MENU

Slide #1

LECITHIN NEWS - H1 2022

The market outlook of the non-GMO lecithin has changed substantially in the aftermath of Russia’s invasion of Ukraine.  We will try to shed some light on the situation in this new edition of the lecithin news. 

MARKET OVERVIEW

The market outlook of the non-GMO lecithin has changed substantially in the aftermath of Russia’s invasion of Ukraine. As a result of the war, sunflower lecithin production in Ukraine has dropped approximately 50%, which represents a reduction of 25% of the Global non-GMO lecithin market.

This setback has sharply increased the non-GMO IP soy lecithin demand, which is considered the only real natural alternative to sunflower lecithin. We believe that a third alternative, such as rapeseed lecithin production is insufficient to represent a robust alternative to those above.

Even though rice and oat lecithin are often mentioned as possible substitutes in terms of quality and production volumes, they fall short and cannot play a significant role for the time being. Synthetic emulsifiers such as Ammonium Phosphatides and Citric Acid Ester could be an option for chocolate application, but the installed capacity worldwide is saturated due to the strong demand. On the other hand, in the eyes of the consumers, the perception of non-natural alternatives is negative compared to lecithin.

In such a condition, the global non-GMO lecithin market is unbalanced, which puts pressure on the supply chain and has triggered unprecedented price levels for all lecithin products.

Uncertainty and volatility are the keywords, but some positive signals can be found in these challenging market conditions. Lasenor strives to secure additional volumes of raw materials and encourage crushers to install additional drying capacity.

NON-GMO SOYA LECITHIN - IDENTITY PRESERVED

India

In the current economic recession, the Indian Government has been battling rising inflation for over one year. To fight against this and to protect the domestic feed market, the government authorized Autumn 2021 the importation of soya meals to encourage the farmers to release soybeans at a lower price level.

The effect of this measure has been counterproductive as it led to uncompetitive Indian production for the soy complex, thus contributing to reduced domestic crushing and ultimately no price decrease from the farmers. 

To keep fighting against high prices of locally produced edible oils, India has cut import duties on crude soya and sunflower oil for the next two years since the 24th of May. The annual volume of imported oil is estimated at 2 million Ton for each of these two oils. This represents 50-55% of soya oil imports in India.

This measure supports imports of soya oil from Russia and Argentina. It seems to positively impact soyabean oil and sunflower oil prices for the domestic wholesale market. It now remains to be seen if the lifting of import duties will force the farmers to sell the beans of both remaining 2021 crop volumes and the coming 2022 crop in September – October at a more affordable price for the crushers or if it will continue to worsen competitiveness of the local crushing. 

Regarding the monsoon, conditions are currently favourable, and sowing acreage may increase, supported by the high prices of the beans. Nevertheless, planting is slow at this moment. To be continued, as it is still too early to make any projection.

Brazil

Brazilian soya bean crop is estimated at 126 Mn T in the current year, compared to 138.15 Mn T in 2021. China is not actively acquiring soybeans to be processed locally as the Chinese economy has slowed down. Thus, Brazilian exports are estimated to drop to 9.4 Mn T. In this scenario crushing ratio will be higher compared to 2021´s. The total amount available for crushing is projected at 114 Mn T (other uses than crushing are usually around 2.5-2.6 Mn T).

An estimated 2% of the Brazilian crop is non-GMO nowadays; this means 2.280.000 tons of soybeans for 2022´s harvest. It is considering that Lecithin content in soybean is approx. 0.55% of the potential production of non-GMO lecithin is 12.500 tons for 2022.

Pressure to get Brazilian non-GMO lecithin is exceptionally high due to the situation in India and supply disruption of sunflower lecithin due to the war in Ukraine. This creates additional tensions regarding availability and pricing.

SUNFLOWER LECITHIN

Ukraine

Most of Ukraine’s crushing plants are in the south-eastern part of the country, where heavy fighting with Russian forces occurs. A limited number of crushing plants are operating in the western region, leading to a steep decline in Ukrainian exports of sunflower oil, meal, and lecithin.

