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Bananas are not in great supply, when looking at the global market. For most areas, volumes are rather low, while demand is strong. South Africa seems to be the only territory with more than enough quantities available. Exports from Ecuador have been about 8% lower, while the eruption of the volcano in La Palma resulted in lower production from Spain. Lower global volumes means that prices are increasing all over the world.

Germany: Decreasing demand, high price level
The ongoing heat as well as summer holidays resulted in limited interest in some regions. In order to avoid overhangs, traders could offered some discounts. In Hamburg, the demand had improved, too much supply prevented price increases though. In western Germany, prices of third brands from Colombia were increasing, as well as second brands in Frankfurt. At the wholesale market in Munich, banana prices were increasing overall as well. In general, wholesale prices are significantly higher than last year’s price level.

Banana traders had to take a hard hit during the 2nd quarter of 2022, due to the Ukraine crisis and accompanying cost increases and freight hikes. "Particularly during the change of season, there can sometimes be a shortage of supply and a drop in quality in Ecuador. The Dominican Republic is a logical alternative, and Panama and Costa Rica could also be considered. Colombia is establishing itself more and more concisely as an alternative in the conventional sector,” an importer states.

The Netherlands: Strikingly high spot market for bananas for the summer period
While the banana market traditionally shows a dip in the summer months, the market remains remarkably good this year. "We have not experienced the prices we are seeing for green bananas in years," says a Dutch banana expert. "The growing conditions in Ecuador are not good at the moment. An average temperature of 22 degrees is too low for banana cultivation. This ensures a supply that is 25% lower than we are used to in this improving spot market.”

"Traditionally, Ecuador always had a lot of sales in Eastern Europe, including Russia and Ukraine. Because of the war, those sales largely disappeared. You saw in the spring that the spot market was at a considerably lower level, but that situation has changed. now completely reversed due to the lower production," says the banana specialist. The prices of bananas in most Dutch supermarkets have 'silently' crept up this year by about ten cents per kilo. "At the same time, bananas remain a relatively cheap item on the shelf. In these times of inflation, bananas are one of the consumer's basic purchases. Due to the extremely dry weather, other types of fruit are on the high side, so that often benefits banana sales."

Italy: Falling quantities and rising prices
The banana market will not be easy in the coming weeks. A major trader based in northern Italy explains that fewer bananas are arriving from Ecuador due to domestic problems. Also from Colombia the quantities, due to the climate, are decreasing. Many people therefore turn to Costa Rica: here prices have risen. If you then add the transport costs and the fact that the Dollar is recovering strongly against the Euro, it is clear that general prices are set to rise further. In addition, ripening costs are increasing due to rising energy costs. At the wholesale level, a carton of bananas will have to cost €20 to cover all expenses.

"The industry needs to better understand inflation and how it will impact banana production and logistics, in order to determine how it will operate sustainably in the future". This is the comment of a well-known banana multinational. “External factors such as the costs of fuel, paper, fertilisers, exchange rates and logistics costs, as well as disruptions due to war and adverse weather conditions cause supply constraints. In the coming months we will see a decline in the availability of bananas, while consumer demand is expected to remain constant. A similar trend can also be observed in Italy. Consumer demand for bananas has increased slightly.”

US: Lower supplies, strong demand
Bananas are slimmer in supplies than usual, largely due to high shipping rates. Right now some of the bananas are sourced from Honduras and Guatemala. Mexico also supplies bananas, though those largely stay in the central U.S. and push into Canada as well while Colombia is also shipping bananas. Organic bananas largely come from Peru, Colombia and increasingly, Ecuador.  Meeting these tighter supplies is strong demand, all of which means prices are stronger than usual. However, the banana pricing is beginning to pressure down.

France: Good momentum not enough to reverse downward trend
Supply to the European market remains significantly lower in the first half of 2022, down by 2% compared with 2021. The good momentum in May (+ 3.1 %) and June (+ 1.3 %) was not enough to reverse the downward trend of the beginning of the year. As for the European banana (West Indies + Canary Islands), it is decreasing, affected by the eruption of the volcano of La Palma in the Canary Islands. For the Guadeloupe & Martinique banana volumes are slightly up, above the averages of the last two years. In this context of moderate supply, the market was balanced and fluid throughout the summer period, with a good progression for the Guadeloupe & Martinique banana. As for prices, although they have been relatively sustained given the limited supply, they do not compensate for the increase in production costs for producers 

South Africa: More volumes cause lower prices
Banana volumes on the market are triple the volumes of last year, resulting in 24% lower prices than this time last year. New banana plantings in South Africa (Komatipoort), southern Mozambique as well as in Zimbabwe have started bearing fruit, increasing the supply to a very high level. The quality is better than last year, a trader says, and growing conditions have been very good. The banana price is on average R5.51 (32 euro cent) per kg, and R6.79 (40 euro cent) for class 1 fruit, with an 18kg box of bananas trading for R130 (7.68 euro) on an online platform.

