January monthly market insight

PRESTIGE PURCHASING'S Christopher Clare, gives Footprint readers exclusive access to its hot-off-the-presses January monthly market insight.

 

The top movements this month relate to the fresh produce and fish and seafood markets. Price changes over the festive period have not been as steep as those that we have seen over the past few months.

 

Cabbage prices have increased, on average by 67.1%. High market prices (the top end of the pricing scale) moved from £0.40 to £0.60/each and low prices (the lower end of the pricing scale) from £0.30 to £0.57/each between December 4th and January 1st. The recent British weather has impacted upon prices, with heavy rains damaging crops and reducing harvesting capabilities. We are expecting the price increases to be short-lived as a result of the weather as supply is usually good at this time of the year.

 

Vine tomato prices have, on average, increased by 57.5%, with high market prices moving from £1.00 to £1.65/kg, and the low market from £0.90 to £1.50/kg. Salad tomato prices have risen, on average, 44.1% across December with high market prices going from £0.90 to £1.35/kg and low prices from £0.80 to £1.10/kg. Tomato prices have increased over the last month as a result of recent low prices creating some market volatility. November was somewhat of a poor month for Canarian tomatoes, but volumes from countries in central Europe were very large, which enabled prices to drop considerably. As the season continues, and poor weather has reached these countries, supply levels have dropped, and applied this upward pressure on prices.

 

Apricots have fallen in price over December by 42%, with high market prices moving from £5.00 to £3.00/kg and low market prices from £5.00 to £2.80/kg. This is primarily due to seasonal harvests from countries like Australia and New Zealand being in full swing, and good quality – and quantity – of produce reaching the market. We are expecting prices to start increasing again in February as these growing seasons come to a close and we await fruit from Israel and Spain.

 

Iceberg lettuce has also fallen in price over December by 30.8%, with high market prices moving from £0.75 to £0.50/kg and low market prices from £0.55 to £0.40/kg. Current supply levels of the iceberg lettuce are good, and this is helping to drive prices down for the time being. We are expecting, based on intelligence, that prices will rise again over the next few weeks; if you spot buy your lettuce, make the most of current lower pricing levels.

 

Anchovy prices have dropped by just over 25% in the last month, with prices going down from £5.00 to £3.75/kg. Anchovy prices have decreased this month, but not to the lower levels we saw a few months ago, as supply volumes start to increase again, and are more able to meet demand levels.

 

Inflation Overview

 

CPI has fallen to 2.1% in December from 2.0% in November, with the fall being driven primarily by alcoholic beverages and tobacco, clothing and footwear, and recreational goods and services. These decreases were, however, moderately offset by an upward contribution from motor fuels.

 

Food Inflation has dropped from 3.0% to 2.1% between November and December – the lowest figure in the last twelve months.

 

For the first month in a long time, all changes to Food Inflation categories have been negative, or remain unchanged, with the only exception of bread and cereals (+1.1%, indicating prices in this category are now 3.3% more expensive than last year) and this has contributed greatly to the decrease in Food Inflation this month. Fruit experienced the largest drop of 4.3% down to -0.1% this month, which indicates that prices are now 0.1% cheaper than they were this time last year. Oils and fats also decreased by 3.7% to reach 0.9%, fish fell by 1.9% to 5.2%, meat decreased by 1.8% to 2.5%, miscellaneous items fell by 0.9% to 2.9%, vegetables (including potatoes) dropped to 2.3% (-0.8%), and milk, cheese and eggs fell by 0.1% to 1.8%. Sugar, jam, syrups, chocolate & confectionery remained unchanged at 0.1% more expensive year-on-year.

 

Fresh Produce

 

• The citrus market has remained largely unchanged this month, with only lime prices changing. Limes have increased in price by 22.2% to £0.12/each. This is still from the aftermath of the old/new lime split, which helped to previously drive prices down. With the presence of more new limes on the market we are seeing some price increases here, but we do not expect prices to climb much higher in coming weeks.

 

• Melons have also fluctuated this month, with galia and honeydew melons both decreasing in price, while the watermelon increased. The galia melon decreased by 13.5% to £1.25/ea (and £1.00/ea for low market prices), and the honeydew melon decreased by 4.2% to £1.30 (and £1.00/ea for low market prices). There is currently a good, healthy supply of galia and honeydew melon on the market at the moment. Based on current weather conditions it is unknown if these low prices will remain, but it is hoped they will continue for the next few weeks. The watermelon has increased in price by 11.1% to £2.90/ea for high market prices and £2.41/ea for low market prices. This increase in price is primarily as a result of frosts in key growing countries such as Argentina, which has hindered growth and harvest volumes.

