and US $69.4 / ton in 2012, all of which are on the farm gate delivery price.

Deliberately reducing the price of raw materials is aimed at reducing the planting area of tomatoes, thereby avoiding higher than expected harvest.

In addition, especially in California, because of the strong dollar and the weak euro, this means to regain a certain degree of price competitiveness, when local exporters dropped out of the EU market for most of 2015.

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