Extreme weather conditions in Thailand look set to be compounded by temperatures over 42ºc and reduced rainfall forecast in the first half of the year. This, together with an acute mealy bug infestation, has led National Starch Food Innovation (NSFI) to announce a price increase of between 8 and 12 per cent for all its tapioca ingredients as of next month.
“Thailand contributes approximately 80 per cent of the tapioca to the international market and its price always sets a benchmark,” Luc Bertram, European sales director at NSFI told FoodNavigator.com.
According to a survey last month by the Thai Tapioca Starch Association, the 2009/10 crop is estimated to come in at 22,116,917 tonnes. Projections made in August were over 20 per cent higher – 27,759,115 tonnes.
As for how long the new pricing will remain in place at NSFI, Betram said: “The market is dynamic and involves a number of price drivers, so it is very hard to predict the future price accurately; however, it is extremely likely that the over-demand situation of tapioca will remain throughout 2010 and it is likely that next year’s supply will continue to be tight.
We therefore predict the price will continue at or near the current high level throughout the year.”
Increasing demand
Adrian Short of Ulrick and Short told FoodNavigator.com that the problems in Thailand may cause a “blip” in the price he expects longer-term price increases to be down to increasing demand for starch ingredients from tapioca root instead of maize, which carries GM concerns. His company will be looking carefully at its pricing from April onwards.
Global impact
Ulrick and Short sources most of its tapioca from Brazil, so is not directly affected by the problems in Thailand. However Short agreed that the importance of Thailand as a global supplier means overall global tapioca supply will be affected.
Bertram added that other SE Asian countries have had recent weather issues that have affected tapioca supply, too. For instance, drought in Indonesia in early 2009 affected the crop there and caused processors to buy in stocks from Thailand. In Vietnam, a typhoon this year has led to reports of losses between 20 and 50 per cent of the crop.
“Tapioca prices have therefore increased in both countries as a direct result. Ultimately, even without such supply issues, prices ultimately follow Thailand,” he said.