The outlook for food commodities is mixed. The increases in one area are, overall, being offset by decreases in another which is leading to a relatively settled picture, certainly in comparison to recent years.
This is not to say that there are not a few commodities changing significantly year on year. Dairy prices are high, and sugar prices will be lower. In previous years, we have seen underlying factors cause significant increases, almost unilaterally. For example, unprecedented increases in freight costs or energy costs affect the wider market, rather than just individual categories.
It does seem that agricultural commodities are never too far removed from geopolitical issues.
Many of these issues remain, but commodity markets are generally learning to cope and deal with them. However, the danger remains with unexpected shocks to these markets that haven’t been factored in or are not yet known.
At a macro-level, the overall UK inflation level in September was reported at 1.7% which is the lowest rate in three and a half years and falling below the UK Government’s 2% target. At the time of writing, the recent budget announcement is likely to cause labour-related increases from April next year as employers deal with the National Insurance increase, plus the knock-on effect of the rise in the national living wage, which could impact food production.
Exchange Rates
US DOLLAR EXCHANGE RATE
£1.00 TO $1.30
As of October 2024, the GBP has weakened against the U.S. Dollar (USD), with the exchange rate around 1.305 USD per Pound. This decline is influenced by the UK’s slowerthan-expected economic growth, post-Brexit uncertainties, and a cautious approach from the Bank of England regarding interest rate hikes.
The U.S. Dollar has strengthened due to the Federal Reserve’s aggressive interest rate increases and strong economic performance, making USD-denominated assets more attractive to investors. This dynamic has further pressured the GBP.
EURO EXCHANGE RATE
£1.00 TO €1.19
The GBP has been performing steadily against the Euro, with fluctuations largely driven by economic conditions in both the UK and the Eurozone.
As of mid-October 2024, the GBP/EUR exchange rate stands around 1.195, marking a slight decrease compared to earlier highs of 1.203 seen in early October. The Pound has generally been trading between 1.19 and 1.20 throughout the past few months.
Several factors have influenced this performance. In the Eurozone, weak economic data, particularly from Germany, and expectations of more aggressive interest rate cuts by the European Central Bank (ECB) have weighed on the Euro.
Energy
The 10% increase ‘Energy Price Cap’ came into force in October, with a typical household now paying £1,717 per year. This is in place until 31st December 2024, however, experts are predicting a 1% increase for January 2025, taking the price cap to £1,730 per year. Whilst the increase is never welcome, it is still a small saving on the Price Cap for the same period in 2023, which was £1,834 per year.
It is too early to make firm predictions on what will happen for the rest of 2025, however, Money Saving Expert has provided predicted ideas below:
Energy Price Cap - confirmed changes & future predictions
Shipping
Global freight costs have fluctuated significantly over the past two years. There have been lows of below $1400 and highs of $6000 (per 40ft container). The current level is just over $3000 but has fallen continuously since the summer. Interestingly, the current rate remains 126% higher than the pre-pandemic 2019 levels of $1420.
Global container freight rate index from the 12th January 2023 to the 10th October 2024
1
Fuel
The decrease in price is being attributed to the continued reduction in the cost of oil, which is around $72 a barrel versus the $90 a barrel in July.
A litre of unleaded petrol averaged 134.69p and a litre of diesel to 139.63p which is a huge saving since May, of 15.5p and 18.5p per litre respectively.
Fuel duty has been frozen in the recent budget which is also seen as a positive to pricing.
“With analysts predicting oil may continue to fall on the back of a weakened global economy, and Saudi Arabia upping its output to regain lost market share, the immediate future on the UK’s forecourts looks considerably brighter for drivers”.
Simon Williams, Head of Policy at RAC
Source: RAC Fuel Watch
CONTINENTAL CHEESE
Key Commodity Pricing
FRUITS (CANNED & FROZEN)
FRUIT JUICES
DRIED FRUIT & NUTS
COCONUT MILK, OLIVES & CAPERS
RAPESEED, SOYA, SUNFLOWER & PALM OIL
OLIVE OIL
MILK
Milk prices are historically high, driven by low supply levels across Europe and strong demand for dairy products. It remains to be seen whether this continues, particularly as there has been a slight softening in some wholesale dairy markets in recent weeks. Some experts predict that the market cannot sustain a further milk price increase as we head into the Winter period.
