The raw material market’s uncertainty has continued throughout the year. The war in Ukraine and Russia continues to cause uncertainty regarding the availability of many raw materials and the goods needed for production. The prices of raw materials are now at a record high due to higher production costs, poor crops and due to increasing demand and lower supply.

Extremely hot summer

Last summer was extremely hot and dry in Europe and it has affected the availability of wheat, corn, and potatoes. The most severe impact it was for waxy corn yield and overall availability. Transportation of raw materials on the large river routes in Central-Europe could not be organized, due to the water level being too low. Many starch producers have cut their production by up to 30%, and this is strongly reflected in the availability and price level of waxy corn-based starches. At the same time, the demand for different starches has grown strongly and raw materials have been under monthly allocations.

Decrease in cultivated areas

Sugar prices have increased due to decrease in cultivated area in the EU. Higher production costs and increased world market price has driven prices further up. Bird flu situation in the EU has lowered output of eggs and higher feed and energy costs have increased egg powder prices at very high level.

Energy availability and the increase of energy costs

As a result of the sanctions, the availability of energy has decreased, and this has led to very high energy prices. The share of energy in production costs is significant. Energy supply during winter months causes concern and uncertainty. The increase in energy costs (electricity, natural gas, oil) can be seen in almost every product group.

An increase in the transport prices and packaging materials

Transport prices in Europe have risen significantly since last year, due to the lack of transport capacity and lack of drivers. EU Mobility package which is EU’s unified regulatory framework to improve the working conditions of drivers and harmonize their wages and social security as well as working hours have increase the cost. Asia’s sea freight has come down but is still at a higher level than before the covid time. Packaking materials have also increased during the year.

In general, the prices of raw materials are now at a record high due to higher production costs, poor crops and due to increasing demand and lower supply. Due to the uncertain price and availability situation, the contract periods for raw materials have been shortened Euro has been weak against the USD; this has been reflected in the raw material prices which are coming from outside the EU.

The biggest increases are in the following product groups:

• Corn starches and waxy corn
• Wheat-based raw materials, starches and breadcrumbs
• Potato starches and potato-based products
• Sugar products, dextrose and maltodextrins
• Rice starches
• Egg products
• Lecithin
• Thickeners like carrageenan, xanthan gum and methyl cellulose
• Yeast extracts
• Proteins e.g. milk proteins, soy, meat proteins.
• Tomato products

We thank you for understanding!

Best regards,
Mikko Salonen
MP-Maustepalvelu Oy

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Thanks to all respondents. We are excited and happy to receive the very nice feedback from customers. The feedback you give us is valuable in developing our operations to meet your needs.

Download the summary of the study results (pdf) >>

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The cost of raw materials has risen sharply since the beginning of the year.

Costs have been raised due to war between Ukraine and Russia, which has created uncertainty and shortages in the raw materials market. Ukraine and Russia are major producers of cereals (wheat, corn, and oilseeds). Uncertainty of the future availability has significantly raised the price level of several commodity groups.  In addition, the strong growth in demand during the pandemic has affected to raw material availability and price levels.

Energy costs such as electricity, natural gas and oil are at record highs, and this has led to a sharp rise in production costs. Prices of process chemicals are at a high level.

Shortage of sea containers and delays in shippings continues. Transportation costs have risen due to very high diesel price. Transportation costs are rising also due to EU’s mobility package, which requires drivers to be paid a minimum wage in the countries where they are registered. In addition, drivers must return to their home country on a regular basis and there will be changes to rest time.  Currently there is lack of drivers in Europe, which has led to shortages and delays in transport capacity, this will increase cost further.

The prices of packaging materials have risen.

Euro has weakened against USD which led to higher prices.

Price validity is currently very short and there have been increases in the previously agreed prices due to this very exceptional force majeure situation.

Price increases in following commodities:

• oilseeds, sunfloweroil, rapeseed oil, fat powders
• egg products
• wheat and corn based products
• food additives
• thickeners
• milk proteins
• meat proteins
• soy products
• flavorings
• mustard products
• spices
• packing materials

We thank you for your understanding.

Regards,
Mikko Salonen
MP-Maustepalvelu Oy

The post Raw material update June 2022 appeared first on Maustepalvelu.

