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, provide recommendations on ways to mitigate price increases, and provide insight into 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

From September 2022, we have seen inflation reach 11.1%, then slowly and steadily decline to 8.7% before a sudden and unexpected drop to 7.9% during July. The recent focus on supermarkets and whether they were artificially raising prices has slowed overall inflation as increased scrutiny brought price reductions

When it comes to fuel and energy there is some good news at least. The energy price cap has been decreased from nearly £3,000 for a typical annual energy bill down to £2,074 for the same period, with further reductions expected in October that should take it below the £2,000 mark. Whilst the headline saving of nearly £1,000 won't impact everyone, the overall cost of Gas and Electricity is coming down, which will positively impact everyone, alleviating some of the cost stress that people have been suffering from.

Alex Gess Business Supply Chain Analyst Pelican Procurement

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The summer period is when most families look to get away. Still, with the increased cost of living and a reported rise in prices for holidays in the Mediterranean –Britain’s favourite holiday destination – there’s an expectation that UK-based holidays may increase in quantity this year, something that would be very beneficial to a hospitality industry that has felt the effects of first covid and then the costof-living crisis.

Climate Change

Thankfully, following this increased scrutiny, there have been some positive signs that food inflation is easing.

Sainsbury's bosses have reported that they are seeing the prices of goods coming down again but agree with Management at Tesco that we are unlikely to see prepandemic pricing return. Supermarket expectation is that by the end of this year, the current level of food inflation will halve from 17.4%. But this would first be seen with fresh food and later packaged and premade goods.

Another impact of the cost-ofliving crisis has been the increase in interest rates as the Bank of England has attempted to combat rising inflation. The current interest rate sits at 5%, and this increased rate will have the most significant impact on people’s repayments. Whether it be credit cards, loan repayments or renewing your mortgage rate, this new increased rate can have disastrous impacts on anyone struggling to cope with the increased fuel and food costs

7.9% 17.4%

We have been experiencing more unusual weather patterns in the UK and abroad, and these extremes are occurring more and more frequently. The UK experienced the hottest June on record, with highs of 33°C and averages of 15.8°C, which is a whole degree higher than the previous record.

Whilst we can all enjoy this improved weather in our own lives, it provides a problem to food growers and heavily impacts the wider UK economy. Firstly, crops are planned out ahead of time and planted according to growing seasons which are based on sunlight and rainfall. With both changing dramatically, it affects growth rates and final yields; it’s expected that disease pressure will remain high and more destructive weeds will need maintaining, both linked to the changes in temperature and rainfall. south. States like Florida and Texas are seeing record temperatures that significantly affect residents and workers in those communities and ignite fires in California. will influence surrounding markets and industries, the direct impact felt in the EU and UK will be minimal as we tend to export small quantities of goods from the region.

After a long period of struggle for farmers, with reduced processing and margins from Covid, to the massive increases in fertiliser costs, this is just the latest hurdle for growers as they report lower yields for winter potato and wheat crops which are now being harvested. This is expected to be repeated across many aspects of the UK farming industry.

It's not just crops that are being affected; reports have emerged that fish and insect populations have suffered, with higher than usual fish deaths reported in rivers whilst plants and crops wilt in the increased heat, leaving less food available. Both groups of animals are essential in a healthy ecosystem, and the UK is under much stress right now.

Around the world, the story is very similar. India, China and Pakistan have seen destructive flooding causing havoc with crop growth and displacing people from their homes and communities. Fortunately, we mainly import clothing and machinery from these countries so our food supply chain should not be too heavily impacted.

In the West, the US and Canada have been experiencing heatwaves and, more notably, the Canadian Wildfires that have raged since March. That longevity makes this the worst year ever for North American fires, and the smoke and debris from these fires have impacted air quality and the climate across much of the US. The extreme heat that started these fires has now spread to the

With a third El Nino event predicted to be coming before the end of the year, there is no expectation that these current trends or weather patterns will change or reverse. The last El Nino event was in 2016, still the hottest year on record. With global temperatures already higher than they were back then, it's expected that right up until the end of the year, we will be experiencing more extreme weather, both in terms of heat but also flash flooding and unexpected rains. The first evidence of this is the heatwave that is spreading across southern Europe, bringing with it record temperatures as high as 43°C in Spain, which will severely affect any agriculture in the area, including pig farmers who have to be wary of slower weight gain and heatstroke both affecting herds.

The first significant commodity to notably suffer from this heat have been Olives and Olive Oil. With the majority of European crops coming from Spain and Greece, and both these countries seeing consistent 35°C - 45°C, not only are the trees and fruits suffering in the dry conditions, but pickers and processors are unable to work normal hours in the heat. There is further disruption expected to crops like corn or maize, grapes and citrus fruits

Global Markets

Global markets have been particularly volatile since our last report. Continued fighting in Ukraine was briefly overshadowed by a potential rebellion that led back to Moscow before fizzling out. Towards the end of June, we again saw fierce fighting in Israel and the West Bank. Whilst the conflict in Israel

The Russian rebellion and progress with the Ukraine counter-offensive have impacted EU and UK markets more Thankfully, we are not seeing increases in energy, which was the first impact of the initial war Still, the latest developments around the Black Sea Grain Agreement mean that we should expect wheat and sunflower oil prices to begin to creep up again This is because Russia has announced that the agreement is at an end, and they will look to attack any commercial vessels in the Black Sea region, making transporting goods once again challenging. Combined with the Olive Oil shortages mentioned previously, we can expect another increase in the pricing of cooking oil in general, although hopefully less impactful or surprising this time around.

+12%

Increase in the price of Sunflo wer Oil in 1 week

Up to this point and despite the active conflict, market stability has resulted in a reduction to fertiliser pricing and an improvement to grain availability, two things which directly and positively impact farmers, both livestock and produce It remains to be seen how much of an impact the latest developments will have, but the expectation is that if the component parts to fertiliser in particular are once again going to go up, then the end product also will, putting farmers in a repeat position of the 2021/22 season.