Purchasing patterns in the holiday season will influence prices

Absa AgriBusiness explores what transpired in mid-November in the fresh produce markets and what is expected for the rest of November, moving into December.

As we approach the end of the year, fresh produce pricing trends will be highly influenced by increased consumer spending. Christmas shopping as well as holiday festivities are anticipated to increase consumer demand.

CABBAGE

The monthly price trend of cabbage had a favourable trajectory, increasing by 38,2%

(see Graph 1). The consensus suggests that price spikes were supply related during the first week of November.

In the next weeks, it is expected that the price will exhibit a stable trajectory. However, there is a slight expectation of modest increases in prices throughout the month of December.

CARROTS

There was a month-on-month (m/m) increase of 15,2% (see Graph 1), with carrot prices rising from R4 057/t in mid-October to R4 673/t. The observed price increases were shown to be correlated with a decrease in supply, with a decline of 19,8% on a weekon-week basis and 5,6% monthly. Market agents advised that volumes would remain relatively stable for the remainder of November, with the potential for a slight increase in demand over the Christmas season.

This increase in demand might have a slight effect on prices in December. It is anticipated that prices will return to the levels seen in November throughout the period spanning from January to early February.

ONIONS

Onion prices exhibited a declining trend around mid-November, with a decrease of 1,4% on a weekly basis and a substantial decline of 24,4% over the course of a month (see Graph 2). The prices saw a decrease from R5 130/t during the same week in October to R3 876/t.

The decline in prices was aided by an excess supply of onions, which coincided with the start of the Northern Cape’s production/marketing season. The volume of produce had a significant increase, climbing from 5 470t to 7 234t. This shift indicates a monthly growth rate of 32,3%. The Swartwater area in Limpopo is projected to reach the conclusion of its harvest by the end of November, whereas the Northern Cape is forecasted to provide supplies until the end of February 2024.

THE HOLIDAY SEASON COINCIDES WITH A SIGNIFICANT RISE IN CONSUMER DEMAND AND AN INCREASE IN DISPOSABLE INCOME

It is anticipated that market pricing trends will see a drop owing to the projected peak quantities from November to December.

POTATOES

During the week ending on 10 November there was a significant m/m rise of 85,5% in potato prices (see

Graph 2). The observed prices saw a

significant increase from R5 097/t in mid-October to a record-breaking R9 456/t on a m/m basis. Over the past three years, average potato prices have fluctuated between R3 800/t and R 6000/t. Analysts note that there has been a decrease in the quantity of purchases from the Sandveld region due to the rise in delivery expenses to the market.

Consequently, the primary source of supply has shifted to the Limpopo region. Additionally, it is anticipated that KwaZulu-Natal will gradually begin delivering quantities towards the end of 2024.

In terms of future projections, it is anticipated that there may be an upward trajectory in the prices of potatoes for the remaining duration of November, depending on the timely completion of the harvest in western Limpopo.

The average market volume is expected to decrease, accompanied by an increase in consumer demand and price. During the holiday season, historical patterns indicate a significant increase in consumer demand, leading to a corresponding rise in prices.

TOMATOES

The prices of tomatoes exhibited a declining trend, with a decrease of 0,35% on a weekly basis and a decrease of 10,12% monthly (see Graph 3).

The prices moved from R 15 513/t to R13 942/t, accompanied by a slight increase in the amount of supply by 0,2%. The surplus originated from the Limpopo area catering to inland markets, and the East London region, which in turn served the coastal markets. The quality of the product remains consistently high.

The holiday season will coincide with a significant rise in consumer demand, influenced by an increase in disposable income. Analysts anticipate increased prices throughout the month of December.

This upward trend is expected to subside only after the Christmas week, extending into early January, as the purchasing patterns associated with the holiday season begin to diminish.

Email Marlene Louw of Absa AgriBusiness at marlene.louw@absa.africa.