 

• The berry market is another where we have seen some volatility, with the blackberry and blueberry both decreasing in price (-30% and -11.1% respectively), and grapes (both white, +37.9%, and red, +38.4%) and strawberries (+2.4%) increasing in price. Argentinian berries are doing well at the moment, and recovering favourably following on from the adverse weather experienced last year; supplies are up and the quality is good. This is helping to lower prices on the market at the moment. In addition to this, lower pricing from Morocco is creating competition on the market, allowing lower pricing overall. Strawberries are currently increasing in price as a result of delays to the Spanish season, but looking forward we are expecting produce volumes to pick up with the promise of strong and sweet strawberries to appear on the market. While the increase on strawberry prices has been quite minimal, we are not expecting prices to increase too considerably as available volumes increase, creating a greater equilibrium in the supply and demand market, but combined with the excellent quality produce we are awaiting, this could keep prices somewhat higher. Grapes have increased substantially more than strawberries, and this is because we are predominantly in the middle of switching varieties and countries of origin, therefore supply levels are seasonally lower at this time of year and we do not predict these prices will continue to increase as steeply over the coming weeks. While raspberries have remained unchanged in price, we are expecting the price of these to begin increasing throughout January.

 

• Stone fruits have had a good month, with the majority falling in price. Apricots (-42%, as previously discussed), cherries (-6.3%), nectarines (-18.6%) and peaches (-18.6%) have all dropped in price this month, whilst plums have increased (+25.8%). With good production levels, despite hard frosts in places like Chile at the end of 2013, the cherry market is looking good, and we are expecting prices to remain slightly lower over the next few weeks. We did not predict further drops in the price of nectarines and peaches, so the massive 18% drop has been very welcome recently. With this further drop, we are not expecting prices to fall much more in coming weeks. Plums have been of good quality and quantity recently, which has allowed prices to fall by such a considerable percentage, and prices are predicted to remain lower for the next few weeks at least.

 

• The lettuce market has been subject to some variation this month, with iceberg lettuce falling in price quite considerably (-30.8%, as previously discussed), whilst round lettuce (+18.2%) and romaine lettuce (+1.7%) have both increased in price. Little gem, lollo rosso and oakleaf varieties have all remained stable this month. Lettuce prices are highly changeable based on the effects of the weather and small changes in supply and demand. The weather conditions experienced recently – cold and very wet – would normally push prices upwards, as it has with the round and romaine varieties, but a drop in demand for iceberg has alleviated the pressure on pricing allowing this to fall.

 

• Pepper prices have increased this month (+1.7%) which has been primarily driven by a rise in the price of red peppers. The prices of peppers have still not fully recovered from poor weather conditions at the end of last year – and we predicted some increases on the back of this, this month – but they are starting to show signs of stabilising. We believe we will see higher prices on the market over the next few weeks, but these should not continue in an upward trend.

 

• Potatoes have gone up in price this month by an average of 4%. The most significant price fluctuations across December were for the Sagitta (+10.3%) and Maris Piper (+8.3%), with only Kind Edwards seeing a decrease in price this month (-2.7%). The price increases are not as high this month as last, where prices increased by, on average, 10%, but are still being affected by poor weather conditions, and as predicted last month, we do not expect to see a reverse in this increasing pricing trend over the next few weeks.

 

• Broccoli prices have continued to climb this month (+11%), but not anywhere in the region of last month’s steep increases (+131%). We predicted higher prices would remain for at least the start of 2014, as a result of delays to the harvest and lower quality produce. Supply levels have not yet reached adequate levels to cope with demand, and as such prices will remain higher for the time being.

 

• Carrots, brussel sprouts and mushrooms have all remained unchanged in terms of pricing, but we have seen leeks (-2.7%) and cauliflower (-17.5%) both drop in price across December. Leek supply volumes are still plentiful, which is helping to drive prices down, although the decrease has slowed compared to last month and could be showing signs of stabilisation. Cauliflower prices have turned around compared to the 110.5% price hikes we saw last month; as supply volumes increase and harvest conditions improve in Spain. We are expecting prices to continue falling, but this will be a gradual decrease over the next few weeks.

 

Meat & Poultry 

• Prime beef prices (steer, heifer and bull) have fallen by, on average, 1.9% whilst cow prices have increased by 8.7% over December. Demand at a retail level was relatively subdued over the last few weeks. Typically, we expect lower beef prices for this time of year, as post-holiday demand drops off and budgets are somewhat tighter in the New Year too. Therefore any upward increases on price as a result of tight supplies are expected to be limited. Should demand start to pick up significantly, however, this has the potential to create a large upward pressure on prices in the months to come.

