On Thursday, January 22. the European Central Bank announced a €60 billion-a-month bond-buying program including - for the first time - purchases of government debt. The program will start in March and will continue until September 2016. Following this announcement the Euro dropped to a record low. In New York trading one Euro bought as little as $ 1.1368.
In the same time prices of US Fetal Bovine Serum continue to stay at their peak. Demand is much greater than supply. According to the current forecast this shortage situation will last through the whole 2015.
No good news for Fetal Bovine Serum buyers, especially in Europe. Serum users dependent on US origin FBS will not only face difficulties to get sufficient supply but will also have to face higher prices. Additionally they will have to pay more Euros per liter due to the dramatic change of the exchange rate.
Serum is a commodity that is traditionally handled in USD. Although smaller end users or primary manufacturers calculate costs and prices in their local currency, the US Dollar is the universal value measuring unit in international trade of large serum volumes.
For this reason even South American FBS - which is largely used on the research market in Europe - may be affected by a certain price increase.
FBS shortage is only part of the problem - the Euro currency market adds to the trouble.
How bad is this really?
About 10 years ago the Euro was almost as weak as today. On November 15. 2005 one Euro bought $ 1.1693. It took a while to overcome the crisis - two years later the currency has gained back its stability. There have been other ups and downs in between; as we can see in the statistics just the normal course of the financial markets.
About 10 years ago one of the biggest serum manufacturers in the world wrote in an official annual report:
"Fluctuation in the price and supply of raw FBS could affect our business.
The supply of raw fetal bovine serum (FBS) is sometimes limited because serum collection tends to be cyclical. In addition, any additional discovery of bovine spongiform encephalopathy, or BSE (popularly referred to as mad cow disease) in the U.S. may cause a decline in the demand for FBS supplied from the United States. These factors can cause the price of raw FBS to fluctuate. The profit margins we achieve on finished FBS, one of our major products, have been unstable in the past because of the fluctuations in the price of raw FBS, and any increase in the price could adversely affect those profit margins. In addition, if we are unable to obtain an adequate supply of FBS, or if we are unable to meet demand for FBS from supplies outside the U.S., we may lose market share."
The company that submitted the report is still a leading serum manufacturer. With ups and downs during the past decade – this is only the normal course of the serum market. High prices and shortages are part of it.
Being an optimist I look at the present development as a chance for the market. A chance to find new ways, new solutions, new products and new business models. The challenges are there because we need them to grow and get better. Both on the financial and the serum sector.
We have a whole year ahead to see where it will lead us to. It is going to be challenging. And in any case it is going to be interesting.
Stay tuned!
