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CGA Prestige Foodservice Price Index (FPI)Sub Category Report - June 2017
Your source for accurate data, analysis and insights into today’s food prices.
2
To receive the full volumetric data, detailed category and subcategory performance and a more in-depth analysis, please [email protected] or [email protected] to purchase.
Twoofthemostsignificantchangesthismonthcanbeseenindairyandfruit, though for
differingreasons.
InflationintheDairycategoryforMayis9.9%,asignificantincreaseonthepreviousmonth.
Farmgatepricesformilkhavebeenrisingformanymonths,andthoseincreasesarenowbeingfeltin
foodservice.Processeddairyproductssuchascream,butterandcheesehavecontinuedtoincrease
inpricesignificantlyabovethatofmilkitself,drivenbyhighglobaldemand,especiallyfromChinese
importers,andlowstocks.Whilesomeshiftsfrombrandedtoownbrandproductshavehelpedto
keepthelevelofinflationdown,theadditionalsharprisesindairyproductsduringthepastcoupleof
monthshavenowcomethrough.
InflationinFruit sitsat12.7%inMay.Asamajority-importedcategory,thecumulativeeffectsof
theweakenedpoundhavetakenatoll,especiallywhencomparedtothemuchstrongerpoundinMay
2016.Diseaseandpoorweatherhavenothelpedeither,with‘greening’oncitrusfruitproduction
inFloridaandValenciaandunfavourableweatherinkeygrowingregionsacrossEuropeandtheUK
bothaffectingsupplies.Undersuchtryingconditions,itisnosurprisethatimportsoffruitcontinue
tocostmorecomparedtolastyear.
Numerousmorefactorsarecontinuingtoaffectfoodanddrinkprices,includingOPEC’s
diminishedcontroloveroilprices,theeffectofanunpredictablenewUSpresident,andmorelocalissuessuchassealiceinfectionsdrivingupScottishsalmonprices,theuncertaintycausedbythe
GeneralElectionandtheongoingBrexitnegotiations.Inlightofallthis,foodbusinesseswillneedto
bemoreinformedandactivethaneverinmanagingtheircosts.
InflationintheFoodservicePriceIndex(FPI)isat9.0%forMay2017,upfromthe5.8%reportedlastmonthandasignificantriseonthe2.9%
recordedatthestartoftheyear.TheinflationarymovementintheFPIfromApriltoMayissignificant,andthegapinfoodinflationbetweenthisand
theConsumerPriceIndex(CPI)hasbecomemoreprominent.
Pricesremainhigheryear-on-yearacrossallcategories,withnotablejumpsforfruitanddairyproducts.Thelasttimeinflationwashigherthan
thiswasinAugust2008,whentheCPIreportedfoodinflationat14.5%.Somefactorsimpactingfoodpricesarecommontoboth2017and2008,
includingsignificantdepreciationofSterlingandsharpincreasesincertaincommoditymarkets.Butthesearenottheonlyfactorsandshouldnotbe
usedinisolationtodrawanyconclusionsaboutwherefoodinflationmightendup.
AbouttheCGAPrestigeFoodservicePriceIndex(FPI)
Food & Non-Alcoholic Beverages - FPI vs CPI
Executive Summary
CGA-Prestige FPI Report - June 2017
9.0%
333
FPICategoryReportJune2017
All findings for May 2017 relative to May 2016
Category
107.3
101.7
103.1
105.5
94.5
98.3
96.6
106.9
99.8
106.3
101.8
96.3
106.5
102.8
99.4
105.1
107.7
95.1
101.5
99.4
Jan 17Jun 16
98.2
104.3
106.3
106.0
99.3
103.4
105.7
110.2
101.4
100.0
101.7
97.0
99.0
101.3
99.2
103.9
106.4
102.3
101.0
99.1
Jul 16 Oct 16
103.4
102.1
107.5
107.6
98.5
101.5
101.2
98.9
101.0
103.4
May 16
100.9
96.9
106.9
101.8
97.7
105.0
107.0
103.0
102.0
97.8
99.9
99.0
101.2
101.3
99.4
101.7
104.6
95.6
99.8
99.8
Aug 16 Nov 16
104.0
102.1
102.3
107.4
99.8
101.3
101.6
106.2
104.3
103.6
Sep 16 Dec 16
104.9
104.3
101.5
109.4
95.1
97.7
97.7
107.0
101.8
103.0
Poorprojections
forwheat
pushingprices
up,asare
increasesfor
butter.
