What is the general situation of lecithin in the world?
As a Company present in the main supply areas of Non-GMO lecithin, Lasenor prepares periodical updates on its evolution with the aim of offering this information as a diagnosis and management tool for its clients.
Non-transgenic soy – Preserved Identity
The Indian harvest in 2020 had a lower percentage of damaged seeds than the 2019 one. However, the supply from farmers to the mills was interrupted by widespread floods, which triggered speculative transactions and an increase in prices as a result.
This circumstance, together with the rise in the marketplaces of Chicago and Malaysia, where levels have reached their highest points in five years, has caused even more price speculation on the part of the mills.
Due to the situation of the market, the preserved-identity non-transgenic soy lecithin prices have increased by 6% in 2020 and 9% in 2021.
Another important factor to keep in mind is the presence of ochratoxin (OTA) in food products coming from India. Its prevalence in that country is such that it could lead in the near future to the creation of a double market that would create high prices for low-OTA lecithin and a lower price for lecithins with few OTA restrictions.
In this context, Russia has become a reliable option for preserved-identity non-transgenic soy lecithin, given that local regulations ban the use of foods derived from GMO.
The sunflower production during the 2020/21 period, of 8.86 million tons, is significantly lower than the one from last year and the average of the last five years, which is mainly due to the decrease in production in Romania and Bulgaria.
According to Lasenor, the development of this market dynamic has given mixed signals during the period going from September to December of 2020:
- Mills in Russia and the Ukraine were overly cautious because of lower availability, and the price offered for raw lecithin oil has been increasing since the beginning of the season, because of the concerns over availability.
- Mills in Western Europe were aware of this shortage of raw material in Russia and the Ukraine, but the pressure to increase market shares and recoup the investments of the last 5 years, led them to go along with the downward trend of prices.
- As a result, prices are at the lowest they have ever been at this time of year.
But when came the time to deliver products to clients, vendors were going through big difficulties to procure the necessary raw material to respect their engagements.
As a logical consequence, prices are now rising due to the lower availability on the market.
In our Lecithin News of the first trimester of 2020, we expressed our concern over the reliability of the product available on the market due to:
- The productivity of the crop: 2 metric tons per hectare. Average yield for traditional sunflower; probably lower for organic crops.
- The yield of the oil extraction keeping in mind that only mechanic press is allowed: 32% of the weight of the seed.
- Lecithin content: 7 Kg per metric ton of raw sunflower oil, according to Lasenor data.
One element to highlight in this organic sunflower lecithin market (which boasts a potential global production of around 800 tons per year), is the current offer of unlimited volumes of organic sunflower lecithin coming from suppliers in India and China. This is an interesting paradox if you remember that there are no organic crops in either country. More astonishing still is the case of India, taking into account that they import around 1.000 tons of traditional sunflower lecithin dos monthly.
In various editions of Lecithin News from 2017 and 2018, we were giving information on the debate in the media and with the public around transgenic foods in the United States.
That debate has now become a reality in the United States and American companies have deemed non-transgenic foods to be a crucial challenge in their industrial and commercial activity for the next few years.
American consumers are becoming more and more mindful of this material which has triggered demand in the biggest market of the world. Big supermarket chains are now presenting non-GMO product lines and policies.
Furthermore, the trend towards a cleaner food label is driving the change of synthetic emulsifiers for natural ones like specialty functional lecithin, which could potentially be a substitute for synthetic emulsifiers in certain applications like bakery and confections.