In our new 2021 Sustainability Report, we have divided our achievements around four sustainability themes. The first theme deals with social responsibility, the second with product and product development, the third with financial sustainability and the fourth with environmental sustainability.

We also take sustainability into account when choosing suppliers of raw materials. During the autumn of 2021, we have launched a broad inquiry on the social responsibility of our raw material suppliers, and we will complete it in the first half of 2022.

The removal of the pandemic restrictions has created a major shortage in the raw materials market, as consumption of many commodities has increased at a record pace. The global shortage of containers has reduced the availability of raw materials and delivery times have been long. We have wanted to secure our customers business with ingredients that meet raw material availability standards, so we have been working to ensure the availability of raw materials for months in advance.

One of our most important environmental goals is to reduce the amount of packaging, increase the efficiency of recycling and manage energy consumption at our production facility in Hämeenlinna. The transition to wind power has had many positive effects on Maustepalvelu, as we also utilize electricity for heating.

“Spices are a small but very important part of food products. In order to get rid of fossil energy sources once and for all, each of us has a role to play, ”says our CEO Mikko Salonen.

With these measures, we guarantee that our business will continue to be sustainable, serve our customers with quality and continue to build on our strong foundation: health and well-being, decent work and economic growth, cooperation and partnership.

Download our year 2021 Sustainability report >>

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At the moment there is tightening restrictions and lock downs in many countries which shall delay logistics and increase cost in supply chain. Companies have taken various measures to ensure the continuation of production. Current situation is very challenging especially in seafreight from Asia. There are restrictions in shipping capacity and huge lack of sea containers from Asia to Europe because export from different continents to Asia has decreased. Cost for seafreights have been multiplied and lead times are longer.

In Europe Brexit caused border formalitites between UK and EU which congested export ports in UK and caused additional costs due to import declarations to Europe.

PROTEINS

The demand for pea and soy proteins for vegetarian and health food is still high which keeps the prices at high level. East-European soy bean prices went sharply up at the end of the year. There is also bullish trend in USA and China due to strong demand in China for feed and tight supply in South-America.

Milk protein prices are on an upward trend. This is supported by strong demand Asia and Middle east. China is expected to maintain strong European dairy imports in 2021 which likely firm pricing.

Meat protein prices have stable on downward trend, this is due to higher output in Q4 last year, export growth has been weak.

SUGAR

Sugarbeet crop in Eu was slightly lower than previous crop due to unfavorable weather conditions and and plant diseas in some parts of Europe. However lower export from Europe and lower demand due to corona increased ending stocks. Changes in global demand and supply may affect pricing during this year.

WHEAT AND CORN

Demand for corn and wheat has strongly increased in China. China has increased import for feed due to rebuilding hog sector after outbreak of African swinefever. The price level has been raised due to weakening crop outlooks and declining ending stocks worldwide. Energy cost has also risen from previous year. Concerning wheat Russia, USA and Argentina has suffered from draught, which increase concerns of declining yields. Europe suffered from draught during crop period and remaining stocks were lowering. Brexit had impact on wheat prices in UK by increasing import costs.

TAPIOCA, RICE AND POTATO

Tapioca starch and rice based produts from Asia have increased due high demand but also related to high freight cost. Potato based products have been on stable level.

FOOD ADDITIVES

Chinese food additives like ascorbic acid and its derivates have increased strongly. This is due to production cost increase but also due to tight supply and multiplied seafreight.

STABILIZERS

Carrageenan and locust bean gum prices are still at high level. Xanthan gum is on increase due to tight supply and multiplied freight cost.

INULIINI

There was poor crop of hickory root and this caused shortage in supply and higher price.

ONION AND GARLIC

Prices for dehydrated onions have been on high level. Main harvest which is in March is delayed several weeks beacause of late sowing due to rainy period at sowing time. Crop is forecasted to be normal but security stocks are empty. Garlic prices have been on a rise due to high seafreight and delayed shipments but partly also due to speculations.

PEPPER, SPICES AND HERBS

Pepper prices have raising trend. There is reduction in planted acreage and expectations of lower yealds. Global production is forecasted to decrease appr. 10 %. Current situation in high sea freight prices is also affecting peppers. There will be new harvest in Vietnam in the spring. Pimento prices increased in different origins due to poor crop. Ginger and coriander prices have also increased due to tighter supply. Paprika prices have been stable. Basil and marjoram have increased due to poor crop.

