Bullish Factors Dominate The Market as The Upcoming Tomato Paste Season Draws Near

Published 2022년 6월 21일

The 2022-23 global tomato paste season is forecast to begin with elevated prices, owing to the rise in production costs. These bullish factors could influence price negotiations for the upcoming season, with current contracts in the US, Spain, and China 60% higher than last year. In California, tomato paste has risen to USD 1,750/ton, while contracts for the upcoming season in Spain are reported to be around EUR 1,500/ton.

The 2022-23 global tomato paste season is forecast to begin with elevated prices, owing to the rise in production costs. Inputs such as energy and fuel have risen significantly in Italy, China, Spain, and the US, while fresh tomatoes prices went up by 20%. These bullish factors could influence price negotiations for the upcoming season, with current contracts in the US, Spain, and China 60% higher than last year.

In Europe, where ketchup plants utilize gas-fired boilers, energy costs remain elevated due to high natural gas prices. Drought conditions in the Italian peninsula have led to a decrease in irrigation water, impacting tomato production. A similar fate could also befall the Golden State due to the ongoing drought. The price of packaging materials, such as iron drums, has risen due to the effects of COVID-19, as major steel factories in Europe have not been fully operational, increasing iron plate prices. In California, wood packaging costs have also increased by 10%.

These rising production costs are forecast to impact tomato paste production figures in most regions. In China, production for the new season is estimated to drop to about 1 million tons, with the conflict in the Black Sea region impacting European stocks. In California, tomato paste inventory is expected to drop to record low levels. Global tomato paste consumption is declining as the impact of COVID-19 subsides. The decline is less significant in North America and Europe and more evident in China.

The Chinese tomato paste season is two months away, and industry analysts forecast high export prices due to the rising cost of fresh tomatoes and tomato processing. Two main price patterns have emerged: Firstly, a few factories are offering tomato paste at 5,800 yuan/ton (EXW), resulting in a FOB price of USD 900/ton (Tianjin Port), while other factories are offering the product at 6,200 yuan/ton (EXW), resulting in a FOB price of USD 950/ton (Tianjin Port). Based on these two scenarios, exporters' profit margins could range between USD 150/ton and USD 200/ton. Prices for the new season are set to be higher in the US and in Europe. In California, tomato paste has risen to USD 1,750/ton, while contracts for the upcoming season in Spain are reported to be around EUR 1,500/ton.