Even if seaports are closed, Ukrainian sunflower seeds are being exported by truck or railway and delivered to Romania, Hungary, France, Spain, and Bulgaria. Export figures exceeded expectations in May, so trade continues, although limited, despite the conflict.

Regarding sowings, the war has prevented planting in many areas of Ukraine, and the total acreage should be reduced by 27-28% compared to 2021´s crop. In addition to this, treatment of crops will not be possible in many regions due to a lack of fertilizers and insecticides, so productivity is expected to be lower than average. We are uncertain about future availability and crushing activity in Ukraine for this year’s crop. We will monitor the situation closely in the coming months.

Russia

Sowings are expected to decline this year, and existing seed stocks are relatively high. Crushing and subsequent availability of Lecithin will depend on the farmers’ willingness to release the seeds and on the Russian government’s export tax policy. 

Export taxes on edible oils have been in place for several months already, which has curbed returns for Russian sunflower oil processors and led to a slowdown in crushing. Taxes are expected to be lifted shortly in August this year, potentially boosting sunflower oil crushing and subsequent lecithin production and availability. 

Sanctions from the EU against Russia will play a significant role in the coming months. If Sunflower complex imports are banned or restricted, it will negatively impact sunflower processing.

European Union

Amid availability concerns, the planting surface has increased in Spain, France, Bulgaria, and Romania, and it is estimated that sunflower oil production will increase by 6.5% this year. Unfortunately, the projected extra volumes are not big enough to significantly increase lecithin production, which should remain at the current level.

PALM OIL: A KEY DRIVER FOR LECITHIN PRICING IN 2023?

Being the most efficient source of vegetable oil globally, Palm is considered a significant driver of the oils global market. Despite not being directly linked to Lecithin, as it is not extracted from palm fruit, the price split between palm and sunflower or soy production may have a bearing effect on future Lecithin prices.

The past week’s downtrend in Palm oil prices is due to the release of Indonesian oil to the market after the ban on palm oil exports in May. After a three-week ban imposed by the government to reduce the domestic price for cooking oil, restrictions were lifted as local storage capacity was exceeded, and quality issues were becoming a concern due to late processing.

Concerning production in Malaysia, the labour shortage seems to be on the right track to be solved by 2023. This sends a positive message for 2022 and 2023. Consequently, palm oil prices are expected to ease further. The demand for less expensive palm oil will rise at the expense of price-prohibitive soyabean oil and sunflower oil. It stands to reason that both will follow the downtrend of palm oil.

Driven by this downtrend and given the dramatic price hike on lecithin that happened in Q2/Q3 2022 that may curb lecithin demand, it is possible that lecithin prices can ease during the second half of 2023.

For a better understanding of the lecithin market evolution, have a look over our previous edition of the Lecithin News ( Lecithin News Q4 – 2021)

Slide #1

LECITHIN NEWS - Q4 2021

After reaching the lowest prices ever by the end of 2020 for both soya and sunflower lecithin, last year has been marked by continuous increases, first in freight prices, the growth in demand, and several political decisions.  

MARKET RETROSPECTIVE

On one hand, sunflower seed crop during 2020, in the Black Sea region, decreased approximately a 20%, compared to an average year, reaching 14,1 million t in Ukraine and 13,27 million t in Russia. On the other hand, the Soyabean crops in India were up to 10,45 million t. Despite these figures, prices of both IP soy and sunflower lecithin reached their historical lowest levels in December 2020 – January 2021 because of decreased demand due to COVID lockdown and new players entering the marketplace.  

In February 2021, the sunflower lecithin price starts its current trend. Following this pattern, non-GMO IP soy lecithin started its increase in May. 

During 2021 the oceanic freight prices have risen dramatically, playing a key role in market dynamics with acute lack of vessels & containers. In addition to the soaring price of fuel, the shortage of vessel crews for COVID- 19 incidence has resulted in skyrocketing prices and shipment delays. Sea transportation has then put severe pressure on international trade. 

