Article 15 August 2019
Weather is wreaking havoc in the brassica markets as rains have reduced supply in the UK and demand continues to grow for the healthy products.
Heavy precipitation in June shifted a dry season into an overly wet one in a matter of days (figure 1) in Lincolnshire UK. The flooded crops have resulted in price moves and write ups in the mainstream media. At the same time in the EU a heatwave has had detrimental impacts on production.
Figure 1; Daily Recorded Precipitation, Cranwell
Agricultural risk has always been a function of weather risk (among many other things). As climate change brings more extreme events it is clear this will translate into increasing risk in agricultural supply and prices. Anticipating the timing of such events is impossible so mitigation requires either substitution, exclusion, or price risk management. This is the gap Stable can help fill by offering hedging tools for this price risk.
Figure 2; Wholesale Cauliflower Prices; £/Head Weekly
The UK cauliflower market prices have started to react to the supply disruption, figure 2 shows Defra’s wholesale price on a weekly basis. The August 8, 2019 price of £1.39 head is the highest price since weekly reporting started in 2015. With only two weeks of data the monthly average for August 2019 is also a record since data reporting started in 2005 (figure 3). Higher prices will ration demand as consumers use other products, imports are increased or clients are forced to live cauliflower free lives; even with lower demand it is likely higher prices will remain in the medium term. Stable also tracks the brassica markets in the EU using prices reported in each of the 28 member states; data is delayed from the commission, but we expect to see higher values in August for many of the markets. This will be a function of the UK situation as well as the major heatwave to hit the continent in July.
Figure 3; Monthly Average Cauliflower Prices (Aug 2019 is provisional)
Interested in speaking with our analysts about their perspective on the brassica market? Want to find out more about how we help businesses manage brassica price volatility? Contact us today.
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