Welcome to your market overview from Prestige Purchasing for February. This is your quick guide to what is happening in the major food and drink supply markets.
Top News
Top Increases | Percentage Difference | Top Decreases | Percentage Difference |
Raspberry | +50.00% | Broccoli | -69.96% |
Honeydew Melon | +39.13% | Lychee | -50.00% |
Pomelo | +28.57% | Courgette | -45.12% |
The top movements this month relate to the fresh produce market.
Raspberry prices have doubled in price over January. Raspberries from Australia were in short supply in December which greatly impacted upon their export volumes. The crops were also delayed due to poorer weather conditions and high winds which hindered the abilities of bees to pollinate. This has been a similar story from other major raspberry producers, and we have seen a shortage of supply in relation to demand. We are not predicting this will alter for a few weeks, and higher prices will be maintained.
Honeydew melon prices have also seen significant increases of 39.1% during January. Melon production in Argentina has been affected by harsh frosts and many regions saw their produce damaged by cold weather burns. This also saw the remainder of the plantations delayed to prevent further losses. Growers who lost their crops have had to invest further capital and replant, which has caused more delay to harvests. You can read more about the melon market in the Fresh Produce section of this report.
The price of pomelo has gone up over January by 28.6%. Whilst the European season is still in full swing, now that the quieter seasonal period has passed, demand has picked up significantly, and this is creating pressure in the supply market and pushing prices up. We do not predict prices will continue to rise at such a steep rate throughout February, but we may still see some increases to prices in this market in coming weeks if demand levels remain high.
Broccoli has fallen in price by, on average, 70% over the last month. During December, broccoli production levels were struggling to meet with demand, and exporters reported difficulty at the end of 2013 covering the demand levels in Europe. Whilst demand levels for broccoli remain high in European countries, key export countries have seen significant increases to the supply volumes which has helped restore the supply and demand equilibrium, particularly in the UK, and allowed prices to fall. That being said, we are not predicting prices to drop further next month and they have the potential to rise again, as overall EU demand levels still outstrip supply volumes and producers are struggling to keep up with this.
The price of lychees have also fallen this month, with prices halving across January. This price drop is predominantly a result of good growing conditions towards the end of 2013, but extreme heat in recent weeks in areas of Australia has caused damage to these and other crops resulting in burns and bleaching of the fruit. This is likely to result in prices increasing again throughout February as lower volumes of fruit – or greater volumes of poorer quality fruit – reach the market.
Courgette prices have dropped by 45% over the last month, but we do not expect this trend to continue due to outbreaks of the New Delhi virus in courgette plantations in Murcia, Spain – which is also affecting the production of melons, which we discuss later. This was only detected a few weeks ago, and the outcome of this is unknown as yet. If crops are damaged, then we will see a drop in supply, which will apply an upward pressure on prices and cause greater concerns over the benefits of growing these crops, and others within the Gourd family over fears of further infestations.
Inflation Overview
CPI has fallen to 1.8% in January from 2.1% in December, with the fall being driven primarily by recreation and culture, household, and alcoholic beverages and tobacco.
The annual rate of Food Inflation has remained stable at 2.1% over the last month.
Looking at food, prices across all categories are up. The biggest increase was for miscellaneous goods (+4.1%), followed by fish (+3.2%) and then meat (+2.6%) and fruit (+2.4%). The rest of the categories all saw rises between 1.1% and 2.3% over the year. Having said that, bread and cereals (-2.0%), meat (-0.6%), fish (-0.7%), oils and fats (-1.3%), and fruit (-0.3%) all decreased in price between December 2013 and January 2014.
Fresh Produce
- The price of apples has, overall, gone down across January by 0.4%. The majority of varieties remained stable in price across January, with Pink Lady apples experiencing the most significant price change of -2.65%.
Overall, apple harvest volumes are down due to poor harvest conditions and delays to the harvest which has meant it is more difficult to match demand levels, particularly in the UK. This has not been reflected in this month’s prices, but we can expect prices to start increasing over the coming weeks as a result of this. Year-on-year (y-o-y) figures show that apple prices, especially those grown in Germany, are up, and recent trends are showing further gradual increases to prices. Significant increases have been seen for Braeburn (+8.1% y-o-y), Red Delicious (+7.3% y-o-y) and Granny Smith (+4.6% y-o-y) from Germany alone. Apple production in Italy is predicted to be 11% higher y-o-y due to good growing conditions before harvesting began. Italian apple harvests this month have been performing well with excellent fruit quality reaching the market in good volumes. Harvests in France are off to a slightly late start, particularly the Pink Lady variety, but looks promising with excellent quality and supply early in the season.
- The general price of pears has remained stable over the last month. Looking forward, however, we can see that recently South African pear harvests have been significantly delayed; this is predominantly as a result of an unusually cold and wet spring which hampered the growing season. Further delays to harvesting at the start of 2014 came as the country was hit by very heavy rains. That being said, the quality of the pears being produced here has not been diminished – there has been little in the way of weather damage. In addition to this, reports indicate fruit sizes are better than last year, which matches the current European demand for larger pears. The supply from Greece has been greatly hindered due to very poor weather conditions and hail storms during the growing season. Expectations are that there will be a 26% drop in supply volumes from the country as a result. However, with less fruit on the trees – as a direct result of the weather – it is also thought fruit sizes will be bigger this year too. From this, we can expect prices of pears to, generally, increase over coming weeks.