FORECAST 2022

Current Situation for IP soy lecithin iIndia: 

The soybean crop in 2021 raised to 11,9 milliot which stands for a 18increase compared to 2020. Nevertheless, farmers are stocking beans to keep high prices of soy complex. The domestic soy meal prices skyrocketed in 2021 affecting greatly to the Indian poultry sector. Subsequently, soybean processing is exceptionally low with reduced crushing activity and so an acute drop of lecithin. 

Soyabean crop 2021 IN

Table 1: Indian soybean crop production evolution. Source USDA December 9, 2021

Currently, crude lecithin is in high demand. Therefore, securing raw materials is a continuous fight for every available load, which is pushing prices steadily up. 

Our prediction is that this trend will be kept, at least, until new crop in September / October. 

Current Situation for sunflower in the Black Sea: 

Russian sunflower seed crop in 2021 recorded a 15,5 million t that is 23increase versus 2020 that was a particularly bad crop due to weather conditions. 

Russia sunflower lecithin crop production

Table 2: Russian sunflower crop production evolution. Source USDA December 9, 2021

Ukrainian sunflower seeds crop in 2021 also recorded an increase of 18compared to 2020 with a total output of 17,5 million t 

Sunflower seeds crop 2021 UA

Table 3: Ukrainian sunflower crop production evolution. Source USDA December 9, 2021

Despite the good outputseed crushing in the Black Sea region has plummeted since the harvest is done, following export taxes applied by Russian government for vegetable oils to protect domestic prices. Extra tax burden does not allow local crushers to be competitive in sunflower oil export markets. Due to the shortage of rapeseed oil because of bad crops in Canada and EU, the milling activity has diverted to the momentarily more profitable rapeseed that is in big demand.   

Price projection

Prices in Europe for both IP soy and sunflower lecithin are expected to rise at maximum historical highs. In our views, market will remain bullish in H1, and probably H2 2022 until Brazilian (April-May) and Indian (October) crops are available.  

Key factors to affect price in H2 2022 will be the Brazilian crop, oceanic freights and sunflower in the Black Sea. 

If sea freight rates are still in the current elevated level during 2022 and sunflower seed crushing stays at the normal rate, on H2 2022 we foresee the following scenarios:   

Option 1: Good Brazilian crop / high sea freight rates. 

This will have a positive impact on GM lecithin which EXW price will drop, but still quite high CFR price. 

Non-GMO IP lecithin would benefit from the price downtrend, but impact will be reduced as non-GMO crop in Brazil is limited. 

In this scenario H2 2022 prices for both sunflower and non-GMO IP soyabean lecithin may decline. 

Option 2: Poor Brazilian crop / high sea freight rates. 

Prices will remain extremely high for Indian IP non-GMO soybean with maximum historical level for Q2/Q3 CFR shipments to European Ports. 

In this case, supply pressure on sunflower lecithin as an alternative to soy, will increase, even if crushing activity comes back to normal level. Prices for sunflower will then moderately decrease in Europe. 

For a better understanding of the lecithin market evolution, have a look over our previous edition of the Lecithin News ( Lecithin News Q3 – 2021)

Lecithin Nws Q3 2021 texto Thumbail

Lasenor is actively present in the main sourcing areas for NON GMO lecithin. We will offer regular feedback on its development as a diagnosing tool.

Non GMO Soya – Identity Preserved

Indian Soy Crop 2021 estimated production figures

Captura de pantalla 2021 10 15 a las 13.13.21

Highlights of this issue : · Monsoon season is still in full swing, with late showers. Beans humidity is a factor to be carefully monitored as this may bring quality issues (OTA levels).

Import figures show a fast-growing demand in India, strongly supported by a healthy local Feed industry. 

Increasing sea freight from South America to India combined with restricted lecithin availability in Brazil have led to bullying price levels. 

As a consequence, many Indian companies have been forced to accept paying prices similar to European market to get the material they need. 

Indian Soyabean prices have reached a record price of EUR 1200/Mt this year 2021, (and we now see) farmers seem reluctant to sell at a lower price level despite oil complex slight decrease overseas. 

