Euro/GBP Exchange rate as at close 7.4.08
During March the £GBP continued to weaken against the Euro, at one stage dropping to Euro1.25=£1. This continuing trend may be levelling out now – although we thought/hoped that last month! However it triggered immediate price increases from the major Ingredient manufacturers to compensate for currency losses, and regrettably we have had to follow where these increases have been imposed. However where fixed pricing is in place, the impact of weak sterling will come through at the next 6 monthly Price review from 1 st July. At this stage it would look like Barry-Callebaut & Belcolade will be increasing prices by 9-12%, but we hope to have specific news in the coming couple of weeks. Commercially we can offer all our customers the opportunity to buy in additional stock prior to the increase and for those selling into Eire or other Euro-land markets we can offer the option of buying in Euros.
The Cocoa Market settled back from the extreme highs which were driven by speculators piling into commodities and creating highs in a lot of markets. The current levels are supported by fundamentals, although Indonesian main crop and West African mid-crops start in earnest at the end of April.
London Cocoa Market – as at close 7.4.08
Cereal crops are continuing at high levels. On the wider issue, the continuing drive towards Bio-Fuel production is seriously flawed, in that environmentally & socially, increased production and subsidies for bio fuel production is causing potentially huge world problems. These take the form of farmers diverting food crops to bio-fuel production and clearance of more land for palm oil, maize etc, resulting in a negative impact on climate, and also resulting in seriously reduced world food stocks. Unfortunately although this has been widely reported, it will take a major famine situation to really bring this into the wider public awareness.
In the meantime of course, tighter supply drives prices higher and consumers need to get used to the fact that food will & must cost more in the future – it has been too cheap for too long.
Tony Mycock 8.4.08