Jun 27, 2022Rabobank report continues to track inflation
Throughout Rabobank’s North American Agribusiness Review, the company analyzes the effects of inflation on what consumers buy at retail and order at restaurants, and how growers are being affected, with rising costs of inputs.
The general Consumer Price Index resumed its upward trend, reaching 8.5%, with grocery items expanding to 11.9%, as consumers see prices passed from food manufacturers to retailers and then final consumers.
At the same time, consumer sentiment dropped back to pandemic lows in May, with preliminary numbers for June reaching the lowest level since the report debuted in the 1940s. With food and other basic goods, consumer confidence doesn’t play as much as a determinant role as it does for costlier items, according to the report, but it can indicate consumers’ willingness to spend and save.
Negative supply shocks and inflation hammer the U.S. economy, according to the report, yet the labor market continues to be strong, so it’s unlikely the National Bureau of Economy would call it a recession, according to the Rabobank report.
Demand of refrigerated ocean shipping units, also known as reefers, is expected to continue increasing throughout the year. The upward trend is mainly due to the imbalance of the equipment, which is not where they are most needed.
The Rabobank report breaks down hot fruit products leading into the summer:
- U.S. apple exports are down 7% in volume for the marketing year, according to the USDA. Industry sources have reported that inventories are up about 8% year-over-year, which will keep pressuring prices downward. During the first half of June, non-organic fujis were up 11% in price, galas were up 6% and Honeycrisps were up just 1. Granny Smiths and red delicious prices were down 1-% year-over-year, according to Rabobank.
- Strawberry prices were around $8 per flat of non-organic berries at the beginning of June, down from $11 a carton from 2021. Availability of strawberries is high this year, with slightly lower prices. Blackberry availability has significantly improved and prices remain weaker.
- Avocado prices have been elevated for a couple of months, a departure from short-lived price spikes in 2021. Mid-sized California Hass avocados were above $73 in early June, an increase of 62% from the previous June. California and Peruvian avocados will capture more of the market share in the U.S. this summer; Mexico will resume a new marketing and export season at the end of the summer.
The average retail price-per-unit of fresh vegetables was 8.5% higher year-over-year at the end of May. Retail volume for the category was down 5.8%. Fresh vegetable consumption is expected to be pressured downward at consumers take money-saving measures to deal with the rising costs of living.
Highlights of Rabobank’s vegetable analysis:
- Broccoli crown and cauliflower supplies are ample now and close to last year’s levels. Shipping point prices are also strong and higher. Romaine and Iceberg lettuce shipping point prices are holding up at levels higher than last year as a result of strong demand and short supply, respectively.
- Potato markets are awash with bullish news: Low inventories, the recent opening of the Mexican markets to U.S. fresh potatoes and raised concerns about a yield after a delayed planting are all factors contributing to strong prices.
- By the end of May, total shipments of carrots, celery, artichokes and sweet potatoes, were lower year-over-year, while those of cabbage, cucumber, squash, spinach, bell pepper and some types of tomatoes were higher year-over-year.