Food costs for November

Welcome to your market overview from Prestige Purchasing for November. 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
Fig	+80.56%	Beetroot	-98.50%
Courgette	+55.00%	Conference Pear	-47.60%
Blackberry	+50.00%	Pink Lady Apple	-32.50%

The top movements this month relate to the fresh produce market.

The start of October saw the end of the fig growing season from countries like Brazil, which helps to account for the price increase of figs (+80.56%). This price increase is typical for this time of year and higher prices should be expected to continue until at least the end of December.

Courgettes have risen significantly (+55%) over October with lower supply levels being seen on the market. Spain, a major courgette exporter, has been hit by the New Delhi virus which has spread quite quickly and resulted in many growers having to dig up their crops, and replant new ones. We are predicting these prices to maintain high levels until the end of the year.

The price of the blackberry has shot up this month (+50%) as harvest volumes start to decrease after the autumn harvest began at the start of September. The supplies from Holland and Belgium have drawn to a close and whilst we await the arrival of Spanish produce we are not expecting the quality specs to be quite as good.

The price decrease of beetroot (-98.50%) this month is typical for this time of year. Supply volumes are matching demand levels well and we hope these lower prices will continue through until the start of 2014. Surprisingly, cooked beetroot offers better value for money, so where you cook your beetroot, this is a good option.

Prices of Conference pears are favourable just now (-47.6%) due to our (the UK) preference for medium-small sized pears – whilst other countries are seeking to source larger fruits – of which supply is plentiful and quality is good. We expect to keep seeing these lower prices over coming weeks.

The Pink Lady apple variety has finally fallen in price (-32.5%) but still remains the most expensive between popular apple choices. Prices for the Pink Lady apple typically fall at this time of year and current prices are the lowest we have seen in over three years. We predict prices will be somewhat volatile over coming weeks, so it is best to consider buying sooner rather than later.

Inflation Overview

CPI has fallen to 2.2% in October from 2.7% in September, with the fall being driven primarily by the transport sector (particularly by fuel costs) and the education sector (specifically tuition fees).

Food Inflation has dropped from 4.8% to 4.2% between September and October.

The biggest change in Food Inflation was the move from 2.9% in September to 4.9% in October for fish, followed by an increase from 1.4% to 3.2% for oils and fats. The only other increase in Food Inflation between September and October was miscellaneous food which increased by 0.16%, taking it to 3.1%. Everything else, which contributes to the decrease in the overall Food Inflation, has fallen from September to October; sugar, jam, syrups, chocolate and confectionary (-1.66%), vegetables (-1.42%), fruit (-1.1%), bread and cereals (-0.42%), milk, cheese and eggs (-0.07%) and meat (-0.01%).