From the demand point of view, we have been seeing a kind of panic in Europe and South America, due to scarce Brazilian production of Non GMO IP material:

Captura de pantalla 2021 10 15 a las 13.18.24

Many customers found themselves short, with open positions and default from their usual suppliers. 

This puts additional pressure on Indian supply, and we expect prices remaining high until the new crop in South America. 

Last but not least, sea freight from India to Europe/Americas has sky rocketed in the past five months, which makes many sellers reluctant to make long term agreements. 

Facing such an uncertain scenario, Non GMO IP Russian material is now strongly considered as a back-up option.

Captura de pantalla 2021 10 15 a las 13.20.19

Sunflower Lecithin

Captura de pantalla 2021 10 15 a las 13.24.16

– Latest harvest figures in the Black Sea show that crop may turn potential record crop in Ukraine (larger than
previously assumed), but on the other hand Russian crop may turn a lower than expected.

In the worst-case scenario Russian production may turn out below 15 million Tons in 2021.

– Abundant production is expected in several EU countries.

– However, the transition to the new crop is being extremely difficult for various factors:

  • The season started later than expected due to weather conditions 
  • Many deliveries are pending due to the shortage 
  • Many farmers keep stock, being reserved sellers 
  • Russian taxation on exports is reducing processing of sunflower seeds 
  • Demand is healthy in EU 27, with biodiesel production switching from rapeseed to sunflower. 

– As a result, demand of raw materials remains firm and the expected price decline on sunflower lecithin on the high season has not materialized. 

– From a more global point of view, the Non GMO production deficit in South America, combined with sea freight crisis, has a strong impact on sunflower lecithin market segment. 

India will not be able to absorb 100% additional demand coming from usual Brazilian customers. We strongly believe that end users will continue with the switch from IP soy to sunflower in order to guarantee the Non GMO status.

In our views, both Non GMO soya lecithin and sunflower lecithin prices will remain at high price level, well above EUR 2,00/kg EXW, with additional potential increases later in the year if demand remains strong. 

Next crop in South America will have to be carefully followed, as there is a high risk that La Niña weather conditions would result in rainfall deficit and bad crop. 

All these factors are at play in a market where we continue seeing a solid demand for lecithin as a “natural” emulsifier

Lecithin Nws Q2 2021

Lasenor is actively present in the main sourcing areas for NON GMO lecithin. We will offer regular feedback on its development as a diagnosing tool.

Non GMO Soya – Identity Preserved

2021 in Brazil

Soybean Balance (Mn T) January / December

Captura de pantalla 2021 07 06 a las 15.22.49

 

Soya bean Crop 2021 in Brazil shows very good figures, but only 47,24 MnT of the crop is expected to be processed in local crushing plants.

It is roughly estimated that 98% of the total soybean output is now genetically modified, thus our projected volume of 945 000 T of Non GMO soybeans to be crushed, which yield approximately 5.250 T of soyabean lecithin.

It is also worth underlining that local crushers are reported to experience difficulties to maintain Hard IP certification system, leading to lower production volumes and discontinuation of IP certification projects.

 

Having a look at historical data for Brazilian crops we have the following scenario:

Captura de pantalla 2021 07 06 a las 15.24.34

Source: CONAB, September 2020.

This graph clearly shows the decline of the Non GMO soybean crop in Brazil over the past 4 years. With regards to lecithin production the historical data is as follows:

Captura de pantalla 2021 07 06 a las 15.25.54

 

Explanation for this trend:

In order to overcome the increasing risk of cross contamination, farmers and crushers have opted to concentrate in the value added Non GMO soy complex thus targeting exports to Europe with a view to capitalize on a premium price for Non GM Soy derivatives.

However, if there is no financial compensation/premium for Non GM material, same producers will shift its focus to GM soy products.

Unfortunately, the prices in Europe were not attractive enough to support Brazilian farmers efforts for certified Non GMO products. As a result, Non GMO soy cultivation has

Sunflower Lecithin

As anticipated in our Q1 2021 ́s issue, sunflower lecithin is facing an acute shortfall since end of March. There is virtually zero availability for spot business and contracts on Q3 2021 as a result of the high demand.