Dairy farmers receive Autumn uplift as prices near 45p/litre
BUTTER & CREAM
In recent weeks, butter and cream have shown signs of slowing down. Both dropped back slightly but have since shown a slight upturn in the last couple of weeks.
What we do know is that European butter futures for Q1 are around €7000 per ton, which is lower than the current €7700, perhaps indicating a bit of a drop to come in the New Year.
The caveat to this is that cream prices are still high, and manufacturers claim it is more profitable (as well as helping cash flow) to produce cream than butter. In addition, this is all before the Christmas demand surge.
With that said, a post-Christmas drop-off in cream demand could support a butter reduction, however, there are many factors to contend with first.
“The outlook for price changes in the next three months, at least, is extremely favourable, with the fats market in particular at record-breaking levels”
Soumya Behera, Senior Dairy Analyst at AHDB
CHEDDAR & MOZZARELLA
Mozzarella prices have begun to drop in Europe but remain firm in the UK. We should know soon whether this means a drop will come to the UK.
What we do know is that prices have risen significantly since September, so even any price reductions (if they happen in the UK), would probably only put it back to where it was previously.
The Italian Consortia govern the sales and value of products sold and exported from Italy
ITALIAN CONSORTIA PDO
Cheddar is more stable with a game of cat and mouse between sellers and buyers, keeping the price moderately flat. Bulk prices are around £4300 per ton on mild cheddar. It is worth noting that year on year this price is 31% higher than the same point last year (£3290).
The UK has had a strong Summer with uplifts in the volume of Italian cheese. This is managed by price and availability by the consortia. We would expect to see this reduce in Q1, however, we have seen a 0.50-0.60 euro cent per kilo increase across all Italian hard cheese this quarter. On some products, it starts to look favourable to use more premium options such as Parmesan, which can often command a higher price.
SHEEP & GOAT PLAGUE
The cull of animals across Greece is nearing 20% of the farmed stock. This is causing an impact on yield for farmers. In addition, there is a strain on resources outside of Greece to ensure the supply of non-PDO products, while the Greek supply is covering off PDO Feta and other governed lines.
EGGS
Several factors are driving the egg price increases:
Recent bouts of Avian Flu
Cost of feed increased by over 50% due to Ukraine war
Ever-changing energy prices
4 million shortage of birds Vs 2023
“Value and branded lines lead latest round of egg price increases”
Meat & Poultry
PORK
The pork market is poised for a challenging winter in 2024, with limited production growth expected and a breeding herd still recovering from recent declines.
Pork production is forecasted to increase slightly by around 0.6% year-on-year. This comes after an 11% reduction in 2023, as the industry faced reduced herd sizes and high costs of production.
Key pressures include high input costs, particularly feed, although these have eased somewhat due to declining wheat prices. Soya remains expensive. Market conditions remain uncertain due to high inflation and the cost-of-living crisis, which could suppress consumer demand for pork. Additionally, while there is some optimism in producer margins, expansion of herd sizes is expected to be minimal, with many focusing instead on herd rejuvenation rather than large-scale growth.
UK imports of pork are likely to rise by about 3% in 2024 to meet domestic demand, and exports are predicted to grow by a modest 1%. The industry will continue to track developments in the EU market to stay competitive, especially given the tight supply outlook across Europe.
TURKEY
Demand for turkey remains strong, driven by the upcoming season, but the market has faced challenges.
Supply Chain Disruptions
Influenced by both rising input costs and labour shortages, these disruptions continue to affect production capacity. Turkey imports, particularly from Poland and Germany, remain significant to meet demand with Poland being the largest supplier to the UK.
Avian Flu
Outbreaks in Europe have raised concerns about potential supply constraints, which may result in higher prices for consumers.
While imports have shown resilience, local production has seen fluctuations, with turkey production decreasing slightly in recent years. Despite this, overall turkey meat imports rose in 2023, suggesting continued reliance on foreign suppliers. Price volatility has been moderate, but there may be upward pressure due to the ongoing effects of inflation on feed, transport, and processing costs.
The market will likely experience some price increases due to supply chain challenges and possible disruptions from avian flu outbreaks across Europe.
CHICKEN
The fresh and frozen chicken market is experiencing key trends influenced by demand, consumer preferences, and logistical factors.
Fresh Chicken Market
The price of fresh chicken has seen fluctuations due to:
• Inflation
• Rising feed costs
• Supply chain disruptions
Ongoing consumer demand for organic, free-range, and high-welfare chicken options is pushing premium market segments forward. Fresh chicken prices have increased by around 1.8% compared to last year.
