Food and drink market update - Jan/Feb 2024

18 January, 2024

Overview

January and February brings forth challenges for essential commodities due to adverse weather conditions and geopolitical events.

Storms in autumn and excessive year-end rainfall have impacted crop yields and fishing, leading to logistical challenges nationwide. Despite these immediate concerns, there is optimism for easing inflation and potential price reductions in certain commodity lines in 2024.

Notably, pubs and restaurants may benefit from this positive development, alleviating the burden of significant price hikes on main ingredients like chicken and dairy experienced in 2023.

However, challenges persist in certain regions, where high humidity and cool temperatures are impeding crop growth and hindering the ripening process for broccoli, tomatoes, peppers, and courgettes.

Additionally, the industry faces elevated levels of the ToBRF virus in tomato and courgette crops, with potential impacts on volumes and quality.

Looking beyond domestic concerns, it is essential to monitor the potential impact of Houthi rebel attacks on ships in the Red Sea. The Red Sea, a critical shipping lane facilitating approximately 10% of global trade, is vital for transporting oil, gas, food, and consumer goods between the Mediterranean Sea and the Indian Ocean. Houthi attacks have disrupted this trade, increasing the risk of higher prices and shortages globally.

The ramifications extend to supply chain efficiency, with shipping container delays and availability issues due to containers being improperly positioned in ports. As a result, the situation in the Red Sea poses a significant risk to the global trade network, impacting pricing, availability, and overall supply chain functionality.

Key price movements by category:

Fruits & Vegetables

Spanish soft fruit such as strawberries and raspberries are now available. The arrival of Sevilles, known as marmalade oranges, is eagerly anticipated. Given their short season and consistently high demand, swift action is advised.

Storm Bernard has severely impacted Moroccan raspberry growers, with forecasts indicating a roughly 50% reduction in availability.

Additionally, extreme weather conditions have affected the UK strawberry sector, with cold and wet conditions leading to delayed planting. Excessive rainfall is causing crops to be left in the ground, risking spoilage.

The Spanish orange crop is expected to be around 30% lower than last year due to issues with greening caused by hot weather. This could pose challenges in the coming months. Look out for the arrival of Italian blood oranges, with warmer days and cooler evenings imparting their flavour and colour.

Early in the month, Nadorcotts, a late-maturing easy peeler with a balance of acidity and sweetness, will be available. Embracing the citrus theme, pink grapefruit from Florida is at its prime in January.

Recent storms have disrupted shipping, causing delays in the arrival of crops, including bananas and pineapples. These delays are expected to be short-term.

While Bramley apples are available year-round, their quality is at the best in January. Early UK varieties such as Discovery and Bramley are currently being supplied, with Cox's apples expected soon.

Tomato prices increased at the close of last year due to imports from Spain and Morocco. This month, the arrival of Egyptian products is anticipated, which may stabilise pricing.

Peppers, cucumbers, and lettuce products remain readily available from Spain, providing a positive outlook. Romanesco is currently in its best quality.

Persistent wet weather poses challenges for cauliflower growers, affecting both quality and availability. Improvements are expected in the next few weeks. However, UK cauliflower destined for harvest in late March, April, and May has been severely affected by current rainfall, with rumors of a 50% loss, and further losses are expected at harvest time.

The British harvest has concluded, and the UK is now dependent on Spain/EU for broccoli imports. Spain faces availability challenges, but gradual improvements are expected week by week. Shortages are anticipated to be short-term.

Anticipated issues with Savoy cabbage are expected in the coming months due to crop damage and rotation. Alternative cabbages are recommended for the time being.

Asparagus is currently in short supply with nothing available on the market, and prospects for availability in the near future are low.

On the bright side, Yorkshire Forced rhubarb volumes are set to rise in the upcoming weeks.

Parsnips are in good supply, and sprouts are not exclusive to Christmas. Fine beans, sugar snaps, and UK red cabbage are also viable options.

Due to excessive rainfall last year, there's a decrease in potato yields, resulting in firming up prices. Further increases are anticipated in the weeks to come, with growers predicting a severe shortage by early spring. As an alternative, Cyprus potatoes are available.

Fish and Seafood

Navigating the seafood market from December to February presents challenges due to species variability and fishing conditions. While colder water enhances the quality of most species, flat fish may experience deterioration during spawning.

Positive developments include meagre/stonebass achieving a 2 rating under our Global GAP certification, defying initial delisting concerns by the Marine Conservation Society (MCS).

Trawl-caught cod from Iceland and Norway received downgrades to 3 and 4, respectively, relevant to the Channel Islands. Dover soles from the Irish Sea moved from a 3 to an automatic 5 due to stock level concerns.

Warnings highlight increased storm and flood risks, potentially making fishing more hazardous and disrupting breeding habitats. These environmental factors are anticipated to impact availability and induce price volatility for both sea and river fish

Butchery & Eggs

Beef & Lamb:

  • The UK meat industry faces rising prices due to increased demand and post-pandemic pressures.
  • Projections suggest a potential 8% beef price hike by August 2024.
  • A Farmers Weekly article offers a contrasting perspective, noting a positive start for finished deadweight steers in the new year, with a 40p/kg price increase compared to January 2023.
  • Finished lamb prices are on an upward trajectory, reaching 615.6p/kg for the week ending 6 January, the highest since mid-July the previous year.
  • British beef maintains a premium over European prices, with growing demand from the Continent in recent months.

Poultry & Eggs:

  • An expected increase in layer chick placings early in the year is set to boost supply.
  • Rising feed costs contribute to an uptick in chicken prices.
  • Despite improved availability, a significant easing in prices is unlikely.
  • The UK poultry sector anticipates fluctuations in 2024.
  • Some producers have withdrawn, and there is a scarcity of applications for new units.
  • Challenges, including the bird flu crisis and inflation, have impacted UK egg production.
  • A positive report from GOV.UK reveals a 6.9% rise in egg product production in Q3 2023 compared to the previous quarter, hinting at potential improvements in UK egg production and the possibility of stabilising or easing prices in the coming months.
Oil

Currently, rapeseed oil prices are expected to either stabilise or decrease, fueled by abundant oilseed supplies from the Black Sea region, leading to cost reductions.

However, this outlook is contingent on the ongoing war status in the area, with potential supply impacts influenced by issues in the Red Sea region. Rapeseed oil is currently favoured over ordinary vegetable oil.

In contrast, olive oil prices continue to rise with no signs of easing. Europe's olive oil supply is diminishing due to consecutive years of droughts and heatwaves damaging harvests.

Spain, the world's largest producer, is notably affected, expecting production to drop to 750,000 tonnes, significantly lower than the previous 1.3 million tonnes. The International Olive Council predicts a global production decrease to 2.4 million tonnes, falling short of last year's harvest and the global demand of approximately 3 million tonnes.

Sources: A David UK, Birtwhistles UK, Brakes UK, Direct Seafood UK, Dole UK.

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