Fresh produce volumes increase, driving down prices

With the supply of various fresh produce commodities improving, prices should stabilise or decline. However, there seems to be no end to the price run for tomatoes, despite higher volumes. Absa AgriBusiness reports.

Since March 2021, the quality and volumes of cabbages, carrots, onions, potatoes and tomatoes has improved, thanks to drier weather.

Market stakeholders reported less damage and waste, especially with regard to potatoes.

They also noted that tomato prices had surged 110% year-on-year (y/y) due to extremely low volumes. This was mostly because of rain and flood damage experienced earlier this year in key production areas that is still affecting supply from South Africa’s northern regions.

In line with seasonal trends, demand around the Easter holiday period held firm for these commodities, which was reinforced by the fact that it coincided with month-end.

Taking historical seasonal price movements into consideration, prices should soften over the next three months.

CABBAGES

Demand for cabbages was under pressure in mid-March due to quality concerns attributed to damage caused by excessive rain. As a result, cabbages were supplied to the Joburg Fresh Produce Market from as far afield as KwaZulu-Natal and the Western Cape.

Monthly volumes decreased almost 7%, which led to prices increasing 16,2% month-on-month (m/m). Despite this, cabbage prices are about 17% lower than in the corresponding period in 2020. Cabbage prices averaged around R4 100/t in April ( see Graph 1).

Seasonal trends suggest that prices will trend lower over the next three months due to higher volumes.

CARROTS

Carrot prices were down 3,6% m/m due to a 27% increase in volume, brought about by low packout volumes in March because of wet weather. Drier weather in April ensured increased supply to fresh produce markets. Volumes were 16,5% up y/y, resulting in prices roughly 15% lower than those for the corresponding period in 2020 ( see Graph 1). Carrot prices averaged about

R5 800/t in April. Historical seasonal trends suggest that prices could remain under pressure over the coming months.

ONIONS

Onion prices increased almost 19% m/m, despite a 7,6% increase in volume. Prices held strong with consistent good-quality onions coming onto the market, especially those sourced from the Western Cape. The increase in volume, combined with an increase in prices, points to firm demand, with market stakeholders noting that demand for regional exports is still firm.

Prices are about 34,5% lower y/y

( see Graph 2). However, it should be noted that April 2020 was associated with consumer stockpiling due to the COVID-19 pandemic, and strong demand for larger packaging sizes during this time supported onion prices. Since then, prices have stabilised and averaged at approximately R4 200/t in April.

Based on seasonal trends, prices are expected to increase towards May, after which they could shift downwards.

POTATOES

Potato prices rose almost 30% m/m. This is a large increase, even if taking into consideration the marginal decrease in volumes of 3,1%, and suggests firm demand for the commodity, combined with an improvement in quality after the wet weather in March. Prices are up almost 35% y/y, and volumes are approximately 16% higher ( see Graph 2). The highest average price this year was R5 060/t, which was attained in early January. Average prices for April were about R4 500/t.

Prices are expected to trend lower over the coming months as the eastern Free State concludes its marketing season and supplies from the western Free State begin to dominate the market.

TOMATOES

Tomato prices increased sharply from the end of March to early April, and are currently averaging about R19 500/t. This reflects a m/m increase of almost 44% and a staggering y/y increase of around 110%

( see Graph 3). Prices were supported by strong demand over Easter, as well as low supplies. Volumes were under pressure in early April due to weather conditions earlier in 2021 affecting product availability and quality.

Traditionally, tomato volumes pick up during the second quarter of the year, which results in lower prices. In mid-April, however, there was still no indication of a break in the price run that tomatoes have experienced since the beginning of the year.

Email Olga de Freitas at Absa AgriBusiness at Olga.deFreitas@absa.africa.

THE QUALITY AND VOLUMES OF CABBAGES, CARROTS, ONIONS, POTATOES AND TOMATOES HAVE IMPROVED SINCE MARCH, THANKS TO DRIER WEATHER