Frozen Chicken Market
The price of frozen chicken is rising more notably, with a 15%-20% increase due to:
• Demand for convenience
• Inflation
• Rising energy costs
• Outbreak of Newcastle disease
Demand for fresh chicken remains stable, driven by health-conscious consumers who prefer lean protein and is perceived as healthier and more natural.
The recent Newcastle disease outbreak in Brazil is making suppliers nervous about lowering prices and buyers are unsure about buying Brazilian-origin chicken, which is a key player in the frozen market.
BEEF LAMB
The UK beef market in winter 2024 is expected to experience relatively stable production, with beef output forecasted at 903,000 tons, only a slight increase of 0.3% compared to 2023. However, domestic supplies are anticipated to tighten in the longer term due to a 2% reduction in the UK breeding cow herd, which could lead to constrained production moving into 2025. Slaughter rates for prime cattle are expected to increase by 1% this year but drop by 3% in 2025, further affecting supply.
Prices in the UK beef market are likely to remain elevated, supported by strong domestic demand and high prices in key European markets like Ireland. On a global level, prices have diverged between the northern and southern hemispheres. While US production reductions are propping up prices in the northern hemisphere, increased beef production from Brazil and Australia is placing downward pressure on southern hemisphere prices.
Despite these supply pressures, beef imports into the UK are expected to grow by 4% in 2024, driven by a competitive global market, while exports are also projected to rise by 2%.
Beef prices historically high due to higher costs for wholesalers and suppliers as global factors converge
The UK lamb market in winter 2024 is seeing firm but volatile pricing due to several global and domestic factors.
• Reductions in lamb production in the UK and New Zealand
• Decreased domestic slaughter rates
• High feed costs
• Drought in key producing regions
• Increased transportation costs
Supply constraints and weather-related challenges are expected to maintain pressure on lamb prices throughout the winter. In addition, ongoing economic uncertainties and inflationary pressures are affecting consumer demand and production costs across the meat industry.
Fish
COD & HADDOCK SALMON
Russian-caught Cod processed in China is still on the rise and is showing no sign of slowing down. Whilst Norwegian Cod had a slight decline, pricing is increasing once again, with reports stating an all-time high in week 40.
Norwegian H&G cod prices hit alltime high, Russian rising fast
Experts say that due to the decreased Cod quotas for 2024, the previously cheaper Russian-caught fish is now scarce, pushing up the price of the already more expensive Norwegian variety.
The news is not good for Haddock either…
Norwegian Salmon pricing remained reasonably flat in the last quarter; however, prices are starting to rise again as Norwegian Salmon stock is at an all-time low. Stocks are so limited that Norwegian authorities have introduced new restrictions on Wild Fishing, shutting down 33 rivers and sea waters along Norway’s Southern Coast.
Growth in Sea Lice, in Norway’s production areas, is also contributing to the increase in price.
Norwegian salmon industry grappling with high lice loads, biological struggles
TUNA
Tuna prices have jumped up in the past 4-8 weeks with prices increasing around $150 per metric ton.
Despite this, raw material prices remain reasonably low versus the previous 3-year average and despite the strength of the Pound versus the Dollar weakening a bit in the last 4 weeks, the Pound remains much stronger than a year ago. This will support the price of delivered Tuna into the UK, with most of the tuna into the UK generally purchased and traded in Dollars.
COLD WATER PRAWNS
Whilst pricing saw a small increase in the previous quarter, it looks like there could be another rise in the market, with reports of raw material shortages. As the UK and the EU are dependent on shrimp imports, it looks like increased pricing is on the way.
We are yet to see the impact of the new Greenland Fisheries Act, due to come into effect in early 2025. The first revision of the Act since 1996 sets out individually tradeable quotas for the Inland fisheries, but quote caps for the offshore fisheries. There is also the introduction of a 5-year resident requirement for fishermen.
Shortage of single-frozen Coldwater shrimp drives shifts in trade
Fruit & Vegetables
FROZEN & CANNED FRUIT
Frozen fruits have seen significant increases due to:
• Climate change and extreme weather
• Labour shortages
• Supply chain issues
• Increased demand
Over the past 12 months, we’ve seen a 12% increase across the frozen fruit market. There are no signs of this slowing down, especially as most of the above causes are unlikely to end anytime soon.