Fresh Produce

Apple prices have fallen over October (-15.8%) as apple production levels are up again, and experts are expecting current supply volumes could lead to the best results of the past five years. This decrease has been seen across all varieties (except the royal gala which remained stable), and has been driven primarily by the Pink Lady (-32.5%), Braeburn (-28.4%) and Cox (-17.3%). Looking at British produce alone, the quality of apples is good, with high levels of juice and above average sugar levels. That being said, British apples are reaching the market with some weather markings on their skins but this will not affect the taste. The cold spell back in the spring has resulted in smaller apple sizes this season, but the warmer summer has aided in the ripening process.
Pear prices have varied this month, with Conference pears falling in price (-47.6%) and Williams increasing (+11.5%). The Conference pear market has been discussed already in our top news, but pear volumes, in general, are recovering from the losses incurred during winter 2012. Excellent production levels from the Netherlands and Belgium (both major exporters of the Conference pear) are creating competition for other top pear producing countries such as Italy which is helping to drive prices down.
Citrus fruits are doing well this month, with prices falling (-13.9%). Clementines have fallen yet again this month (-23.1%), limes are seeing more price decreases (-17.7%), and the pomelo has also seen prices going down (-25%). Grapefruit and lemon prices have remained stable over October. We are seeing good quality citrus fruits coming through from Spain, but the same old lime / new lime issue is still pushing prices down; we expect prices to begin rising again soon.
Whilst some berries are doing well this month – strawberries (-5.9%) and grapes (-6.3%) have decreased in price – there have been some significant increases in other areas; as previously discussed, the blackberry has rocketed in price, as has the blueberry (+46.4%) and the raspberry (+35.4%). Blueberries have been hit particularly hard due to hard frosts in Chile in September (which affected the majority of soft fruit crops in the country) and by lower supply volumes from other producing countries in the Southern hemisphere, including Peru.
Potato prices have, on average, fallen over the course of October (-2.5%) but there have been some major variations between varieties; red (-8.6%) and white (-2.9%) potatoes have fallen in price as have the Desiree (-2.9%), whereas most other varieties have increased- Maris Piper (+12.9%) and the King Edward (+17.1%). The Estima and Sagitta varieties offer you the best value for money this month (despite both also increasing in price). The UK potato is doing well, with over a 70% completion rate, and the quality of produce this season is generally good, and an improvement on those we saw last year. That being said, however, we are now finding that some growers are leaving part of their crops in the ground to allow them to “bulk up” and this has caused some divergence in the market over prices.
The quality of broccoli (+11.1%), cabbage (+7.7%) and cauliflower has improved greatly over the last few weeks, but prices are still on the rise. Other vegetables are performing well, with supply levels and product sizes returning to more expected norms. This can be reflected in the decrease we have seen of many vegetable prices; beetroot (-98.5%), brussel sprouts (-15.4%), leeks (-2.6%) and parsnips (-2.6%).
The price of tomatoes (-9.6%) has fallen following a good transition over to supplies from the Canary Islands and the Spanish mainland. Vine tomatoes, however, have gone up (+25%) this month. The price drops are being pushed by produce from Almeria, Morocco, where prices are below the minimum for EU Trade Agreements, and high levels of competition are making it difficult for these growers to recover and push their prices up. We predict that these lower prices will remain on the market for at least a few weeks.
The majority of the rest of the salad market is making a good switch from Dutch and UK supplies to Spanish supplies. We are seeing some delays in produce reaching the market, but due to good UK supply levels this should ease the move in terms of prices. The majority of increases in the salad market were cucumbers (+14.7%), iceberg lettuce (+1.22%) and little gem lettuce (+11.1%). It is the increase in price of iceberg and little gem lettuce that has stopped lettuce prices from falling more (-1.1%) as all other varieties decreased in price. The salad market, as a whole, is looking healthy, with prices predominantly falling, including the price of peppers (-27.2%), which fell considerably.

Meat & Poultry

Beef prices have gone down over October (-5.2%). It is expected, in the run up to Christmas, for beef prices to increase, and reports have suggested that with the milder weather conditions remaining, demand has not increased adequately enough to offset the ample supplies available and this will keep prices lower for the time being. We are predicting however, that with Christmas just around the corner demand levels will increase over the next few weeks, and this will create an upward pressure on prices.

Whilst these price decreases are somewhat normal for this time of year, cow beef has fallen the most (9.1%) this month which has also been driven by lower prices on the continent. The UK is a primary exporter of cow beef, and with the added downward pressure on prices on the continent, this has led to lower prices on the domestic market. An increase in slaughter volumes for cow beef (+7.1%) has also helped account for the price drops.

Looking ahead, drops in production levels being available for domestic consumption have been revised at a lower level than previous forecasts had predicted. Experts are, however, predicting a small increase in supplies come early 2014, due, in large, to a proposed increase in production and imports.

The price of lamb has increased this month (2%). This has been the same for the Republic of Ireland (4.7%) and the top 25 EU countries (+0.1%), but prices fell in France (-3.9%). The price increases in the UK can be partly accounted for by a reduction in supply (-15.3% in the number of slaughterings), while reports suggest that demand levels have been on the rise. We are predicting prices to rise further in coming weeks, but experts say the rises we are seeing now are not steep enough to signal the start of this year’s seasonal trend.
Pork prices have gone up marginally in the UK (+0.8%) and across Europe (+0.8%). These relatively stable prices are attributable to a well-balanced market, with slaughter levels up this month (0.5%) as well as year-on-year (+2.3%). Providing feed prices do not dramatically increase on a similar level to last winter, 2014 is expected to be a similar year to 2013, with good levels of sow slaughterings and carcase weights, which is good news for the pork industry.

