For several weeks it has been known that this year's harvest has been very poor in the Mediterranean countries. The crop yield is significantly lower than in previous years.
In some main producing countries it is less up to 50%. This led to a shortage of raw material even before the harvest was brought in, as the kibblers delivered very reduced amounts of seeds from the previous years to the market. During the harvest, the extent of the scarcity became more and more evident and the supply of seeds came to a complete stop for a few weeks.
The kibblers were hesitating to quote and fearing to close contracts at too low prices. The producers of LBG, in turn, hesitated to cover raw material not knowing in which direction prices will move.
The business was run very speculatively during this time!
As a result, no prices for new contracts were released for a few weeks. Neither volumes nor prices for new contracts could be offered.
In the meantime, the situation has become a bit more transparent. Prices have increased significantly and only limited quantities are available.
However, such a situation already existed in 1988, 1994 and 2005.
If quantities are available, we recommend to contract demand until at least mid-2018.
It is interesting to see that after the poor harvests in these years, prices have risen sharply and, above all, the prices in the following year, especially in the 1st and 2nd quarter continued to increase. Taking this scenario into account, it can be concluded that current high prices will remain into the year 2018. The LBG producers are forecasting rising prices.