Sugaroutlook
better,cocoaset
torisesoon.
Oliveoilprices
stillrising,
butterprices
alsogoingup.
Suppliesofsugar
predictedtobe
constrained,
couldhalt
pricefalls.
Farmgateprice
trajectoryfor
milkuncertainas
risesannounced
forJuly.
Beef,porkand
lamballmoving
upwards.
Poorexchange
ratesstrongly
affectingfruit,
asareshortages
ofworkers.
Aslastmonth,
sealiceproblem
continues,cod
andtuna
pricesrising.
Teapricesrising,
cocoatorise
soon,while
exchangerates
alsokeep
pricesup.
Shortageof
migrantworkers
nowhavinga
notableeffect
onprices.
Foodservice Price Index May 2017 +9.0%
102.3 105.2 110.0 110.4
102.3 107.5 109.2 112.2
103.6 104.0 107.2 114.1
97.0 101.0 102.0 109.2
100.1 103.1 103.3 106.6
100.2 103.5 105.6 109.7
107.2 116.5 106.9 110.6
104.3 106.6 105.0 102.8
104.7 108.1 105.9 111.7
Feb 17 Mar 17 Apr 17 May17
106.6 108.4 106.4 110.6
CGA-Prestige FPI Report - June 2017
ForMay,month-on-monthpriceincreasesareshowingforalmostallcategories,saveforaslightfallinAmbientHotBeveragesaswellasthesugar-
ledChocolate&Confectionary.Year-on-year,thismonth’sfiguresrepresentpre-Brexitvspost-Brexitforthelasttime,asJunewillfeaturesomeof
thepost-Brexiteffectsfeltin2016,especiallytheinitialdropinexchangeratesfollowingtheEUreferendumresult.
Category Summary
4
FPICategoryReportJune2017
ThegraphicbelowshowsFPIperformanceoverthepastyear,alongwitharollingone-yearforecast.Withinflationnowat9.0%,ourprojection
showspricesstabilisingfollowingtheupheavalcausedbytheinitialreactiontoBrexit.
Historical Performance & Forecast
Jan 17
101.8101.3 106.0
Jun 16
101.8
Apr 17
101.4
Feb 17 Mar 17
100.2 109.2
Jul 16
102.8
May 16 May 17
102.2101.1
Aug 16 Sep 16 Oct 16 Nov 16
101.5
Dec 16
102.4 106.7
CGA-Prestige FPI Report - June 2017
Whileoilpriceshavemovedupanddownsincetheconfidence
inspiredbytheOilProducingandExportingCountries(OPEC)
woreoffatthebeginningofMarch,theoveralltrendseesprices
headingdownwards.Thismovementisfuelledinmultipleways,
fromOPEC’sdiminishingabilitytocontroloilprices,non-OPEC
countriessuchastheUSrampinguptheirshaleoilcapabilities,to
themovementtowardsalternativeenergysources.Theongoing
failureinrelationsbetweenSaudiArabiaandQataralsoadds
uncertainty.
ThefinalresultoftheGeneralElection,whichsawthe
ConservativesforcedintoanagreementwithNorthernIreland’s
DUPtocoverfortheirlostmajority,hasalsodestabilisedthe
expectedcourseofBrexitnegotiations.Thedetailsofthedeal
withtheDUP(aswellaspoliticaldiscontentoverhowitwas
reachedanditsimplicationsfortheNorthernIrelandpeace
process)couldcausefurtherupsetsoon.
FruitandVegetables,asacategory,shouldbewatched
carefullyinthecontextofongoingBrexitnegotiationsdueto
theimpactofmigrantworkersonthesecategories–agrowing
perceptionoftheUKasxenophobic,togetherwithaweaker
poundimpactingthevalueofpaythoseworkerswillreceive,have
combinedtomaketheUKalessattractiveplacetowork.Some
farmershavealreadywarnedofproducebeingleftunpickeddue
tothoseshortages,andwithveryfewintheUKwillingtostepin
andfillthoseshoes,thiscouldhaveamajorimpactastimegoes
on.
