Christopher Clare, Prestige Purchasing’s head of insight gives Footprint a quick walk through guide in the world of food and drink supply markets.
CPI (Consumer Price Index) is down 0.1% compared to last month (2.9% to 2.8%), whilst food inflation is up 0.5% compared to last month (3.9% to 4.4%).
The current food inflation figure is still within our predicted range for 2013, but the increase seen this month has been primarily affected by the pricing of fruit, which increased 2.6% in the month.
The price of oils and fats (+0.7%), fruit (+0.9%), vegetables (+0.1%), breads and cereals (+0.3%), meat (+0.6%) and sugar, jam, syrups, chocolate and confectionary (+2.0%) have increased this month, and this has contributed to the increase seen in food inflation between June and July.
This Month’s Highlights
• The majority of exotic and citrus fruits have remained stable throughout July. Included in this are clementines, grapefruit, lemons, and limes, as well as bananas, coconuts, kiwis, mangos and figs. Exceptions to this are oranges (-2.9%) which have seen a price decrease after rising throughout June, and the lychee (-40%) which has continued to fall in price for the second month running. Lychee prices have fallen considerably as stocks are almost fully replenished after weather greatly affected crops a few months ago.
• Melon prices have, however, seen some variations this month, with the galia (+6.25%) and honeydew (+34.6%) going up in July whilst watermelons (-40.5%) have fallen. The orange melon has again remained stable. The galia and honeydew melons have increased in price this month after a slow start to the season due to poor weather conditions which meant production had a difficult start. Higher prices are expected to begin easing off as August continues. Watermelon prices fell as they have high volumes available, and supply is currently greater than demand.
• Stone fruits have also been subject to some variation; apricots (+18.2%) have increased in price while nectarines (-8%) and peaches (-16.7%) have fallen. The prices of cherries and plums have maintained stability throughout July after a decrease in price in June. The variation in price change here is associated with how the weather in the spring affected crops; while nectarines and peaches have recovered well from this, apricot harvests have continued to struggle after a long, cold and wet few months.
• As summer gets into full swing, popular berry prices have seen a fall in price; strawberries (-23.4%), raspberries (-33.3%), blueberries (-42.9%), blackberries (-62.9%) and redcurrants (-42.9%) have all decreased in price during July. Prices have continued to be positive here as the berry season reaches the height of its potential and crops continue to do well, with succulent, ripe fruit being harvested.
• Apple prices have primarily remained stable this month, with only the golden delicious (+9.1%) and granny smith (+4.3%) varieties experiencing a price increase. This is a good sign for the apple market, as fewer prices are now rising after the poor start to the season, and it looks as though the market is stabilising.
• Moving on to vegetables, it can be seen that those favourite accompaniments to main meals have seen a fall in price this month; with garden peas (-25.4%), parsnips (-11.8%), cabbage (-20%), carrot (-16.7%) and cauliflower (-16.7%) all decreasing. The primary increase for this month has been onion (+34.3%).
• The 2012 potato season ended this month, and we await the 2013 season to fully commence. The price of red (-14.1%) and white (-6.3%) potatoes, in general, have fallen this month, whilst new potatoes have gone up significantly due to low supply levels reaching the market. The state of the potato market is still in a bit of disarray from the devastating weather that hit the 2012 stocks, but it is hoped next month that the situation will start to see some proper signs of improvement as 2013 harvests begin to reach the markets.
• The salad market has seen some variation throughout July. Tomatoes have primarily decreased this month; with beef tomatoes (-23.1%), plum tomatoes (-6.7%), round tomatoes (-8.5%), salad tomatoes (-54.5%) and vine tomatoes (-6.7%) all falling in price. Cherry tomatoes (+19.8%) are the only exception to this, seeing an increase. The salad and beef tomatoes are the best priced. Lettuces have been a bit of a mixed bag the past month; iceberg (+14.3%) and romaine (+6.7%) lettuces have increased in price, whereas little gem (-9.1%) and round (-14.3%) lettuces have decreased. Lollo rosso and oakleaf varieties have remained stable. If you are looking for value for money though, the round lettuce is your best bet, followed by the iceberg. Peppers have also seen some variation this month with green peppers (+38.5%) going up in price, while red (-38.5%) and yellow (-29.2%) peppers have fallen in price.
Meat & Poultry
• From a buyer’s point of view, the beef market has vastly improved this month, with all deadweight beef prices seeing a decrease throughout July, after experiencing an increase in June. If we consider all beef grades, we can see that steers have fallen by 0.7%, heifers by 0.9%, bulls by a larger 2.2% and cows by 3.6%. This is the first month in a long time we have seen all beef prices falling, and could be good news – indicating the markets should start stabilising following on from the horsemeat escapades.
Beef prices have been affected by rumours of discounted Polish beef being made available on the continent and being used to fill the deficit in the current UK market following a surge in demand for barbeque meats – this is amongst the cheapest beef in the EU. This is helping to drive prices down because the Polish beef is increasing supply levels, and creating greater competition for British farmers.
Sales of burgers vastly improved between June and July with the appearance of an unexpected British summertime; increasing sales of BBQ meats with burger and grill sales up almost 30% year-on-year. That being said, total beef sales were down 8% year-on-year, which is pushing prices down due to more subdued demand levels.
• The lamb market brings more good news for buyers, with more decreases in UK meats. With New Season Lamb (NSL) filling the market nicely, we see the price of NSL, and lamb prices in general, fall by over 17% this month. RoI (Republic of Ireland) prices still remain lower than those of the UK (and have also fallen by 9.3% this month), but prices in Europe are higher than the UK, with the likes of French prices increasing by over 5%.