Canned fruits follow this trend and have seen more than 8% increases over the past year. The only thing that is slowing down the increase is that the demand is generally more stable for canned varieties.
Pineapple is also on the increase. In the area of canned fruits, pineapple generally seems to be going through regular fluctuation pricing cycles.
In 12 Months
COCONUT MILK
Coconut has seen a gradual rise this year. Add this to the freight issues bringing the product from Thailand to the UK and it will mean exaggerated increases.
OLIVES & CAPERS
Throughout 2024, there has been a known shortage of capers which has resulted in some businesses pulling supply from the market. The issues with the drought in Morocco have impacted this, as well as olives.
We are hoping for better news in 2025, but it has forced companies to look at different origins moving forward.
POTATOES
The 2024 European potato harvest has been interesting as everything started late, causing nervousness in the market.
Plantings were late which means potatoes being lifted out of the ground were a lot later than usual. With that said, now that crops are being harvested, we are seeing an ‘ok’ crop.
Overall, pricing is pretty flat year on year. Producers have taken different strategies depending on their concerns about where raw materials would go. Some producers have since had to retract slightly on their original positions.
There is one positive for the future. Factories are investing in greater capacity in what is a growing category. This means that pricing is not just driven by raw material and cost, but also by capacity and how much producers want to fill their new production lines.
Frozen potato market poised for significant growth as global demand surges, new report reveals
Grocery
SULTANAS & RAISINS FRUIT JUICES
THE 2024 CROP HARVEST IS 98% COMPLETE IN TURKEY
Even with a shorter crop, the harvest has taken longer than expected due to the heavy rainfall. At the start of September, the first rain was in the form of floods and occurred in the whole area of crop harvest. The second rain lasted for 7 hours and occurred only ten days later. The fact that these two rains happened in the whole raisin planting region, and caused floods in some places, had a very negative effect on the quantity and especially the general quality.
We expect 2025 to suffer yet again when it comes to sultana and raisin pricing. Not only Turkey, but China has been facing issues with their crop and adding to the freight conditions over the previous months. China is limiting the supply of these products as they are not confident they can fulfil all stock requirements.
It will not be a good year for fruit juice prices, specifically orange and apple juice.
The long-standing issue with orange juice continues as manufacturers conclude raw material contracts at very high levels. This now gives an element of certainty around pricing moving forward. Many manufacturers have switched to blended products to bring the overall cost to a more reasonable level.
Apple juice raw material has also risen over 40% year on year, with lower availability and a short ‘fresh’ market. This means juice processors are having to fight (and pay) for all the raw material that they want, also exacerbated by the high prices of orange juice.
Citrus greening disease: Orange prices more than double
WHEAT
The UK wheat and flour market for winter 2024 is influenced by several global and local factors, contributing to price fluctuations and supply uncertainties. Although the market softened earlier in the year, a slight recovery in wheat prices is expected in late 2024 due to low global stock levels and rising demand.
Geopolitical tensions, particularly between Russia and Ukraine, and the potential for further disruptions to wheat exports from these regions.
Weather conditions in major wheatproducing areas like the EU and the US could impact supply levels.
Global production in the 2023/24 season is robust but slightly lower than last year’s near-record levels.
In the UK, wheat supply has been strong, which has somewhat mitigated local price pressures, but flour prices remain sensitive to shifts in the global wheat market.
On the positive side, falling fertiliser costs have helped boost yields globally, although the market remains vulnerable to sudden shocks.
Grocery
RICE
The rice market is expected to face significant volatility due to several global factors:
• Climate disruptions
• Export restrictions in major riceproducing countries like India and Pakistan
• Adverse weather conditions in Southeast Asia causing strain on production capacities in Thailand and Vietnam.
India, the world’s largest rice exporter, imposed an export ban on non-basmati rice varieties, due to domestic inflation and food security, which is likely to keep global rice prices elevated into 2025.
These factors have reduced global rice supply, contributing to rising prices in international markets, and the UK’s reliance on imports means these pressures will directly influence local pricing.
For wholesalers and suppliers in the UK, the cost of rice is projected to increase substantially through the winter, with potential spikes of up to 10-15% depending on continued export policies and weather patterns in key growing regions.
SUGAR
Bearish global sugar markets and increased supply have weighed on prices across Europe throughout 2024. A global surplus is forecast by traders for next year and into 2026, based on current crop conditions, which has dampened market sentiment. The sugar beet crop in the UK returned to more normal levels, after a reduced crop last year.