Overall,whilethegenerallevelofinflationthismonthis
significant,weprojectthatthosedifferencesshouldevenout
acrossthemediumterm,ascomparisonsstopbeingpre-Brexitto
post-Brexit,andbegintoreflectthe“newnormal”.Whilefurther
pricerisesarealmostcertainlyahead,barringanyunpredictable
eventsweshouldseesuccessivechangestotheindexbecome
lessdramatic,asdemonstratedbyourgraphabove.
100.2
101.3102.2
102.8101.8
106.7
109.2108.4
112.9
98.0
102.0
106.0
110.0
114.0
May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18
FPI - 13 Months Low Forecast High Forecast
5
Breadandcerealpricesareupby4.8%comparedtothistimelastyear.Whileunexpectedlywarmanddryweathercontinuestoaffectgrowthinthe
UK,globalfactorsalsoplaytheirpart,withUSwinterwheatdisappointing,whilefactorsatplayinRussian,UkraineandKazakhstanalsopushwheat
pricesup.Butterpricesarealsoservingtopushthiscategoryup.
Bread & Cereals
Globalwheatpriceslooksettogouponcemore,dueto
unexpectedlydisappointingyieldsforhardredwinterwheat,blamed
onhot,dryweatherinsomeofthebiggergrowingregions.Thisisalso
exacerbatedbymovesbysomefarmerstodiversifyawayfromwheatto
moreprofitablecrops.Poorprojectionsforotherglobalwheatharvests,
suchasthosefromUkraine,KazakhstanandRussiaarealsoservingto
pushpricesup.
HereintheUK,theongoingBrexitnegotiations,coupledwiththe
continueduncertaintythattheGeneralElectionfailedtoquell,will
meanthatexportscontinuetolookattractive,whilestockstightenin
theshorttermduetothecontinueddryweather.
Whilesugarpriceshavecomedownslightlyoffthebackofincreased
productionbyBrazil,theincreasingcostofbutterisasituationthathas
notgoneunnoticed–Frenchbakeryassociationshavenowbegunto
considerthematteramajorcrisis.
FPISub-CategoryReportJune2017
CurrentinflationFPI | 4.8% 12mthForecast | 3.9%
CGA-Prestige FPI Report - June 2017
98.497.8
97.1
98.597.9 97.6
98.5
99.8 98.0
99.9
100.3101.1
100.5
101.7
105.1
103.9
105.0
103.4
101.5 101.3
98.397.7
100.1
103.1 103.3
106.6
96.0
100.0
104.0
108.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
6
Hotbeveragepricesareup10.4%year-on-year,althoughcomparedtolastmonthpriceshavefallenforcoffeeandcocoa.Teaprices,however,have
goneup,asteafromtherecentlowerproductionperiodstartstobeauctionedoff.Adverseweatherisonceagaintoblameforthis,andthisseems
likelytocontinueintheshortterm.
Ambient Hot Beverages
CoffeepricesarenowmovingdownwardsforbothArabicaand
Robustavarieties,dueinparttospeculationbycommoditybuyersthat
pricescouldgolowerinfuture.Thiscanpotentiallybecounterbalanced
tosomedegreebyroastersbuyingandholdingontothebeansrather
thanprocessingthem,inanticipationofpriceincreasesinthenear
futuremakingitmoreprofitabletobuildupstockpiles.
Theproductionoutlookforthe2017/2018coffeecropisstillgenerally
positive,however,sothisanticipatedriseinpricesmaytakelongerto
arrivethanexpected.
Whilethepriceofcocoahasfallenacrossthelastfewmonthsdue
toplentifulsupply,therearenowsignsthatpriceswillincrease–the
cocoafuturesmarkethasshownfallingpricesbeginningtoevenout
andcurveupwardsonceagain,asignthatthecurrentharvestseemsto
beslowing.Itshouldbeborneinmind,however,thatforIvoryCoast
thisisthesmalleroftwoannualharvests,withthelargerduetostartin
October.