 

• UK lamb prices have increased over the last month by 1.8%, and EU-25 prices have also increased by a slightly lower 1.5%, but UK lamb still remains better value for money, especially compared to that of France where prices are currently over 35% more expensive (as of Jan 4th). The price of lamb has not fluctuated significantly as of late as a result of the fine balance currently existing between supply and demand levels. Lamb prices are highly dependent on demand levels, and should these alter considerably, the effect on prices could be significant. We believe that for, at least, the first few months of 2014 supply volumes will remain tight, and this will keep prices higher.

 

• The price of pork has gone down in the UK (-1.6%) and on the continent (-1.5%), and UK pork still remains better value for money. In the weeks leading up to Christmas, research has shown that the volume of pork purchased was up 5% year-on-year, and the popularity of pork is on the increase. Demand for the meat has been high, but has subdued slightly following the holiday period, which has helped to reduce prices, and this is typical for this time of year. We do not predict that pork prices will climb over the coming weeks, and we should see some stabilisation on the market.

 

• Chicken prices have gone up across the board during November, with the exception of Brazilian-sourced chicken (-9.2%). Irish chicken prices remained unchanged, whilst UK chicken rose by 0.8%, EU-25 by 1.9% (which was driven by countries like the Netherlands where prices rose by 2.5%). Demand for chicken and poultry is on the increase which is applying a slight upward pressure on UK prices, but that being said, we still expect to see the price of chicken ease throughout the duration of 2014.

 

Dairy

 

• Farmgate milk prices have increased from 33.52 pence per litre (ppl) to 34.45ppl in November. This is an increase of 2.8% month-on-month, and a massive +14.7% increase year-on-year. Production and supply of milk is on the increase, and has been for the last month or so. On a wholesale level, the markets have followed a characteristically seasonal trend with prices increasing on the run-up to Christmas as demand peaked, before price started falling after Christmas with the fall in demand.

With respect to cream, wholesale prices have decreased by 6% this month; this has been a result of lower demand levels and good supply availability.

 

• Butter prices have decreased this month by 1%. At the beginning of December, the supply and demand balance was a relatively stable one, but a drop in demand in recent weeks has allowed prices to fall. In addition to this, with the availability of butter expected to grow, buyers are holding off in the short term which is applying a downward pressure on prices and we expect, as a result of this, that prices in the next few weeks could potentially fall slightly further.

 

• Cheese prices on the Cheddar market have remained stable this month which, after the slight decreases we saw last month, could signal the start of price increases again. In last month’s report, we predicted that Cheddar production could continue to be constrained as competition for raw milk supplies continues, and as a result we are expecting the market to be somewhat volatile this year due to a combination of unbalanced supply and demand levels and the potential for buyers to hold out when prices are higher in a hope to reduce these.

 

Fish and Seafood

 

• The price of cod has gone up this month by, on average 7.4%. High market prices have risen from £0.91 to £1.00/kg and low market prices have risen to £0.68 from £0.66/kg. Cod profits have been reportedly low over the latter part of 2013, and this is adding pressure on the current prices, pushing them upwards in a bid to increase margins. Whilst cod pricing is particularly volatile anyway, with these added pressures, we are expecting to see some higher pricing remain on the market, at least in the short-term.

 

• Haddock prices have increased by, on average, 0.4% over December. Whilst high market prices have increased from £0.91 to £1.05/kg – more than that of cod – low market prices have decreased from £0.73 to £0.59/kg which lowers the total percentile movement in terms of price. The supply and demand equilibrium is balancing itself out in December, allowing haddock prices to stabilise a little, but we are still expecting to see a lot of price volatility over the coming months as supply and demand play a massive role in determining the price of fish, and these fluctuate considerably on a week-to-week basis.

 

• Salmon prices have risen by 34.3% over the last month, with prices moving from £3.94 to £5.29/kg. Demand levels have continued to increase for salmon, and as a result prices have gone up. Reports from the Norwegian Salmon Council has indicated that 2013 had strong growth in demand for salmon, and the recent reductions in salmon production in the country, combined with a strong increase in demand, has resulted in higher prices for the fish. Although such a large price increase was not predicted for the fish, we do expect higher pricing to be more commonplace throughout 2014.

 

We hope that you enjoyed reading this month’s Market Report. If you have any comments, questions or feedback, please do get in touch with Christopher on +44 1908 222678 or via email christopher.clare@prestige-purchasing.com. 

 

 

 

 

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