Better prices for lamb have resulted in greater volumes of New Season Lamb (NSL) being pushed through to the market by farmers in a bid to receive improved returns – and this can help to account for the observed price drops towards the end of July; supply levels are increasing whilst demand levels remain stable. The volatility that has been witnessed in recent times in the lamb market is a result of inconsistency in demand and sheep farmers are seeing more large retailers sourcing higher levels of imported lamb. In the long term, we should expect higher prices to be prevalent as the imports from New Zealand are reduced towards the end of 2013.
• Pork has not seen the same price decreases, and has gone up again this month, but increases have been minimal at 0.4% for British pork and EU pork, and could suggest markets are stabilising. The rises we have seen in the price of pork have been primarily driven by the strong demand levels that producers have been seeing the past few months for British standard pork. This has been consolidated by the preferences for retailers to also shorten their supply chains by using only British pork.
Prices peaked in mid-July and we are starting to see these stabilise. As a result of this, it is not expected that prices will continue to rise greatly next month. However, current prices are considerably higher year-on-year, and this is not predicted to ease in the near future.
• Poultry prices in the UK have remained steady this month, with both chicken broiler and fresh duck prices continuing unchanged after dropping in price last month. Poultry prices are steadying as the cost of feed becomes more consistent which stabilises the costs for the farmer. It is thought that nothing will majorly impact on the poultry market in the short term to greatly affect prices – except the usual supply and demand level fluctuations.
• Milk prices increased in June (+3.5%), and whilst milk production has seen some recovery in recent months, it is not yet sufficient to stabilise the market.
Deliveries in the first two weeks of July are up year-on-year however, which is a promising sign of things to come. If we look at other dairy markets it can be seen that milk supplies are becoming more available for use in other areas such as cheese again.
September will see more farmgate price increases, and this will potentially be reflected in the milk prices we see in Q4 of 2013. NFU (National Farmers Union) Scotland have issued a statement that farmgate prices of 34.00ppl (pence per litre) is more than attainable based on calculations from current commodity markets and production levels. Furthermore, the Farmers For Action (FFA) group are already looking to secure another 1ppl from August as they are still struggling financially after the hardships encountered during the winter of 2012.
Cream prices have remained unchanged this month.
• Cheese prices have almost levelled out again after the increases experienced in the last few months. In the cheddar market, all processor prices have remained unchanged, except for mild white cheese (+3%) which increased this month. The only other changes seen this month were for gorgonzola (+1.6%), mozzarella (+0.6%) and parmesan (+1.5%). Cheese prices are still following an upward trend; with wholesale cheddar prices up by over 2% this month, and this is being driven by lower supplies of milk being fed into the cheese market. The MCVE (Milk for Cheese Equivalent) market indicator suggests we have not seen the last of the price increases for the cheese market.
• Butter prices, at a processing level, have seen price stabilisation for a second month running, but wholesale prices have increased again (+2.9%) and are up by over 60% year-on-year. Again, this is being driven by lower milk supplies. It is hoped that as we see milk production levels on the rise again, this should bring an end to the new price increases on the butter market.
• After much volatility in the egg market, this month we see prices remain unchanged; large eggs show the best value for money being the cheapest, whilst medium eggs are the most expensive this month. Egg prices in Europe, however, are particularly low; the French farmers have been protesting this month by smashing hundreds of thousands of eggs – 5% of the country’s daily production – in a bid to make a stand and reduce supplies to increase prices – let’s hope our farmers do not feel the need to follow suit.
Fish and Seafood
• Both cod and haddock have gone up this month; cod by around the 6% mark (dependent on size), and haddock by a much greater 65+% (again, size dependent). White fish in general has gone up this month – with hake (+4.5%), ling (+28.3%) and whiting (28.2%) also all increasing in price.
Norwegian cod has seen a boost recently in its catch volumes, but this has not resulted in the expected price decreases we are used to seeing as supply increases. Haddock price increases are, however, more expected as catch volumes have fallen by almost a quarter recently, following on from the cuts to the Barents Sea quota earlier this year. This cut has restricted supply levels which is pushing prices up.
Cod prices are expected to continue to fluctuate within normal parameters, with potential for a slight upward trend as a result of reduced levels of cold-water prawns available – a main constituent of the cod’s diet, for the next few months. Haddock prices, on the other hand, will remain higher with the potential to climb further based on these reduced quota figures.
• Wild salmon (Norwegian) has eased in price this month (-2.8%), whilst we see farmed salmon (+16.6% for Norwegian and +2.9% for Scottish) increasing in price. Smoked salmon (+1.4%) has also become marginally more expensive. The price of farmed Norwegian salmon has increased this month as export volumes of the fish have decreased. Wild Norwegian salmon prices, however, are down, as supply levels are plentiful, helping to reduce the overall pressure on the market.
Expert analysts have recently increased their price predictions for farmed salmon for the rest of the year – the industry is expecting farmed salmon prices to continue to climb and remain high for the next few weeks. Long term, it is thought that the seasonal price drop (which normally occurs around October time) could be greater than normal based on how far prices increase now.
• Coldwater prawn prices have fallen this month (-13%) – for the second month running - and black tiger prawns have only increased marginally (+0.7%) which is an improvement on the 2.5% of last month, and is good news for the market.
Coldwater prawn prices have fallen due to good catch volumes combined with lower demand levels. These prices are highly dependent on the success of satisfying market demands and are a highly unpredictable market.
Tiger prawns have increased in price somewhat due to slightly lower catch volumes at the moment.