o Key commodity updates
o Cost of living update
o Global supply chain news
o Weather conditions
o What’s in season
Welcome to the Market Report
In this report, we provide the latest commodity market updates gathered from impartial market research, reliable news sources, and our team of supply chain experts.
We cover key price trends and recommend ways to mitigate price increases. We also look at product availability and what produce is in season, to help inform your purchasing.
Market Conditions
COST OF LIVING
In June, good news emerged as the inflation rate dropped to 2% in the UK.
This is the lowest rate in nearly three years and hits the government's target after the steep rises at the end of 2022, and it is hoped that this stability will offer consumers more financial security.
Rate of inflation after repeated drops in 202 4 2.0%
Other positive indicators include rising property prices and wage increases in May, alongside an adjusted GDP growth forecast of 0.5% for the year, up from 0.1%.
Retail sales also showed signs of recovery, with a 2.9% increase in May and a 1% rise over the past three months. Online shopping surged by 5.9%, suggesting improved consumer confidence.
Despite these positive trends, the Bank of England kept the interest rate at 5.25%, the highest in years. Many were surprised by this decision, but if the economy continues to improve, there is hope for a rate cut in August.
Alex Gess Business Supply Chain Analyst Pelican Procurement
We’re here to help you. hello@pelicanprocurement.co.uk
The hospitality sector in Britain and Ireland saw a boost from international football after a slow Easter period. Pubs, restaurants, and bars benefited from increased spending, and with the summer weather, there is hope for continued growth.
The industry, which has struggled since COVID-19 and Brexit, needs a strong summer with events like international football, global tours, concerts, and festivals to capitalise on this momentum.
CLIMATE CHANGE
The weather has noticeably changed over the past few years, with spring feeling wetter and windier and summer heat not arriving until late June.
Surprisingly, despite the grey skies and high winds, May and the spring period were the warmest on record in the UK and Ireland. This period also saw higher-than-average rainfall, highlighting the increasing extremes in weather.
The unpredictable weather conditions are significantly impacting farming operations in Britain and Ireland. The wet ground has made it nearly impossible to use vehicles on
the land, leading to delays in planting. British potatoes, in particular, have been severely affected, prompting farmers to seek government assistance due to delays in lifting the 2023 crop and planting this year's.
While production and storage costs are decreasing in line with inflation, the weather remains the primary cost driver, significantly affecting yields and profit margins.
The production of common British crops like wheat, barley, and potatoes is expected to drop by 21% compared to the average of the previous decade.
It's not just domestic weather changing; major export countries have also suffered over the past 18 months. In 2023, the Mediterranean experienced record-high temperatures, impacting the region's production of citrus fruits, tomatoes, and olives.
These climate changes have led to altered planting seasons, lower crop yields, and increased prices for imported goods. This is particularly concerning for the UK, which relies heavily on such imports.
GLOBAL SUPPLY CHAIN
Weather changes and political unrest continue to disrupt the global supply chain, and this trend is expected to persist throughout 2024.
Both major global shipping canals have faced significant disruptions for over six months. Traffic through the Suez Canal has dropped by 50% due to attacks by Houthi rebels.
With the ongoing conflict in Palestine, normal shipping patterns are unlikely to resume soon. These disruptions have led
to increased voyage times, higher insurance and fuel costs, and a need for more vessels to transport the same volume of goods.
The Panama Canal has also faced disruptions, this time due to natural factors. Poor rainfall and drought in Central and South America have kept water levels too low for normal shipping operations.
This particularly affects grain transport ships and deepbottomed container ships, as the low water levels mean there are adjustments to the weight, size and load restrictions ships must adhere to. Experts predict these delays could persist throughout 2024.
Several developments have impacted global exports. In May, the UK government banned the export of live animals for further fattening and slaughter due to animal welfare concerns.
This policy change, affecting up to a million animals at the trade's peak, may increase processing costs and impact export levels, though the long-term effects are yet to be seen.
Adjustments in exports from Asia, particularly India and Thailand, have also been made, which will be discussed in relevant categories below, but generally appear to be positive.
Conflicts in Ukraine and Palestine show no signs of resolution, with continued hostilities reported in both regions.
The ongoing war in Ukraine, including a Russian spring offensive and a predicted Ukrainian summer counteroffensive, directly impacts the UK. Reduced grain and sunflower exports and shipping restrictions have added to the global supply chain challenges
ELECTIONS
2024 is shaping up to be a significant year for elections, with numerous elections across Europe and the highly anticipated American election at the end of the year.
The outcomes of these elections will undoubtedly create disruptions in the supply chain. The industry must be prepared to adapt to new policies and changes in demand that will arise in the aftermath.
Key commodity tracking
Non-Food
Brazil – UK
US – UK
Shipping; Vietnam – UK
Source: Mintec Analytics 24/06/24
Key commodity updates
MEAT
The UK Beef market has experienced consistent price decreases since March, with a -2% drop from last month. This decline is supported by a +2% increase in slaughter rates compared to 2023, positioning the market better than last year.