Assumingnounexpectedweathereffectsorotherexceptional
pressuresonthecrop,thiswouldresultinsuppliesbeingbuoyed
upagainandpricesheadingbackdown,butthereisevidenceofdry
weatherinsomegrowingregions,whichcouldaffectearlycropgrowth.
TeapricesinIndiahaverisen,duetoacombinationofreduced
productionearlierintheyearandhigherdemand–astheteafromthat
reducedproductionperiodisnowbeingauctionedoff,theeffectsof
tightersupplywillmakethemselvesfelt.
Onceagain,thislowerproductionisbeingblamedonpoor,dry
weatheraffectingcrops,andthisisnotconfinedtoIndia:SriLankanand
Kenyanproductionhasalsobeenaffectedbyadverseweather,which
willcauseincreasingupwardpressureonteapricesgoingforward.
CurrentinflationFPI | 10.4% 12mthForecast | 6.7%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
101.0
100.5 100.2
101.4
100.3
98.5
100.1
98.8
100.3
104.5
103.5
105.1
103.8
99.9
101.8 101.7100.9
98.2
103.4104.0
107.3
104.9
102.3
105.2
110.8 110.4
96.0
100.0
104.0
108.0
112.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
7
Fishpriceinflationisat15.7%comparedtoMay’16.
Fish
Ashasbeenthecaseinpreviousmonths,tacklingsalmon’ssealice
problemisanexpensiveundertakingwithnosinglecompletesolutionyet
tohand.Whiletheindustryhasbeguntolookbeyondheatandchemical
treatmentstootherremediessuchascleanerfish(specificallywrasse),the
longlifecycleofthesehelperfish,aswellasconcernsovertakingthemout
ofthewild,meanthattheremaynotyetbeenoughtoprovideasolution
everywhereitisneeded,andenvironmentalconcernsthatlimittheir
availabilityfurther.
Inthemediumterm,Norway’sNordeaBankbelievethatfarmed
salmonproductionwillbeupby12%inthesecondhalfofthisyear.
Lookingmoreattheglobalmarket,Chilecontinuestorecoverfromthe
toxicalgaethatdevastatedtheindustrylastyear,whichwillservetoadd
additionalfishtoglobalstocks,relievingsupplypressure.
Lookingattuna,pricesinThailandhaverisensharplyrecently,affecting
Thaitunacannerswhohavehadtoturntheirfocusawayfromproducts
forhumanconsumptiontowardsotherlinessuchaspetfood,wherethe
yieldisgreater.
ConcernaboutdecliningAtlanticcodstocksintheBarentsSeahave
continuedtopushcodpricesup,asmovestocutquotasby20%for2018
havebeenrecommended.Thepoorerharvestshavealsoputadded
pressureonfrozenfillets,forwhichpricesarenowbeginningto
approachthoseoffreshAtlanticcod.
CurrentinflationFPI | 15.7% 12mthForecast | 11.0%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
95.8 95.898.4 98.1
96.8
99.6
99.3 99.9 100.2
104.8104.8
103.5
105.8
95.6 95.1
102.3 103.0
110.2
98.9
106.2 106.9 107.0 107.2
116.5
106.9
110.6
92.0
96.0
100.0
104.0
108.0
112.0
116.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
8
Fruitpriceinflationhasincreasedto12.7%,astheeffectsofthisyear’sbadweatheronfruitharveststaketheirtoll.
Fruit
Bananapricesarelikelytocreepupwardsintheshorttomedium
term,duemoretoglobalmarketeffectsthanissueswiththeUK’susual
suppliers.
SeveralproductionareasthatmainlyservetheUSmarket,for
example,haveseendelaysorreducedqualityandsupplydueto
badweather,withEcuadoraffectedbyheavyrainfall,andcold
temperaturesaffectingthesupplyoforganicbananasfromMexico
totheUS,wherethereisincreasingdemandfororganicandpremium
products.
ArecentreportbytheUSDAshowsthatexpectedorangevolume
forthisyearhasbeenadjusteddownwardsby1.4%,offthebackof
virusesdecimatingtheItalianharvest,onlypartiallycompensatedfor
byhealthyproductioninSpain.Peruvianproductionhasbeensteadily
increasingacrossthepasttwoyearsalso,whichwillhelptofurtherplug
gapsinsupply,butnotwithoutcost.ComparethistoBrazil,also,which
hasseenthesmallestcropin10years.
