Welcome to the Market Report

This report aims to provide you with information on what’s happening in the marketplace and the key factors affecting supply and product availability. We look at key commodity price trends and provide recommendations on ways to mitigate price increases and we provide insight to what produce is in season, guiding you to what’s best right now We hope you find this report helpful.

Market Conditions

Cost of Living

The recent announcement in the Spring budget that the energy assistance payments that we received over winter would be stopped This was not surprising and somewhat dampened by the announcement that the Energy Price Guarantee will be held at the previous level of £2,500 rather than increasing as had been reported throughout winter. This is largely due to the fact that costs of Natural gas had decreased by 50% during this period and that UK stores of gas were above a 90% threshold

Good news from the budget announcements came in the form of cash payments to low-income households, a reported 10% increase to benefits and pensions as well as the National Living Wage being increased. These measures were introduced to directly target those most vulnerable individuals and families.

The latest concern is the cost of housing and rental increases being seen across the country. With interest rates consistently going up - they have more than doubled from 2% in September 2022 to the current rate of 4.5%as well as rental properties increasing by the same or higher percentage, many families are worried about housing, both the cost and availability of it. It is hoped that the inflation rate will stabilise and eventually begin to recede as we see a decrease in the production costs of fuel, fertiliser and feed which filter into almost every aspect of the supply chain.

Alex Gess Business Supply Chain Analyst Pelican Procurement

We’re here to help you. hello@pelicanprocurement.co.uk

Weather

Despite the recent 5% increase to the cost of oil after OPEC+ decided to cut the amount of production once again over fears of the price being too low, the costs of oil and its subsidiary products, of which there are many, has steadily been decreasing.

We have seen a small reduction in the pricing of petrol and diesel at the pumps, but these reductions should be having more of an effect in the processing of products and the transportation of goods. With these costs reducing it is expected that these savings can be passed onto the consumer, much in the same way the price increase are, and this will help combat not only the rising interest rates but also the historic levels of inflation we have experienced.

Despite a very icy and cold period during December we were all pleasantly surprised by the milder winter weeks we experienced as it meant our energy bills (most notably our gas bills) were much lower than was feared and any notion of energy rationing was swiftly dismissed. Whilst this is undeniably a boost to households at a time when they most need it as the cost of living continues to increase it is also an indicator of a wider issue.

The regions and environments that we have relied so heavily upon for produce and proteins are changing, largely due to the dramatic changes in weather and climate we have experienced. In one year, we had the lowest winter temperatures for more than a decade, the hottest summer heatwave we have ever experienced and the most devastating storms we have seen for nearly ten years. Extreme weather both in the UK and across the world is becoming more normalised but it is causing a host of issues throughout the supply chain.

The most recent example of this is poor weather conditions affecting Morocco and Spain and having a direct impact on the availability of tomatoes, peppers and cucumbers among others. The yields of the produce grown in this region was disrupted by flooding and colder temperatures throughout the year, whilst the process of shipping the goods was delayed due to high winds and rough seas, resulting in a spate of social media posts about the lack of available vegetables.

In reality, produce was still available often at smaller and local retailers but at very high prices, prices that many supermarket chains were unwilling to pay and so until they had sourced an alternative the shelves were more empty than usual. This situation has now improved but we should expect more of these types of shortages.

Global Markets

Markets across the world are impacted by this change in weather and climate, not just those directly tied to the UK. China and Pakistan experienced horrendous flooding last year that cost thousands of lives in addition to lost production and delayed transportation of key goods into domestic and international markets. Hurricanes and storms disrupted travel across America and Europe respectively, restricting supply chain efficiencies.

and the recovery associated afterwards. As we have touched on this extreme weather is going to become more and more frequent and so the impacts on the supply chain will continue to become more severe as well as a plethora of bank holidays throughout April and May During April, we will be celebrating the Easter Holiday, Ramadan the Muslim festival and Passover of the Jewish faith. These events bring people and communities together in celebration and remembrance. As people spend more time out with families and friends it’s hoped that hospitality can capitalise not only on this widespread feeling of joy and togetherness but also the excitement and anticipation for a long awaiting Spring/Summer

As we move past the first year of the war in Ukraine, we have seen huge fluctuations in cost and availability for staple goods such as wheat, corn and vegetable oil and these changes have been tracked and well documented.

It’s not just the immediate impact that closures, delays and even loss of life causes, but the longterm impact of such disruptions

Now with the establishment of the Black Sea Agreement and trade routes, as well as the fall in price of both Oil and Natural gas, most of these initial issues are abating and we are seeing some return to normalcy. Natural gas is a main component in many nitrogen-based fertilisers that are widespread in agriculture and as the demand for and price of this gas goes down so does the cost to farmer of their fertiliser. This will obviously have a more direct impact on those arable farmers producing crops but will also positively impact livestock farms as the price of feed begins to decrease. One of the main uses for the wheat and corn is in animal feed and so with consistent high-quality supply coming through, prices have been steadily decreasing and livestock farmers can once again afford to feed and house their animals in the standard ways. There is some hope this will lead to herd sizes increasing again and yields increasing across all UK farms.

Spring Holidays

In what could be a timely boost to the UK economy, we see three hugely important religious festivals taking place in and around the same period this year

The Easter Holidays are well known for increasing the spend in pubs and restaurants with the bank holidays being a particular favourite and with a total of five bank holiday days during April and March we really expect consumers to be out with their friends and families, enjoying some springtime sunshine as well as good food and drink.

Whilst it has been one of the mildest winter periods on record for a decade the seemingly relentless rain, wind and dark skies are hopefully coming to an end as we fully embrace spring and all the delights it brings. We go into more detail about what the spring months can provide in terms of seasonal produce that will both engage and excite potential customers, whilst ensuring margins are kept positive and availability is always there.