Price range at present has doubled compared to 6 months ago.

This situation will last at least until new sunflower crop becomes available in October, and market will need time to adjust to the existing supply shock.

 

plummeted to its lowest historical level and prevalence of GM soy varieties in Brazil is almost 100% this season.

Due to the tight supply, Indian Lecithin is in great demand even for South and Northern America users, that in the past imported significant amounts of Brazilian origin. Some important deals with multinational companies, have been recently closed for H2 2021 supply, which indicates a real shortage in Brazil.

On the back of the high demand prices are shooting up in India.

We do not expect better supply conditions before the end of 2021, and we believe that bullish uptrend in price will remain for the period.

In our views, substantial volumes of GMO Free Lecithin will be needed to compensate for the lack of Brazilian Non GMO product, therefore customers will be seeking for replacement with sunflower or Indian Soy.

Ukraine and Russia, the major sunflower producing countries have already started its sowing season.

 

The 2021 planting campaign started a few weeks later than usual due to cold weather and abundant rainfalls in the region. Ukrainian farmers have now almost completed 2021 spring grain campaign.

Ukrainian ministry reports farmers having sowed 6,4 Million hectares sunflower which represents 6% increase in the planting area.

This would lead to a expected record harvest of 16,4 Mt whereas 2020 ́s crop reached 14.3 Mn T.

In Russia and according to official 2021 estimates, the area for sunflower cultivation has decreased by 2.5% in comparison with last year.

Sunflower sowing area is estimated in the region of 8,9 Million hectares and 2021 ́s Russian crop is projected to reach 14.5- 15MnTv/s14MnTlastyear.

Sowing campaign being almost completed, we have now entered into a weather market. Climate conditions will play a major role next harvest.

We will release next Lecithin News issue by the end of September with the most recent insight of the situation and figures for sunflower crop and crush rates in 2021.

Monsoon in India will have started by then that will allow to get a more accurate outlook of the Non GMO lecithin market.

 
Lecithin Nws Q1 2021

Lasenor is actively present in the main sourcing areas for NON GMO lecithin. We will offer regular feedback on its development as a diagnosing tool.

Non GMO Soya – Identity Preserved

Crop 2020 in India

Crops estimations – Lecithin production – Crude lecithin prices

Captura de pantalla 2021 07 06 a las 13.34.21

Crop 2019 was hit by high percentage % of damaged seed due to weather adverse conditions, as a result the production of Lecithin dropped significantly.

The flow of seeds from the farmers to the crushers was steady between October and February 2019, therefore prices kept in a relative low range.

On the contrary, crop 2020 has had lower amount % of damaged seeds. Nevertheless the supply from farmers to crushers has been interrupted due to floods, leading to speculative movements and a price hike as a result.

Even more so, the edible oil complex in Chicago and Malaysia hit the highest levels in more than 5 years which prompted crushers to speculate with prices even more.

Due to this market situation, prices for Non GM IP Soya lecithin have gone up from 6% to 9% comparing 2020 versus 2021.

It is also worth to underline Ocratoxin (OTA) presence in foodstuffs originated in India:

Over the past 2-3 years we have been seeing its predominance rising in this country.

This may lead to a double market in a very near future:

  • High price for low OTA level lecithin suitable for sensitive applications such as Infant formulas, breakfast cereals, etc ….
  • Lower price for Lecithins with few restrictions for OTA.

Crop 2020 in Rusia

Russia has now become trusted option for non GMO IP Soya lecithin. 

Local legislation forbids use of GM derived foodstuffs in Russia.

Crops estimations for the past 2 years are as follows:

Captura de pantalla 2021 07 06 a las 13.36.02

Sunflower

Crop 2020 in Rusia

 

Captura de pantalla 2021 07 06 a las 13.36.53

EU – Sunflower seeds production

 

Captura de pantalla 2021 07 06 a las 13.37.14

EU – Sunflower oil production

 

 

Captura de pantalla 2021 07 06 a las 13.37.39

The sunflower production at 8,86 Million Tons is significantly below both last year’s crop and 5 years avarage dua to reduced output in Romania and Bulgaria.