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The post Market outlook February 2021 appeared first on Maustepalvelu.

We aim to start working in shifts during week 16. There will be no increase in staff – only working hours will change. Between the shifts will be a one hour break for cleaning all shared facilities. Reception and dispatch will run only in day-shift.

The break between shifts will cause shortening of actual working time. This affects dispatching. Working overtime to increase production is limited. Also, production made during the second shift will not be ready for delivery first thing in the morning.

For these reasons express deliveries are out of option, and deliveries can be anticipated to take a day longer.

Working in 2 shifts is only temporary. You will be informed when the situation will allow us to return to our normal schedule.

Thank you all for taking a positive outlook in this temporary change, as we’re striving against coronavirus and doing our best with managing the production.

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Trade conflicts in USA and geopolitical tensions have impactonworldmarket prices for many ingredients. What Brexit will bring is still unforeseen.

Weakening Euro against USD increased raw material cost compared to last year. We have also seen increasing cost in energy and transportation.

Wheat and Corn

Wheat and corn prices increased strongly in European raw material stock exchange due to crop losses caused by hot and dry weather last summer. Wheat Export from Russia has been lower than estimated. At the same time increasing demand lead to lower carryover stocks. For this year it has been important to secure demand as many producers has been in allocation mode.

This all has led to increasing prices for starches, maltodextrins, dextrose, crumbs and coatings and wheat flours.

Potato and Tapioca

Potato crop was very poor in Europe and prices increased sharply from the new crop. There have been also allocations for potato-based products.

Tapioca starch price increased for its peak during last summer. Reason for this was lower crop. Yield was 20 % lower, also plant and insect diseases caused losses for the crop. Prices has decreased from highest peak, but it is still on fairly high level. Tapioca demand will also grow when potato crops are poor. Main crop of Tapioca will be next autumn.

Sugar

Sugar prices have decreased due to changes in world market prices.

Proteins

Dairy products have increased due to shortage of feed for cows.

Export of dairy products from Europe to China has increased due to trade conflict between USA and China.

Soy prices have been stable in USA and Eastern-Europe. Slight effect has been due to rising transportation cost. Price for Chinese soy has been so far stable, even though it may be affected from trade conflict between USA and China.

Egg protein prices have fallen in Europe.

Food Additives

Ascorbic acid derivates have decreased. At the moment, prices are stable, and it is not expected decrease further in near future. Part of Chinese factories have shut downs due to maintenance work but also due to environmental rules. This may slightly affecton prices in future.

Raw materials prices (phosphoric acid and soda) for food phosphates have increased in last six months. Demand is also higher due to that one big producer withdrew from market, this also increased price level.

Potassiumsorbate and sodiumbenzoate prices haveincreased

Stabilizers

Raw material for carrageenans (kappa seaweed) price has been increasing. Xanthan gum and Guar gum prices have also increased.

Spices

Black and white pepper prices have decreased due to good crop in Vietnam but also higher volumes in India and Brazil. Supply is now more than demand, and this has led to lower price level. New crop will be in spring and it is forecasted to be good.

Pimento price increased just before new crop but stabilized for slightly lower level. Ginger price has upward trend in China and India due to less plantings and lower carry over stock. Coriander seed prices increased in Eastern-Europe but also in India. Cassia price is increasing due to lower production. Cardamom prices increased mainly due to the flood in India at the end of last year. Paprika and chili products have increasing trend. It is forecasted that new crops will be lower especially in India and China. Red Bell Pepper prices increased sharply due to crop losses caused by heavy rains end last year in China.

Mustard flour has also slight increase in price.

Onion and Garlic

In India, the production and harvest of onions were lower than before, but the carryover stocks of the previous harvest were good, which has kept the price level stable. New crop will be harvested in March. It is forecasted to be lower than previous crop. US onion production has been lower, and cost are increasing due to water allocation. There have been less onion plantations in China and cost are increasing because of environmental issues. Prices have upwards trend in China.

Garlic prices havedecreased due to previous good crop in China. Tightening environmental rules will increase production costs. Allergen testing will increase costs in supply chain.

Herbs and Vegetables

Many herb prices haveincreased due to dry and hot summer. Prices for various vegetables, like dehydrated carrots and tomatoes, haveincreased.

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