In terms of trade, pork imports to the UK have been somewhat subdued this year, and recovery of this in 2014 will be modest at most. We do, however, expect out export levels to continue to grow and pick up next year. While we predict supply levels to be higher in 2014 than this year, these levels will still be lower than that of recent years.

The price of chicken has fallen this month (-0.8%), and they fell in Poland too (-0.9%). In other major chicken-producing countries however, prices rose (EU: +0.6%). Chicken prices, year-on-year, are up over 8%. Prices in recent months have stabilised to some extent, but as discussed in last month’s report, we are expecting these higher prices to stay with us until the New Year.
Turkey prices have gone up marginally in October, with fresh turkey prices increasing by 0.9% and frozen by 1.5%. Year-on-year we have seen price rises of between 7% (frozen) and 8.5% (fresh). The high feed prices from last winter impacted turkey producers hard, and the market never fully recovered as prices have remained high throughout 2013.

Dairy

The price of milk, at a farmgate level, has gone up 3%, and signifies an increase for the fifth consecutive month. That being said, the milk supply deficit we have been seeing in recent months is well on the road to recovery, and milk deliveries were up 8.9% year-on-year. This improved milk availability has also brought the price of bulk cream down (-2%).
Butter prices have primarily remained stable, with only 80% fat salted butter falling in price this month (-2.2%). We are seeing the PSA (Private Storage Aid) stocks hitting the market, but this is not alleviating the market regarding prices. Demand levels for butter have not dropped, and this is creating a tighter supply which has created this upward pressure on the price.
Eggs prices have varied this month, with extra-large (-6.25%), large (-6.25%) and medium (-5.88%) eggs all decreasing in price, whilst small (+6.7%) eggs and whole liquid egg (+6.1%) increased in price. These price changes mean it is now more economical to buy extra-large eggs than all other sizes (large eggs are the same price) as the smaller sizes are currently more expensive.

Cheese prices remained stable across October. While it has been reported that the improved milk situation has helped to rebuild stocks of mild Cheddar, most has already been contracted keeping unallocated stock levels lower, and the availability of mature Cheddar is reported to be even more scarce than for mild Cheddar. This could mean that these higher prices will remain on the market for some time.

Fish and Seafood

It is surprising to see an overall fall in the price of Norwegian haddock (-2.2%) with all the news in the media surrounding rising haddock prices. However, as we said last month, we are fully expecting prices for haddock to rise in the near future, and haddock caught in the UK has increased by just over 10% last month. This is due to the cuts in quota that are looming and the increases in demand that have come about as a result of this. This increase in demand is applying pressure on supply volumes, and pushing prices up.

Norwegian cod (+0.5%) has not been quite so volatile, and UK caught cod experienced a dip in price during mid-October, but have increased again (+6.1%) over the course of the month. Unlike haddock, the cod market is not being as greatly affected by the quota announcements and the balance between supply and demand is good.

Norwegian salmon (+19.9%) has increased significantly over October, based on spot pricing (3-6kg), whilst Spanish salmon (-5.5%) has actually fallen in price. The price increases for Norwegian salmon are partly due to a weaker NOK exchange rate which has pushed prices up, and more significantly, attributable to a sharp increase in demand levels which has been applying a strain on supply volumes and has resulted in an upward pressure on prices. The same rise in demand has not been felt in Spain, which has allowed the prices here to fall this month, however Norwegian salmon is still 15.7% cheaper.

Sardines have fallen in price during October (-24.2%) whilst anchovy (+8%) prices have risen. Anchovy prices are regularly volatile, and this new price increase is representative of this. Sardine prices have, however, been decreasing since the first week in September and we have not seen prices this low since mid-May. The continued recent decrease in price is surprising due to smaller fish sizes and reduced catch volumes, and we expect this to be reflected in pricing soon, with an increase in pricing emerging on the market.

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