Retail demand for cheaper cuts has risen, driven by the upcoming grilling season and families' financial constraints.
Lamb prices have steadily increased since the spring, partly due to weather issues. Wet weather meant fewer grazing opportunities and fewer healthy lambs. This reduced supply meant prices dipped slightly after Easter but have seen an overall +2.7% increase in the last quarter, expected to hold through the summer.
Recent measures show a -0.4% price change over the last three months.
The upcoming BBQ season drives high pork demand and will test this stability. Higher production rates and increased slaughter weights and rates suggest the industry is recovering post-COVID.
Beef vs. last Quarter -4.1%
However, this positive trend may end, as recent weeks have shown a +0.1% price increase and growing demand for BBQ cuts.
Additionally, there is mild concern about the Blue Tongue disease affecting UK herds, with farmers advised on precautions and procedures.
Following the implementation of the new Australian trade deal and reports of a boosted herd size, we can expect an increase in the amount of Australian lamb and sheep meat imports.
Australian lamb production has increased by +4% and has hit a 10-year high in the process, with the slaughter rates also expected to grow by +5% before the end of the year.
Pork pricing has stabilised for the first time in over two years. Since the start of 2024, prices have remained largely the same despite being higher than pre-March 2023 levels.
Recent increases in feed, fuel, and fertiliser costs have affected all three proteins beef, lamb, and pork. Global conflicts, weather changes, and shipping disruptions may further impact these key inputs in the short term.
Chicken supply has been tight for the past 18 months due to Avian Flu, but this is less of an issue with six months of virusfree flocks. Current constraints include increased border scrutiny, delays due to European holidays, higher demand from BBQ season and international football, and reduced supply from South America. This has led to a +3.5% price increase in the last month, with expectations for continued rises.
Eggs have been impacted by Salmonella contamination in imports from Poland, and an announcement that poultry and eggs from Ukraine will remain tariff-free for two more years. Despite EU export restrictions, this ensures a steady UK supply. The Salmonella issue is mainly contained, resulting in a -5.6% price decrease over the last month.
FISH
The white fish market has experienced significant
volatility since the invasion of Ukraine. Cod, Haddock, and Pollock, traditionally sourced from Russian waters, have been affected by recent sanctions. Despite these sanctions, around 9% of fish consumed in the UK still originates from Russia.
This has increased reliance on Norwegian whitefish, which, while generally of higher quality, is also more expensive. Consequently, there has been a prolonged period of price fluctuations. Currently, prices have improved by -11% and50% from the previous month, but this decrease is expected to be temporary. Lower summer demand for fish, as consumers turn to BBQ meats, has supported this price decrease.
Salmon prices typically dip in summer due to increased demand for barbecue meats before rising again towards the festive period. This pattern is evident this year, with a 10% decrease in a single month.
Prices began falling after strong Easter demand and are closer to late 2023 levels. There have been concerns about the health of Norwegian
fish farms, with reports of increased parasites and diseases throughout 2023, but this has not had a lasting effect on market supply.
The UK is among the top 10 countries globally for Tuna imports, reflected in a 100% increase in canned tuna sales over the past five years. Almost all the tuna consumed in the UK is imported, making prices sensitive to shipping and fuel costs. Recently, prices for Skipjack tuna from Asian waters have dropped by more than -17% compared to last year.
Sustainability concerns and catch rate regulations heavily influence the fish market. Consider alternatives to popular species to manage costs without sacrificing quality or taste. For example, halibut is an excellent substitute for haddock, and pollock or mackerel can be used in fish pies.
DAIRY
In our last report, we highlighted the challenges in the dairy industry, where Milk yields fell below targets and the previous year's total yield.
This was mainly due to smaller herds, increased costs, poor weather resulting in less grazing time, and more illnesses and viruses among cows, exacerbated by wetter weather.
These factors have led to consistent and steady price increases over the last three months, with a notable rise of +4.7% in the past month alone. While demand remains strong, concerns about supply shortages persist, especially as milk intakes continue to decline in line with seasonal expectations.
This supply shortage and the associated price increases affect the dairy market, causing significant price hikes for butter and cheese.
Butter prices have increased by as much as +12.8% in the last month, while cheese prices have risen by +2.7%. Despite these increases, demand for both products remains largely stable, with a slight uptick in retail demand expected as we head into the summer. Consequently, we can expect prices to stay firm until our next report.
The main issue for products such as Butter and Cheese is that milk shortages, as reported in the EU over the past two months, disrupt the supply chain.
This shortage means that milk needed for processing into cheese and butter is both less available and more expensive. Most of these dairy products will likely see price stabilisation only when the market becomes more saturated with raw milk in the spring. Until then, we can expect the monthly increase of +1.7% to continue.
FRUIT & VEGETABLES
The issues plaguing the UK Potato crop have been extensively documented in previous editions of this Quarterly Report and across various industry news sites.