Citrusgreeningalsocontinuestobeaseriousissueinotherparts
oftheworld,especiallyinFlorida,wherethediseasecontinuesto
seriouslyaffectcrops.Greening,alsoknownbyitsChinesenameof
“huanglongbing”orHLB,doesnotyethaveafoolproofmethodof
prevention,leadingtogrowerslookingatalternativecrops,butthiswill
notaddressthedemandforcitrus,andsoUSbuyerswillneedtolook
elsewhere,addingpressuretoglobalsupply.
Theothertwofactorsthathaveaninfluenceonfruitingeneral
aretheongoingaftereffectsoftheweather,andtheexchangerate
betweenthepoundandothercurrencies–ittakessometimeforthe
effectsofexchangeratechangestocomethrough,butevencomparing
theexchangerateof€1.36/£1atthestartof2016to€1.17/£1atthe
startof2017,onecanseethatourpurchasingpowerhasdefinitely
weakenedovertime,withknock-oneffectsforanycategorythatis
majority-imported,suchasfruitorhotbeverages.
CurrentinflationFPI | 12.7% 12mthForecast | 9.9%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
100.3
99.3
97.8
98.8
101.1102.3
105.6 105.6
101.2
102.5 103.7
103.5 102.9
101.2
106.5
99.0
106.9 106.3107.5
102.3 103.1101.5
103.6 104.0
107.2
114.1
96.0
100.0
104.0
108.0
112.0
116.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
9
Meatpriceinflationisat11.9%forMay,asbeefsuppliesarelower,porkcostsarehigherandlambcontinuestoregainpopularity.
Meat
Domesticbeefprices,alreadypotentiallyaffectedbypoor
winterandspringweathercuttingdownongrazinggrass,
arefurtherconstrainedbyreducedproductionandhigher
demandinScottishbeef.Lowercarcaseweightsfurther
contributetothatreducedproduction.
Bycomparison,Irishbeefhasfalleninprice,butwhile
thismightnormallyservetocounterbalancedomesticprices,
movestowardsfocusingonBritishBeef,forexamplethe
Co-Op’srecentmovetowardsBritish-onlyfreshmeatinall
theirstores,hasreducedthepotentialimpactsomewhat.
Porkpricesarealsohigher,withavarietyofcutsincreasing
inpricesincelastyear.Mayfarmgatepricesforporkand
pigproductswerealsoupsignificantly,recordinga36.6%
increasecomparedtothesameperiodlastyear.
Chickenpriceshavesofarremainedrelativelystable,with
noseriousreportsofadditionalcostsorissuessurfacing
followingtheavianflualertearlierthisyear.
UKLambpriceshaveriseninpriceacrossthelastfew
weeksinJune,bothforoldseasonlambsandspringlambs,
bringingtheaveragedeadweightpriceup,asdemandgoes
upandslaughternumbersreduce,atonepointdown13%
comparedtothesameweekinMaylastyear.
CurrentinflationFPI | 11.9% 12mthForecast | 9.4%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
95.296.3
95.0 95.4 95.3 94.8 95.095.9 96.2 96.6 96.7
97.5 97.2
99.8 99.4 99.197.8
100.0
103.4 103.6
106.3
103.0
104.7
108.1
105.9
111.7
92.0
96.0
100.0
104.0
108.0
112.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
10
Pricesindairyareupby9.9%year-on-year,inkeepingwiththesteadyincreaseoffarmgatepricesuptonow.Whilepricespaidtofarmersdippedin
May,forJuneitlooksasthoughtheymaybeabouttoheadbackup.
Milk, Cheese & Eggs
Continuedrisesincommoditypricesfordairygoodssuchascream,
cheeseandbutterfailedtobereflectedinthefarmgatemilkprices
paidbythemajordairyprocessorsinJune–fiveoutofsixofthemajor
namesintheindustrybroughtpricesdownforthemonth.