Spain: Volcano eruption in La Palma leads to high prices
The difference in price between the Canarian banana and the imported banana is huge at the moment. In the wholesale market of Mercabarna, in Barcelona, while bananas are paid at an average of 0.80 euros per kilo, bananas from the Canary Islands do so at an average of €2.80 per kilo. According to a ripener and trader the reason why Spanish bananas have such prices is not only the inflation and the war in Ukraine, which have an influence on the increase in costs, but mainly because of the effects of the volcano in La Palma. In addition to the plantations destroyed by the lava itself, the ashes, which piled up more than 3 meters high, devastated the production of the southwest of the island, which represents the largest high quality banana production in the Canary Islands.

Therefore, from the end of September to the end of 2021, there was little good quality banana on the market. Those who sourced from Tenerife or Las Palmas de Gran Canaria had a good product and did very well. However, from the end of April and the beginning of May, the production of Tenerife and Las Palmas dropped and when they were really the dates for La Palma to have full production, their volumes have been reduced by around 35-40% up until now. To get a picture of this situation, while in the week 26 of 2021, 5,200 tons of bananas arrived on the peninsula, in week 21 of this year 3,979 tons arrived. As a consequence of all this, the price of Canarian bananas has more than doubled throughout the year. 

With such high prices for Canarian bananas, demand has been regulated. There are consumers who have not found this product in certain sales channels and many others have preferred imported bananas because of their considerable price difference. It is in Barcelona where more Canarian bananas have been sold compared to other Spanish cities, either because of a higher purchasing power in general or because they are willing to pay the price difference for quality reasons. On the other hand, the large importers have reduced their banana purchases due to the high freight costs and, in part, they have managed to increase prices a bit, because they have been one of the cheapest products on the market this year.

Ecuador: Banana exports fall by 8.04% in the first half of the year
Banana exports from Ecuador have registered a contraction of 8.04% in the first half of 2022 compared to the same period in 2021, standing at 180.29 million boxes. According to the Banana Marketing and Export Association (Acorbanec), the reduction in exports is based on different aspects. Circumstantial factors such as the increase in the price of fertilizers and their low availability or related to active ingredients and MRLs in the European Union, as well as climatic factors, have affected a lower production which, according to Acorbanec in its latest analysis of exports, it is expected that it will not improve for the third quarter.

The lack of containers and shipping spaces during the months of January, February and March, due to the congestion in important ports -especially in China-, incurred new increases in shipping freights, especially affecting the placement of spot fruit. And to all this was added Russia's war in Ukraine, which has now been going on for 6 months without, unfortunately, an end in sight in the short term.

The sanctions against Russia caused major economic problems for the country, where the ruble suffered a significant devaluation. Russian importers, due to the economic crisis in which the country's economy was immersed, asked exporters in Ecuador to reduce the prices of banana boxes, as well as reduce weekly purchases and some even canceled contracts signed with certain exporters, and even switched from contract to spot purchases.

In January and February, an average of 8.1 million boxes per month were being exported to Russia, which ‘mostly were contracted’, Acorbanec highlights in its report. After the start of the conflict, shipments to the Russian market registered a notable fall estimated at 31.54% in March; In April, compared to exports in the same month of the previous year, this reduction decreased to -6.82%, and in May the difference compared to the same month of 2021 was reduced to only -0.28%.

In June, finally, the recovery of exports to this important destination for Ecuadorian bananas was confirmed, when despite all the challenges that the sector was facing -and continues to face- in that market, it increased its placements by 13.39% compared to June 2021.

Australia: Lower yield finally pushes price above cost of production
After months of consecutive and unprecedented cost pressures on Australian banana growers, there was a slight reprieve as lower yields from an extended winter had finally pushed prices to a level above the cost of production for growers, in recent weeks. But it remains to be seen how long this will last, with the warmer weather into spring expected to increase harvest volumes. The Australian Banana Growers' Council (ABGC) reported in their monthly magazine that they have urged retailers to consider the current cost pressures on growers and set retail prices at sustainable levels and in setting wholesale prices with growers and marketers to ensure the long-term sustainability of the industry. It noted over the past few years some of the COVID-19-related challenges included: worker shortages, changes in consumer buying habits, increased costs of input and logistics, weather events and quality issues.

But it has not just been the production costs causing a challenge for growers, but also disease management. The industry is well past the halfway mark in our transition to full industry management of the Panama TR4 Program in North Queensland. However, a sixth commercial banana farm was confirmed with the disease in June. It followed the detection of Banana Freckle in the Northern Territory. Although only one of the 29 detections was on a commercial banana property.

China: Weak consumer demand in off-season summer months
Banana imports peak in the months March, April and May with monthly averages hovering around 210,000 tons. Summer is considered downtime, with the lowest numbers in June and July. In July, imports accounted for 124,000 tons. It remains to be seen if imports will start to pick up in August. During the Covid-19 epidemic, trading ports Mohan (with Laos) and Houqiao (with Myanmar) were frequently closed. Currently opening hours and trade have been stable.

In July, China's largest banana supplier are The Philippines, followed by Cambodia and Ecuador. The export volume of Ecuadorian bananas in the first half of this year was significantly lower than last year. In addition to the continuous shortage of containers and the increase in the cost of other consumables, decline in production has affected exports.

Guangdong and Guangxi's bananas are on the market. Summer is typically off-season for China's banana consumption, and the market will pick up in Autumn. Yunnan bananas will be available from late October.

Next week: Global Market Overview Apples!