Unseasonably prolonged wet weather severely impacted the root vegetable crop, leading to flooded fields and hindering planting and harvesting operations.
Consequently, we are witnessing significant price increases, with prices up by +27% compared to last quarter and soaring by as much as +80% compared to this time last year.
This marks the second consecutive year that UK potato prices have reached record levels, surpassing £750/MT in June. Continued and sustained demand, coupled with consistently poor supply conditions exacerbated by the notably deficient 2023 harvest, have depleted most reserves ahead of the upcoming summer harvest in July.
Concerns loom over the upcoming harvest, with fears that delayed planting and adverse weather conditions may have hindered proper crop growth.
Other domestically grown fruits and vegetables in the UK have also faced challenges, resulting in increased imports from European sources. Cauliflower, Parsnips, and Cabbages have all experienced shortened growing or harvesting seasons, creating a supply gap of 2 to 4 weeks between the end of UK produce availability and the
arrival of European stock.
While these shortages are expected to be temporary, importing goods incurs higher costs, despite potentially lower production costs, due to additional stages in the supply chain.
The Mediterranean and northern Africa have been particularly hard-hit by adverse weather conditions at the start of the year, including droughts and forest fires that devastated large portions of the olive crop and significantly impacted yields for Strawberries, Tomatoes, and Peppers
These weather disruptions have also delayed the winter brassica crop and pushed back the tomato harvest by about 3 weeks, resulting in a staggering 97% increase in tomato prices compared to last year.
While greenhouses can mitigate some of the impact of adverse weather, their use adds space and operational costs, further contributing to the higher prices of affected products.
EDIBLE OILS
The oil category's primary concern is Olive Oil, following the decimation of crops due to last year's droughts and wildfires. The resulting decimation of olive crops led to record-low exports globally, as Mediterranean countries withheld stock or simply lacked sufficient quantities for export, directly driving up prices.
In response to these shortages and escalating costs, the market sought alternative sources, resulting in a notable shift: imports of Olive Oil from non-EU countries surged by +26%, while internal purchases plummeted by36%. Similar trends are anticipated to persist into the current year.
The supply and pricing pressures on Olive Oil have reverberated throughout the market, leading to price increases for Sunflower and Rapeseed Oil in the last quarter.
Prices surged by +9% for Sunflower Oil and +5% for Rapeseed Oil as buyers
pivoted towards these alternatives. Adverse weather conditions have significantly impacted crops over the past two years, with this year's Rapeseed crop yield forecasted to decline by -9% compared to last year, further exacerbating production challenges.
Although exports of Sunflower Seeds and Oil from Ukraine have helped alleviate some supply pressures, these sources are now considered more predictable and no longer seen as supplementary to the market.
The ongoing dynamics in Olive Oil and its alternatives underscore the complex interplay of weather disruptions, shifting consumer demand, and global supply chain challenges in the oils sector.
DRY STORES
Three essential commodities have faced significant challenges over the past 18 months, primarily due to adverse weather conditions, and these issues are expected to persist into 2024.
Cocoa prices have skyrocketed by +20% annually, reaching unprecedented highs primarily due to dismal crop yields in Western Africa.
Côte d'Ivoire and Ghana, responsible for 40% and 20% of global cocoa production respectively, reported crop shortfalls as high as -32% compared to last year.
Erratic weather patterns exacerbated these shortages, prompting an increase in crop theft and smuggling amid record-high prices.
South American countries, major Sugar exporters, have also faced significant market pressures.
Despite recent price decreases since May, sugar prices saw an overall quarterly decline of more than -11%.
-12.9%
Decrease in the price of Sugar over a Quarter
Export bans from countries like India, Ukraine, and Kazakhstan, initially imposed due to poor crop yields, have constrained global supply.
While these regions do not heavily impact UK sugar production, global market adjustments may increase demand for EU and South American stocks, potentially driving prices up again if shortages persist.
Coffee's popularity surge has intensified South America's focus on coffee production, with countries like Honduras,
Ecuador, and Colombia leading global exports.
However, regional dependencies have made the coffee market susceptible to weather and shipping conditions.
Droughts and infrastructure challenges in Brazil have resulted in smaller bean sizes and lower yields despite favourable harvesting conditions.
As a result, coffee prices have steadily increased month-onmonth in 2024, with Robusta beans rising by +21% and Arabica by +18% over the last quarter alone, following brief price drops in May during harvesting season.
The ongoing challenges in cocoa, sugar, and coffee underscore the critical impact of weather variability on global agricultural production and commodity prices.
They also highlight the need for resilience and adaptation in the face of changing climate conditions.
In the Press
In Season
Asparagus, Artichoke, Basil, Beetroot, Carrots, Cauliflower, Chives, Crab, Kale, Kiwi, Lamb, Leeks, Lettuce, Rhubarb, Purple Broccoli, Salmon, Spinach, Spring Onions, Trout