Thereisanindication,however,thatthiswillbequicklyreversed–Arla
Foods,havingbroughtitspricedownby0.4pperlitreinJune,will
increaseitby1.65pperlitreforJuly.Giventhattypically,whereone
processorgoes,theotherswillfollow,theyarelikelytofollowsuit,ifnot
inJulytheninthemonthsbeyond.
Asmentionedelsewhereinthisreport,butterpriceshavecontinued
tomoveup-followingabriefdroparoundthebeginningofFebruary
thisyear,theendofMaysawsomemarketpricesforbuttershootup
oncemore,endinguphigherthanatanypointoveratleastthelast
20years.
Thisnaturallyhasaknock-oneffectacrossmorethanjustthis
category,alsoaffectingBread&Cereals(anybutterpastryisgoingto
becomemoreexpensivefollowingtheserises)aswellasOils&Fats,
wherebutteralsofeatures.
CurrentinflationFPI | 9.9% 12mthForecast | 8.8%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
97.0
95.596.9
96.7
95.8 95.7 96.0
96.5 96.0
96.6
98.297.4
98.299.4 99.4 99.2
97.7
99.398.5
99.8
94.595.1
97.0
101.0102.0
109.2
92.0
96.0
100.0
104.0
108.0
112.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
11
PricesforSoftDrinksareupby7.2%year-on-year–theincreasedcostoffruitandtheweakenedpoundcomparedtolastyeararesignificant
culpritshere.
Mineral Waters, Soft Drinks & Juices
Asnotedelsewhereinourreport,fruitpriceshavemovedup
comparedtolastmonthastheeffectsofpoorweatheracrosstheworld
affectsharvestsofmanyfruits.Theeffectsonorangegrowthwillbe
particularlyrelevanthere.
Sugar,meanwhile,hasmoveddownwardsastheendofEUsugar
quotasapproaches(primarilyaffectingbeetsugar),whileinBrazilnotonly
aresugarcaneharvestslookinghealthy,buttheyieldfromthatcropis
higherthanusual.
Shippingandpackagingalsomeanthatoilpricesfactorin–Brent
Crudepricescontinuetoslump,asOPEC’sattempttobringpricesback
upisunderminedbystrongproductionfromthosememberswhowere
exemptedfromcaps,aswellasothernon-OPECcontrollers.Attimeof
writing,BrentcrudeoilpricesfromICEsitat$46.42abarrel,andwhile
priceshaveswungupanddownsincethebeginningofMarchthisyear,
theoveralltrendsincethenhasbeenafallinprice.
OPEC’seffectivenessasacontrollerofoilpricesisalsounderthreat
duetotheongoingbreakdowninrelationsbetweenSaudiArabia(and
itsallies)andQatar,aswellastheaccelerationofUSshaleoildrillingin
responsetohigherprice.
TheexchangeratebetweenGBPandtheEuroisalsoafactor,having
reachedahighofnearly€1.20/£1,thenfallingawayfromApril18th
onwards,thedatetheUKGeneralElectionwasannounced.Attimeof
writingitsitsaround€1.12eurostothepound,astheresultinghung
parliamenthasdentedcertaintyintheUK’sdirectioninupcoming
Brexittalks.
CurrentinflationFPI | 7.2% 12mthForecast | 5.1%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
98.9 98.997.2
95.5
98.3
94.6 94.295.5
97.3
96.895.4 95.7
96.6
104.6
107.7106.4 107.0
105.7
101.2 101.6
96.697.7
102.3
107.5109.2
112.2
90.0
94.0
98.0
102.0
106.0
110.0
114.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
12
InflationforOils&Fatsisat10.7%year-on-yearforMay.Oliveoilpricesarestillundersignificantupwardpressure,howeverbutterismoving
upwardsoncemoreassuppliesrunshortandexportdemandremainskeen.
Oils & Fats
OliveOilpricesarestillrisingastheeffectsofdisease,winterfrosts
andthemorerecentdryweatheracrosstheMediterraneanpersist.
Globalpricesforoliveoilareupby25%andarelikelytogohigher,as
productionestimatesremaingloomyinseveralkeygrowingregions.
Butterpriceshavecontinuedtomoveupwards,fromacombination
offactors;poorweatherhasaffectedgrazingconditions,supplyhas
fallenasmoreUKdairyfarmershaveleftthesectorentirelyorreduced
theirexposuretounprofitablefarmgateprices,demandfromoverseas,
especiallyChina,continues,anddomesticdemandisalsoup.
