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LECITHIN NEWS Q2-2023

Prices for non-GMO soya and sunflower lecithin have recently changed due to factors such as demand, recipe adjustments, and industry challenges. In India, non-GMO soya lecithin faces competition and inflation, while sunflower lecithin has shown resilience despite the conflict in Ukraine. The Lasenor Group is committed to finding solutions in this changing market, though there is still uncertainty around future prices and the potential impact of El Niño.

INTRODUCTION

The eagerly anticipated lecithin price correction, as highlighted in our latest edition, has materialized across Non-GMO soya and sunflower lecithin offerings. This development comes from various factors that have influenced the market dynamics.

The market has observed a decline in demand, partly attributed to inflationary pressures and the ongoing trend of recipe optimizations. These combined elements have contributed to improved availability and, thus, an adjustment in pricing.

Furthermore, it is worth noting that the lecithin market has faced challenges due to a lack of support from both the meal and the oil markets, which have experienced pressures and fluctuations. While the current market scenario presents certain complexities, we eagerly anticipate the potential impact of the developing El Niño event in Asia. The prospect of below-normal monsoon rainfalls may serve as a catalyst for changes in the market landscape, introducing new opportunities and avenues for exploration.

Non-GMO Soya lecithin – Identity Preserved, a comprehensive analysis

India, a key player in the Non-GMO soya lecithin market, is witnessing a combination of bearish and bullish factors shaping the landscape. Let’s delve into a more detailed examination of the prevailing dynamics:

Bearish Factors:

  1. Price competition and pressure: The intense rivalry between sunflower and rapeseed oils has created a competitive environment that exerts downward pressure on soya oil prices. This scenario impacts the overall price of Non -GMO soya lecithin.
  2. Accumulated stocks and sluggish demand: Buyers in the market have amassed substantial stocks over the past months. Consequently, their urgency to make new purchases has diminished, intensifying the pressure on Indian crushers. These crushers are experiencing the erosion of vegetable oil prices, further adding to the market strain.
  3. Inflation and import duties: The Indian government continues to grapple with inflationary challenges. In an attempt to stabilize domestic prices, they have confirmed the absence of import duties on vegetable oils, creating an additional hurdle for the market.

Bullish Factors:

  1. Farmer stockholding and El Niño anticipation: A recent survey by SOPA (Soybean Processors Association of India) reveals that farmers hold relatively high stocks of the 2022 soya bean crop. This strategic move is driven by their anticipation of potentially higher prices resulting from an impending El Niño event. These reserved soybean sales have restricted crushing activities, causing Indian meals to face challenges in terms of competitiveness in the global market.
  2. El Niño probability: The Indian Meteorological Department has pegged the probability of El Niño at 70% for June to August and 80% for July to September. Should this event manifest, there is a significant risk of drought, which would adversely impact the production of Kharif crops, including soybeans. This, in turn, could contribute to a recovery in prices. It is important to note that while the potential price surge resulting from the El Niño event is estimated to be around 10-15%, it is expected to be temporary and primarily confined to the monsoon period. Subsequently, prices are projected to revert to current levels or potentially even lower during Q4 2023.

Sunflower Lecithin: empowering confidence and Reliability in the Market

Despite the ongoing conflict in Ukraine, the sunflower lecithin market has mirroring the downward trend in soybean lecithin prices. This market resilience can be attributed to a combination of factors, including the availability of a substantial part of Ukrainian production and the compensatory efforts of European and Argentinian lecithin producers to offset volume losses resulting from the European ban on Russia.

Two major factors clearly influence the sunflower lecithin market:

1. Diverse market flows: Sunflower lecithin is witnessing two distinct flows. Firstly, Russian-origin lecithin is finding its way into the domestic market, as well as China and India, offering competitive pricing. Secondly, non-Russian origins are primarily being delivered to Europe, the USA, and South America.

  1. Supply and demand balance: The market has observed demand erosion for sunflower lecithin due to elevated prices and supply uncertainties. This shift in demand has allowed for a more stabilized supply, enabling crushers and lecithin processors to align with the prevailing soybean lecithin market trends while striving to retain and regain market share.

While price dynamics are gradually reverting to the usual gap of approximately EUR 0.50/kg between the two botanical origins, the main challenge for sunflower lecithin players lies in demonstrating that availability is secure and will remain so.

Sunflower lecithin has long been the preferred choice for the food sector for two primary reasons:

  • Firstly, sunflower is inherently non-GMO (unlike rapeseed and soybean), ensuring food safety and meeting consumer demand for GMO-free products.
  • Secondly, sunflower lecithin is non-allergenic, further bolstering its positive marketing positioning and promoting consumer confidence.

The Lasenor Group has been strategically establishing a robust network and building production facilities in close proximity to suppliers and customers. Currently, we supply our customers with locally produced sunflower lecithin from the following facilities:

2023.06 LSRNWS Lecithin news Q2 2923

This well-defined network has proven immensely valuable during recent market challenges, enabling us to provide effective solutions to our customers.

Conclusion

The market for Non-GMO lecithin is returning to normal conditions, with a good supply promoting healthy competition among suppliers.

However, it is uncertain how much prices will adjust by the end of the year, especially with the possibility of an El Niño event that could change the game in the coming months.

At Lasenor, we remain dedicated to monitoring market dynamics, providing timely insights, and offering comprehensive support to empower informed decision-making. We invite you to partner with us and unlock the true potential of your products in this evolving market.

For a better understanding of the lecithin market evolution, have a look over our previous edition of the Lecithin News (Lecithin News Q1 – 2023)

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