UP! The right Royal price of potatoes
This is Jersey Royal season, and thousands of portions of poached salmon await their arrival. But this year’s crops are patchy, and yields have been dramatically reduced. Persistent rain has been evident since last Christmas, but the greatest challenge has been that the earliest plantings were all growing well until they were hammered by the ‘Beast from the East’ with sub-zero temperatures at the end of February. The damage caused by this has been described by growers as very severe, and prices have been unusually high as a result.
The silver lining is that the potato crop as a whole in north-west Europe is forecast to be marginally up this year, with France, Germany and Belgium supporting what will be lower yields in the UK. Prices for the high-quality end of the market may rise slightly, but there are no dramas expected at this stage, in spite of the poor UK winter weather.
UP! The slippery upward slide of oils and fats
We’ve seen oils and fats lead the way this month on price increases, at a time where we have been expecting food inflation to start to ease. But a combination of weather, disease and exchange rate issues have pushed this category seriously in the wrong direction, with year-on-year prices up almost 30%.
We don’t expect this to ease very much (if at all) in the coming months, particularly as the source of oil (soya, rape, corn, etc.) are all commodities, and could easily be drawn into the potential trade war triggered by the recent US policy. Last week, for example, US sales of soybeans to China ground to a halt after Beijing threatened tariffs on imports.
The biggest internationally traded commodities are the three above, plus seafood, rice, coffee, wheat, palm oil and steak meat. These are all ONES TO WATCH in the months ahead, as the tariffs position gets played out by governments around the world.
UP! Unseasonal leaping salmon
Fish and seafood is in double-digit inflation again, further displaying the volatility within this category. The recent rises in crude oil prices (which are a key cost of fishing) have further increased this month by 5.2% versus last month and a 37.9% increase versus last year. Farmed salmon prices fell for three consecutive weeks following the seasonal Easter high but have since jumped back to prices higher than the Easter week. We also expect them to remain high in June due to Norwegian production shortages and poor growth rates caused by a long cold winter. Prices should ease again during the third quarter of this year once the 2017 salmon generation is scheduled for harvesting.
As negotiations continue over the UK’s waters and fisheries policies during and after Brexit, it has been revealed that while the devolved governments will be consulted, the UK government will retain policy veto rights. This has prompted anger from the Scottish government, which currently exercises devolved power over Scottish fishing regulations.
DOWN! June’s seasonal vegetables
Don’t forget that June is a terrific month for seasonal fruit and vegetables. Yields have been lower, but prices are still easing somewhat in peas, broad beans and strawberries. And in just a few weeks the full UK harvest of lettuce and cucumber comes on stream, alongside fresh, juicy British cherries.
ONE TO WATCH! The milky pendulum is swinging
We have all got used to the volatility of the dairy market, which has swung more frequently and by bigger margins in recent years. Since the end of 2017, we have benefited from benign market conditions that have seen the price of milk fall below last year’s levels for many months. This may be about to change as feed prices are increasing and demand from the UE is rising. Watch your milk pricing carefully.