Associated British Foods, the parent company to British Sugar, noticed a sharper-than-expected fall in UK and European sugar pricing due to an increased supply in the market.
Falling global sugar markets put pressure on domestic prices
COCOA
Ivory Coast and Ghana are two major producing regions, which account for two-thirds of global cocoa production.
The Cocoa market is expected to face significant challenges, primarily driven by global supply issues and price volatility. The price of cocoa surged, with prices hitting record highs of over £10,000 per ton. This represents a significant increase compared to early 2023, when prices were closer to £1,900 per ton.
The price spike is largely due to adverse weather conditions, crop diseases, and supply shortages in major producing regions.
Additionally, the European Deforestation Regulation (EUDR), set to take effect in 2025, is pushing up production costs as farmers adapt to stricter sustainability standards. Political tensions and speculative activity in global markets have further exacerbated price increases.
On the demand side, the growing appetite for chocolate in emerging markets, such as China and India, has contributed to the upward pressure on prices.
We have recently seen a drop in prices albeit still much higher year on year. It looks like cocoa simply became too expensive and this demand drop and possible sell-off from speculators means that we expect next year we should hopefully see a drop in finished goods prices.
OIL EDIBLE OILS
RAPESEED, SOYA, & PALM OIL
Rapeseed and soya prices are stable; however, palm oil has increased significantly this year.
Palm Oil is one of the raw materials in the scope of the EUDR (EU Deforestation Regulation), which looks as though it will be delayed until the end of 2025.
The industry has been preparing for Palm Oil sourcing to become more sustainable and for producers to be able to prove that the production of these raw materials has not led to deforestation in the affected areas. Of course, this is easier said than done and the expected delay is to ensure the supply chain is geared up for the change, for it to be effective.
However, it does mean further uncertainty from a pricing perspective moving forward. Of course, rising palm oil prices can also lead to a knock-on effect on other edible oils.
OLIVE
Pricing is expected to fall. Whilst it is not clear by how much, Spain and Greece are both expecting better than average crops, which would support lower European prices.
One concern is that if pricing drops significantly, it has the potential to create a peak and trough situation from year to year based on demand and capacity. European retail demand will also be a key factor in the overall mix.
Olive oil prices to finally fall as Spain expects bumper harvest
Drinks
TEA
Global tea production is under pressure from climate-related disruptions in major tea-growing regions.
Droughts, Floods, and Unpredictable Weather Patterns in India, Kenya, and Sri Lanka
Political Instability
Reduced Yields
The following have led to price volatility for both raw tea leaves and processed tea, potentially leading to price hikes in the UK market.
Currency Fluctuations (specifically USD)
Increased Cost of Energy, Transportation and Labour
Increased Raw Material Rrices
COFFEE
The UK coffee market for winter 2024 faces significant volatility due to global supply chain disruptions and shifting market dynamics. Demand for coffee remains robust, but several world factors are contributing to rising prices, particularly for raw coffee beans.
Adverse weather conditions in major coffee-producing regions, including Brazil, Colombia, and Vietnam, are significantly affecting supply. Brazil, the world’s largest coffee producer, has experienced droughts followed by frost, severely impacting crop yields. These disruptions have led to a sharp increase in coffee prices versus 2023, with prices continuing to fluctuate through 2024
Global pressures mean that coffee prices will likely remain elevated throughout winter 2024. Higher raw material and import costs are expected to be passed on to consumers, resulting in increased prices for both retail and foodservice sectors. Despite these challenges, demand for speciality and sustainable coffee products remains strong, with some growth in premium and ethically sourced coffee products.
We are seeing major brands increase their prices on the back of this.
2024.
Non Food
PLASTIC
Polypropylene (PP) has increased since the start of 2024 and globally it looks like it will continue as per updates provided this month. The main cause of recent spikes has been rising crude oil prices, but the prediction is that prices will steady in 2025. PET prices have steadied all through 2024.
Polypropylene (PP) prices march higher in Far East Asia and Southeast Asia
ALUMINIUM
The benchmark London Metal Exchange (LME) aluminium contract increased 1.2% to a near four-month high of $2,680 a ton. Prices are expected to make further gains due to those with short positions scrambling to cover. This will be a ‘wait and see’ situation.
LME monitors tightness in aluminium market after the spike is spread
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