- The price of melons has increased on average, by 15.9% over the course of January. Galia melons have remained unchanged, as have orange melons. At the same time honeydew melons have risen in price by 39.1% and watermelons have also increased by 24.3% over the same time. Melons and watermelons from Uruguay, however, have more affordable prices as a result of increased production volumes. The price of melons could be set to increase further as growers in some regions of Spain look to extend their cucumber and tomato plantation cycles instead of starting a second melon and watermelon cycle. This is over fears of the New Delhi virus which has impacted on their courgettes and the uncertainty as to the ease of transfer of the virus to their melons as both are members of the Gourd family.
- Grape prices have fallen by 16.2% this month, with white grapes falling by 29.8% and red grapes by 2.7%. South Africa is a key exporter of grapes at the moment and both quality and quantity are good, which is helping to lower prices. Grapes from Germany are also helping to bring prices down, but growers believe they should have a higher return, due to the favourable weather crops have received. Looking forward, flooding in one of the most productive grape growing regions of Italy – Modena – has greatly affected production in the area. According to sources in Modena, the flooding is so severe there are fears over plants dying due to asphyxia. The total damage has not yet been ascertained as many farms have remained unreachable. As a result of this we are predicting that this will apply an upward pressure on grape prices in the coming months, but we are hopeful this will not be too significant due to the success being seen in other grape producing countries.
- Potato prices have increased by, on average, 1.8% with Baking potatoes (+8.1%) and Sagitta potatoes (+6.3%) being the biggest drivers behind the price rise. Maris Piper and Desiree potatoes remained stable this month, but we saw a drop in the price of the Estima variety (-6.3%). Supplies of Baking potatoes have been very limited in the UK which has resulted in the 8% price rise as they are currently insufficient to cover demand levels. We are seeing prices rise again for UK grown potatoes due to recent poor weather and flooding which has impacted somewhat on crops – but not anywhere near the extent of last year’s unprecedented poor weather. The wet weather we have experienced over the last few weeks has continued to waterlog fields and these now require considerably more time to dry out before the land is close to being workable again. This could see prices continue to rise slightly over coming weeks, but we do not predict any significant increases to be seen on the markets.
- The price of aubergine has dropped this month by, on average, 34%, with good volumes being available on the market. There is the potential for these prices to fall later in the year as Spanish growers are considering planting a second aubergine cycle – which they do not normally do – in place of their melons over fears of the New Delhi virus affecting the melon plantations. If this happens it could increase supplies to levels greater than expected and bring prices down later in the year.
- Cabbage prices have also decreased during January by 31.6%. As predicted in last month’s report, prices have decreased after the considerable increases last month, and supply volumes are good for this time of year. We are predicting a little more stability in pricing in the weeks to come, with less significant fluctuations being seen on the market.
- Cauliflower, however, has gone up slightly, by 3.0% over the last month. Last month we saw prices decrease and this trend is expected to continue for the next few weeks at least as supply volumes increase and harvest conditions improve in Spain, but as predicted this decrease will continue to be a gradual one.
- With regards tomatoes, salad tomatoes have increased slightly this month by 4.1% whilst vine tomatoes have fallen considerably by 30.2%. There have been no significant events affecting the tomato market other than supply and demand, which can greatly impact on prices. Vine tomatoes are in ample supply at the moment, outstripping demand which has allowed prices to fall.
- Lettuce prices have predominantly remained stable, with the only variation being the iceberg lettuce which, surprisingly, decreased by 5.6%. We would normally associate poor weather conditions with an increase in lettuce prices, but prices have remained consistent or fallen, which is good news for buyers. We do not expect these low, stable prices to continue and predict prices will gradually climb on the back of the cold and wet weather.
- Peppers, on the whole have increased, on average, by 15.8%, with yellow peppers rising in price the most significantly (+25.9%) followed by green and red peppers (both by +17.9%) and lastly by orange peppers (+5.6%). As per last month’s report, the continued poor weather has not allowed the pepper market to recover yet, and we still expect to see these prices to continue rising throughout February, although hopefully these will not be such significant rises in price.
Meat & Poultry
- Prime beef prices have fallen (steer, heifer and young bull) by 3.1% whilst cow has fallen by 3.4% this month. Price decreases on the market have been seen predominantly as a result of two things: the first is reduced demand levels; and the second is more imported meat from Poland. Over Christmas, demand for red meats increased and put some strain on the beef market and pushed prices upwards. As the festive period came to an end, however, trade dropped off, and supply has outstripped demand, allowing prices to alleviate somewhat. Despite these decreases in price, prices for beef are still up 3% year-on-year. There have also been reports that supermarkets may have moved back to imported meats, despite promises to build relationships with local farmers, and source their beef from the UK. Cheaper meat prices from Polish imports are also reported to have had an overall impact on bringing the cost of beef down this month. With pork being the preferred choice over beef at the moment, we are expecting to see lower prices for beef on the market in coming weeks, as demand for beef falls in favour of pork.
