While the global growing conditions have caused a reduction in total production expectations, the economics of the industry are favorable for EU products. In 2017, EU sales increased by 6%, no doubt a result of the US Dollar’s exchange rate. Exports from California dropped by 27% (128,000 mT) as a result of the decrease in the Euro’s strength. What makes this drop even more significant is that it occurred during a time when global paste volumes were stable.
Spain accounted for the most significant portion of the EU’s paste export growth, increasing 27% between 2016 and 2017. The majority of Spain’s exports were sold to Germany, Italy, the UK, Portugal, Japan, and Oman.
Portugal’s export sales increased 12% and their destinations included the UK, Japan, Australia, and the Netherlands. Conversely, Portugal did not sell paste to Kuwait, Saudi Arabia, and Russia as they have in previous years.
While 2017 was a productive year for Italy, its exports were less than would be expected. Italy returned to 2014 levels of exports, with the biggest drops in exports coming from reduced shipments to Germany, Libya, Austria, and Sudan.
Despite export volumes increasing, low global prices for paste have limited the financial impact of this growth. Total exports between 2014-2016 and 2017 fell 0.8% (including the U.S.), while the revenue generated from those exports fell 13% in the same period of time.
Economic factors, particularly global inventories (in particular, U.S. inventories have decreased by 23%) and crop reductions, have positive implications for the future.