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Bad weather leads to banana shortage in South America

Adverse climate conditions have caused banana production to stall in a couple of key banana-producing countries in South America. As a result of light supplies, prices for bananas on the open market are higher than normal for this time of year. Importers, however, are not feeling too much of a pinch at the moment because this is typically not a big time of year for bananas.

“Between Colombia, Ecuador, Costa Rica and Guatemala, production should amount to 11 or 12 million boxes per week,” explained Philippe Pons with AZ France. “At the moment, those countries are only producing seven or eight million boxes a week. That's about a 30 percent drop in production.” Most of that drop is due to bad weather in Colombia and Ecuador, where Philippe estimates volumes are down by as much as 25 percent when compared to typical volumes for this time of year.

Because of lighter volumes, prices have been somewhat steep. A large portion of importers already have contracts to receive fruit at a certain price. Theoretically, those brokers are losing out on spot market prices they could be charging their retail partners for the fruit they're supplying. Philippe estimates that there's about a $1.50 to $2.00 difference per box between where most contracts are and where the spot market is.

“But, to be honest,” he noted, “demand from the retail market is not so high, and it won't be very high through most of the summer. This means that, at the moment, the loss that some marketers are experiencing is not so great. But that could change by the second half of August.”

Until then, bananas will largely take a backseat to popular summer fruit. Because of their seasonality and heavy promotions, stone fruit and melons have brisk movement and offer stiff competition for bananas.

“This is just seasonal demand,” Philippe explained. “These conditions are more or less normal.”

For more information:
Philippe Pons
AZ France
[email protected]