FMCG Firms Face Renewed Pressure As Sugar, Coffee, Cocoa Prices Rise

(MENAFN- AsiaNet News)

Rising prices of sugar, coffee, cocoa and several other key inputs are set to put renewed pressure on FMCG companies in the coming quarters, with the earlier broad relief from lower raw material costs now becoming less widespread, Equirus Securities said in a report.

The brokerage said the raw-material environment had“rotated rather than eased” in the second quarter of FY27, as a correction in crude-linked inputs was being partly offset by renewed inflation in several commodities.“Overall, the RM tailwind is becoming less broad-based, with the direction of individual commodities likely to drive relative margin outcomes going forward,” Equirus said.

Key Commodity Price Analysis

Sugar and Cereals

Sugar has emerged as the key outlier among agricultural commodities, with prices rising 19 per cent year-on-year and 20 per cent quarter-on-quarter. The report noted that the increase could directly affect biscuits, confectionery, malted beverages and carbonated soft drink bottlers. Cereal-linked inputs remain relatively better placed, with wheat prices up 2 per cent year-on-year and rice 5 per cent. Maize prices, meanwhile, were down 11 per cent year-on-year, although they rose 4 per cent quarter-on-quarter.

Beverage and Chocolate Inputs

The report also said the period of falling prices for beverage inputs had ended. Arabica coffee prices rose 19 per cent quarter-on-quarter and were nearly flat year-on-year, while robusta was down 5 per cent year-on-year but up 11 per cent quarter-on-quarter. Cocoa prices, which remained 28 per cent lower year-on-year, jumped 48 per cent quarter-on-quarter, reversing part of the earlier cost relief for chocolate and malted-beverage companies. Tea prices were up 10 per cent year-on-year.

Edible Oils and Other Agricultural Inputs

Edible oils also remained a pressure point. Palm oil prices were up 21 per cent year-on-year, while mustard oil prices rose 8 per cent, soya oil 9 per cent, sunflower oil 14 per cent and groundnut oil 10 per cent. Copra remained 34 per cent lower year-on-year but rose 6 per cent quarter-on-quarter amid stronger festive demand.

Among other inputs, soyameal prices were up 70 per cent year-on-year and fishmeal 32 per cent. Milk prices rose 3 per cent year-on-year and 5 per cent quarter-on-quarter, while higher cattle feed costs could keep milk procurement costs elevated in the near term, with some relief expected in the second half of the year.

Crude, Packaging and Specialty Ingredients

Crude and some imported packaging materials provided some sequential relief, with crude down 10 per cent and high-density polyethylene (HDPE) down 18 per cent. However, domestic polymer prices moved higher, while menthol rose 33 per cent year-on-year and 21 per cent quarter-on-quarter.

Outlook for FMCG Portfolios

The report further said that companies with higher exposure to sugar, specialty ingredients and coffee were likely to face greater inflation, while cereal-heavy portfolios were relatively better positioned. (ANI)

(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)

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