Raw material update, November 2021

Dear Partner!

The commodity market has been quite turbulent in recent weeks. Pandemic restrictions have been lifted in various countries, and the demand for many commodities has increased at record rate. This has created a major shortage in the raw material markets, and as a result raw material prices have started to rise sharply.

In addition to high raw material prices, production costs have increased. Energy costs like gas and electricity are at record highs. The global container shortage continues, and sea freight prices have risen even further. This we can see especially in Asia shipments, but also in other continents. Transport costs in Europe are rising, and there is shortage of transport capacity and lack of drivers. Packaging materials are at high level. Labor costs have also risen in several countries.

Price increases have been tens of percent in several groups of raw materials, like wheat, corn, soy, tapioca, rice, phosphates, food additives, milkproteins, spices, breadcrumbs, dextrose, vegetable oils and stabilizers. Potato based products are also on rise, but not as much as corn or wheat.

Many raw materials are under allocation and lead times are longer. We therefore need to ensure the availability of raw materials at an early stage. For many raw materials prices are only available on a quarterly basis.

Because of the reasons above we are forced to change our pricelists in January 2022. The challenges in the raw material market are projected to continue at least the first six months of 2022 or even throughout the year.

We thank you for your understanding.

Regards,
Mikko Salonen
MP-Maustepalvelu Oy