Agric commodity market: Overview of global banana market

The banana market is stable in many countries, without unexpected peaks or dips in the demand. The supply is also stable. There have been some delays in sea freight in recent weeks, but these issues seem to have been resolved. Banana prices are at a normal level, but in some countries they are showing a slight upward trend.

At the production level, things are normal, with the exception of some areas that have had to deal with extreme weather conditions. These conditions are not having a major impact on the global supply.

The Netherlands: High spot prices in Ecuador, but no huge pressure on the banana market
It is currently quiet on the banana market. “It’s not bad, but I can’t say things are lively either. Last week it was a bit busier; the holiday period may have been a reason for that,” says a Dutch banana ripener. He also expects a stable market in the coming weeks.

“The supply is at a very normal level. On the spot market, prices in Ecuador are on the high side, which points to a higher demand than supply, although there are no major shortages. There have been some delays in recent weeks, but the ships seem to be arriving on time now.”

Germany: Spring weather stimulated the demand for bananas
The situation is good in the German banana market. Spring weather stimulated the demand and the supply was sufficient to meet it without any problems. Prices have been developing differently; depending on the region, there have been both increases and decreases. Cologne saw higher prices for premium bananas, while in Munich sellers lowered the prices to boost the demand.

United Kingdom: Demand for bananas is stable and balanced
The demand for bananas in the UK is stable and balanced; programs are running well, but there is not much demand on the spot market. Over the past 12 months, the demand has seen some spikes, as the country has been in and out of lockdowns, but overall, it has remained stable. The same goes for organic bananas. While retail sales have remained strong, the wholesale side has been greatly impacted by the loss of the food service markets.

The supply from South American countries has been generally good. Midway through last year, there were a few dips in the supply, as growers were hit by Covid restrictions that had an impact on workforce numbers. Cold weather in Mexico, 8 to 10 weeks ago, took a toll on the production and the consequences have only now become visible as the fruit is being harvested. The production is back to normal.

At the beginning of last year, shipments were disrupted by cancellations and ships were diverted to different ports, but the situation has now returned to normal. Shipping costs are probably where they should be; however, some shippers are setting peak season charges.

Italy: Demand for bananas will increase in the coming days
In general, the situation in the banana market is good, with prices rising in Europe. In Italy, the product, mainly the Cavendish variety, comes mainly from Ecuador, but there are also shipments from Costa Rica and Colombia.

“Currently, the wholesale price of a box of green bananas stands at around 15 Euro, while a more correct price should be between 16.5 to 17 Euro,” said an Italian trader. “In the United States, the price has stood at around $ 20 for three weeks, even though this country has lower logistics costs than Europe.

“The demand for bananas is expected to increase in the coming days, while the supply remains stable. This is due to some banana producing countries having suffered hurricane damage. Prices for Ecuadorian bananas are higher than last year.”

United States: The demand for bananas will grow slowly this year
A New Jersey trader says that after the hurricanes that hit Central America in 2020 (Hurricane Eta / Hurricane Iota), multinational banana suppliers warned that prices would rise and supplies would be scarce. However, that has not happened so far.

“This is due to shifts in the supply to regional markets. Some South American fruit (from Ecuador) which usually goes to the west coast is arriving on the east coast,” said the trader. “The fruit from Guatemala, Honduras and Costa Rica has gone to the west coast.”

At the same time, Central American countries such as Honduras are shipping bananas which are normally intended for their own consumption. Mexico is also supplying bananas to the Midwest, although adverse weather conditions could cause those volumes to shrink.

The peak season goes from now until Memorial Day. The demand was also higher in January compared to the year before. According to a trader, the demand will grow more slowly this year, but it will be strong. This means that prices are good and are likely to rise. Ecuador has started increasing its prices, and as that happens, prices will rise accordingly in North America.

Ecuador: Market normalizes after hurricanes gave prices a boost
Currently, the bananas from Ecuador are sold more on the spot market than through program sales, which entails a less stable price. Spot prices in 2020 were lower than normal, which was a challenge for producers, who’ve had higher production costs. These higher costs are the result of the precautions they have been forced take to protect their employees from the spread of Covid.

When hurricanes Iota and Eta hit Central America, they had a significant impact on the supply from that region. As a result, spot prices rose for growers from Ecuador, because the total supply on the global market decreased. This situation is now starting to stabilize and spot prices are falling back to a lower level.

South Africa: Demand for bananas variable, but prices are stable
“Banana prices are stable at the moment, which is a very good thing,” said a South African banana trader. “On the Johannesburg market (the largest market in South Africa), the average price per kg for an 18 kg box of bananas amounts to around R8 (0.45 Euro), and it reached up to R13.80 (0.78 Euro) / kg for the popular 1 kilo box.”

Prior to Cyclone Eloise a month ago, banana growers in Mozambique were harvesting a lot and there was oversupply on the market. These volumes have all been absorbed and the price and quality have recovered well, says a banana trader.

He is pleased with the banana market at the moment, noting that things are going well in the central markets and in the coastal areas, with the exception of the KwaZulu-Natal markets, which are under pressure, as KwaZulu-Natal banana growers are harvesting and there are volumes also from Mpumalanga, Komatipoort.

Another trader reports a weak demand for bananas and says that the price has fallen slightly from the mid-February average of R8.40 / kg, but that the current price was promising. It is still higher than at the beginning of the month.

China: Favorable banana sales despite Chinese New Year
Last year, the trade of Chinese bananas was very slow; only in February did the market appear to start warming up. Now that there is enough fruit on the market, the price has gone up. The period around the Chinese New Year is often the low season for bananas, but banana sales have remained at a good level this year.

The price of Philippine bananas has increased from USD 8 / box (13.5 kg) before the Chinese New Year to more than USD 10 / box at the moment. The course of the season mainly depends on the import volume of Vietnamese and Cambodian bananas.

Currently there is no domestic production due to the cold weather. The first batch of domestic bananas will hit the market at the end of March. Most bananas now come from the Philippines, Vietnam and Cambodia. Many banana plantations in Southeast Asia have a good production this season.

The banana industry in Cambodia is developing very quickly. Last year, about 200-300 containers were shipped to China by the end of the year. The development of the banana industry in Cambodia is putting pressure on the banana industry in South America. South America is a long way away and this entails high costs, which makes the market prices higher. South Asian bananas are in a better position.

As a result of the coronavirus, many small banana plantations in the Philippines have faced challenges. The bananas were of poor quality, which led to a decrease in orders. The larger plantations did not have these problems, so these companies are able to supply good quality bananas. There is therefore a high demand for good quality bananas.

Australia: Continued low prices may result in fewer plantings
By the middle of the 2020/21 production year (December 30, 2020), banana production was about five percent higher than in the previous year, according to the Australian Banana Growers’ Council. However, the ABGC suspects that production will not be that high by the end of the financial year.

The institute also predicts that current, persistently low prices could result in fewer plantings, which could have an impact on next season’s production. The shortage of labor currently remains the biggest problem for banana growers.

In terms of consumption, the latest Hort Innovation statistics show that in the financial year ending June 2020, 95 percent of households across the country bought bananas year-round. Less than one percent of the production (1,142 tons) went to the processing industry. And although there are no recorded fresh fruit exports, 80 tons of dried bananas were imported, while 63 tons were exported in the entire year.

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