- Lamb prices in the UK have decreased by 2.3%, whilst we have also seen the EU-25 prices fall by 2.8%, but UK lamb still remains more cost-effective. Recent increases have been due to tightened supply levels, but this has eased across January with an increase volume of lambs reaching the market – which are up 13% year-on-year – and has created a greater balance in supply and demand. Demand has also eased off this month, which has contributed to the drop in price. Looking forward, we expect prices to decrease again slightly next month, but not significantly so.
- The price of pork in the UK has dropped slightly by 0.6%, as has EU pork. Again, UK specification pork remains better value for money. The drop in price for pork has only been minimal this month as pork was the only meat to see continued spending with little change to demand levels following on from the festive period. We are predicting that demand will start to ease somewhat over the coming weeks, but we are not expecting this to be significant as pork seems to be the preferred choice at the moment, mainly at the expense of beef.
- Chicken prices have also fallen slightly, by 0.8% in the UK, whilst EU prices have fallen by 2.5%. That being said, UK chicken prices are still cheaper than those on the continent. Whilst demand for chicken remains somewhat unchanged, as feed prices fall, we expect the price of chicken to fall with it, and while we predict fluctuations in price throughout 2014, the overall trend is projected to be a downward one.
- Farmgate milk prices have decreased in December by 0.7% to 34.26 pence per litre. Year-on-year, however, prices are 13.8% higher in December 2013 than December 2012. Milk prices are highly dependent on the supply and demand balance, as well as the farmgate milk price; strong milk supplies – combined with the strengthening of Sterling against the Euro – have helped contribute to this decrease in price. Farmgate prices are set to increase further next month, following announcements from Arla, which could add an upward pressure to prices, but we are not expecting this to be significant.
- The price of butter has dropped this month; by 6.5% for 80% fat salted butter, and by 6.4% for 82% fat unsalted butter. The price of cream has also decreased this month by 9%. There is currently a good supply of butter and cream on the market – as a result of a healthy volume of milk being available – but we are only seeing buyers enter the market on a short-term basis which could cause significant fluctuations on pricing. There has been a further downward pressure added to these prices as New Zealand butter stocks re-enter the market and create more competition.
- Egg prices have, overall, fallen in price this month; with extra-large and large eggs both falling by 13.3%, medium eggs by 12.5% and small eggs by 17.65%. Liquid egg has also decreased in price by 6.44%. Extra-large and large eggs both offer excellent value for money at the moment. While egg prices have always been volatile, we can expect the prices of non-caged eggs to come down as of February, with the UK’s largest egg packer – Noble Foods – reducing prices by 5pence per dozen. This will create competition amongst egg-packers and comes about after an oversupply of free range eggs became apparent at the end of 2013.
- Cheese prices have had some movement this month, with mild Cheddar falling by 1.4% and mild white
Cheddar by 0.9%. In addition to this, we also saw Parmesan cheese fall by 1.5% across January. All other major cheese varieties remained unchanged. These price drops are good news after the significant increases we bore witness to last year.
Fish and Seafood
- The price of cod and haddock have both decreased this month, by 11.1% and 9.27% respectively, although haddock still remains the most cost-effective of the two. There has been an abundance of cod and haddock in the shores surrounding the UK which has increased supplies and eased any pressures regarding demand allowing prices of both fish to drop. However, the latest reports suggest we may start seeing higher prices as more commonplace; climate change is being blamed for smaller fish in the North Sea – with haddock being reportedly one-third smaller – as a result of colder sea temperatures and lower levels of food availability in these waters.
- Prawn prices have remained relatively unchanged this month, with coldwater prawns from Norway falling by 1.5% on average, black tiger prawns remained stable, and vannamei prawns from Thailand continued to remain high with minor fluctuations. The vannamei market has been greatly affected by early mortality syndrome (EMS), and some estimates suggest volumes could fall by half this year as a result. In addition to this, shrimp in Asian waters have been affected by colder than normal weather, and as a result, prices are expected to remain high until at least Q2 of 2014.
- Salmon prices have decreased across January by around 8.5% on average. A key reason for this, according to sources in Norway, is due to Morpol – the world’s biggest supplier of salmon – having stopped buying salmon other than from its parent Marine Harvest; which is going to impact on prices. This has resulted in price drops as there is now more supply volume than demand. We cannot predict how long Morpol intend to source their salmon from Marine Harvest, but we do not expect lower prices to be long-lived.
- Megrim has fallen in price by a significant 44.2% this month, whilst a more common fish – lemon sole – has only dropped by 3%. The drop is price of megrim is a movement back to more “normal levels” after a price spike at the start of the year. It is thought that, after publicity and promotions surrounding megrim as a good alternative to the sole family of fish, demand spiked and this has now petered out. Prices of lemon sole are now 18% more expensive than that of megrim, after falling to 31.3% cheaper at the turn of the year. Whilst lemon sole may be more expensive than megrim, its price is not as volatile and better value on the long term if you are not secured into contract-pricing.
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