In our views the development of the market dynamics has given contradictory signs during September/December 2020:

  • Crushers in Russia/Ukraine were cautious about low availability, and price offered for crude Sunflower Lecithin has been marked up from the early season due to availability concerns.
  • Western European crushers were aware of the scarcity of raw material in Russia/Ukraine, but the pressure to gain market share and have payback on latest investments done over the past 5 years prompted them to follow the price downtrend.

Organic Lecithin

Here we would like to recap our Lecithin News issue of Q1 2020 that expressed our concern about the reliability of product available in the marketplace:

1/ Crop productivity: 2 Metric Tonnes of seeds per Hectare. *Average yield for conventional sunflower; likely to be smaller for organic crops

Oil Extraction Yield considering only mechanical pressing is allowed: 32% in weight from seed.
Lecithin content: 7 Kg per Metric Ton of Crude Sunflower Oil* (*Internal Lasenor data).

As a consequence, prices were at their lowest at the end of last year. But, later on, when time has come to deliver to the customers, sellers were experiencing strong difficulties to find the raw material required to fulfil with their agreements.

Logically, prices went up and are still increasing significantly as a result of this lower availability.

We believe this trend will continue until the new harvest arrives in Europe.

According to our research the Potential World Production of Organic Sunflower Lecithin raises to approx. 800 Tons per annum worldwide.

2/ Data gathered from Ministry of Commerce & Industry, Government of India and Chinese Agricultural University of Beijing shows that prevalence of Organic crops are non existing in India nor China.

Nevertheless, Chinese and Indian suppliers are offering unlimited (non limited) volumes of Organic Sunflower Lecithin, which is quite remarkable taking into consideration that no organic crops are planted in neither these two of these countries. More surprising is for India taking into account that it is monthly importing 1.000 Tons of conventional Sunflower Lecithin.

Trends

Non GMO products in the US market

In November 2017 & May 2018 editions we were stating

“The debate for the GM food present in the US shelves is ongoing on media and American public opinion. The vast proliferation of Supermarket chains focused on natural and organic products has increased demand of Non GMO and Allergen Free Lecithin to be used by food manufacturers. Initially, only premium brands required such Lecithin and other natural ingredients as well, but in recent years it has grown to a general domain. More strict controls are in place to guarantee absence of GM ingredients in foodstuffs.”

“Deadline of July’18 for the USDA to pronounce on a federal position in the United States regarding labeling of GMO, as well with the fact that public awareness in the matter is a hot topic, it has triggered demand in the largest market in the world. Large supermarket chains are already showing NON-GMO product lines, and in some cases with NON-GMO global policies. 

 

Also, the uptrend for the cleaner label is boosting the substitution of synthetic emulsifiers for natural (with more natural emulsification) solutions such as functional specialty Lecithin, that can potentially replace synthetic emulsifiers in some bakery & confectionary applications.

Food producers are seeking alternatives to synthetic emulsifiers, and enzymatically modified Lecithin can, in some applications, play the same role with more label-friendly.”

This is now a reality: US companies have settled strong “well-being projects”, Non-GMO being a major challenge for the coming years

Captura de pantalla 2021 07 06 a las 13.38.32

 

More and more companies are getting concerned by environmental matters, looking for close supply. This topic now forms part the key factors of the purchase decision for many of them.

 

  • Lasenor started many years ago with saving measures to reduce our energy consumption, but it has not been until 2018thatwehaveaclearmonitoringofourCO2 footprint for Scope.

 

  • Our main actions are concentrated in:

– Energy efficiency in our production.

– Take advantage of the high solar radiation that we have in our part of the World.

 

  • Lasenor main consumption is by far in Olesa de Montserrat, but the monitoring program and consequent planning will also be ready for all our 5 subsidiaries by end 2020.

Lasenor is making an ambitious internationalization expansion in order to be able to offer equivalent products in the different main economic regions in the World. This project allows us to be very close to the raw material sourcing and to our customers plants.