ThepressureonpricesisnotconfinedtotheUK,either–inFrance,
aspokespersonforthefederationofFrenchbiscuitandcake-makershas
alreadystatedthattheindustryis“underunsustainablepressure”,
witharealriskofbutterrunningout.
Pricesforsoyaoilandpalmoilhavealsocontinuedtofall,following
anxietyaroundanewtaxregimebeingintroducedinIndiathatcould
maketaxationonsoyaandsoyaoilmorecomplicated.
Onceagain,theweaknessofGBPservestopushuppricesforall
imports,exacerbatingexistingpricerisesandreducinganybenefitthat
mightbehadfromreducedprices,havingmovedfrom€1.20/£1to
€1.12sincelastyear.
CurrentinflationFPI | 10.7% 12mthForecast | 7.0%
CGA-Prestige FPI Report - June 2017
FPISub-CategoryReportJune2017
98.8
99.698.2
101.7
99.598.5
97.1
102.1
102.7
103.4
106.2
99.3
102.5
99.0
96.397.0 96.9
104.3
102.1 102.1 101.7
104.3
100.2
103.5
105.6
109.7
94.0
98.0
102.0
106.0
110.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
13
Whilepricesinthiscategoryarestillhigherthanlastyearby3.0%,theproportionalincreasehas,likepricesthemselves,beenreducingoverthe
lasttwomonths,asyoucanseeinourgraph.Thisismostlyfuelledbysugarpricesfalling,asBrazil’sproductionsofarthisyearlookshealthierthan
originallyexpected.
Sugar, Jam, Syrups, Chocolate & Confectionary
Priceestimatesacrossvariousglobalmarketshavecontinuedto
movedownwardsaspredictedoutputbymajorgrowersofsugar,
includingbeetsugarintheEUandcanesugarfromthelikesofChina,
ThailandandBrazil,continuetolookpositive.
Brazilisnotonlyproducingmoresugarcane,buttheyieldfromthat
canehasbeenhigherthanexpected.Thisislikelytokeeppriceslowfor
somemonthstocome.Astheprimaryingredientforthiscategory,this
abundanceofsugarwillbethemainreasonthatactualprices,asshown
inourgraph,havecomedownacrossthelasttwomonths.
Cocoaprices,meanwhile,arelikelytoincrease,atleastintheshort
term–thecocoafuturesmarkethasseenpriceseveningoutand
comingbackup,asignthatthecurrentharvestseemtobeslowing.
Ofthetwomaingrowers,however,IvoryCoast’smainharvestisdue
tostartinOctober,whichwillserve,barringanyunexpectedevents,to
replenishstocksagainandsendpricesbackdown,butthereisevidence
ofdryweatherinsomegrowingregions,whichcouldaffectearly
cropgrowth.
TheotherelementkeepingpriceshigherthaninMay’16isthe
weakenedpound–despitepricesformanyoftheinputingredients
goingdown,theUK’sbuyingpowerhasbeendentedbylowerexchange
rates,andthissituationislikelytocontinueforsometime.
FPISub-CategoryReportJune2017
CurrentinflationFPI | 3.0% 12mthForecast | 0.9%
CGA-Prestige FPI Report - June 2017
99.7 97.6 97.8
99.9
97.0
98.0
96.6 96.6
101.4
98.2 98.6
99.9
101.4
99.8
101.5101.0
102.0101.4 101.0
104.3
99.8
101.8
104.3
106.6
105.0
102.8
94.0
98.0
102.0
106.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
14
Vegetablepricesareup9.2%onMaylastyear.WhilewarmweatherandtheonsetoftheBritishgrowingseasonbrieflybroughtpricesdown,a
combinationoftheweakerpoundandthefalloutofBrexitarenowcombiningtopushthemupagain.
Vegetables (including Potatoes)
Whilevegetablepricesdippedlastmonththeyhavenowclimbed
againinMay,notonlyduetotheincreasedcostofimportsdueto
theweakerpound,butalsoduetoincreaseddifficultyhiringmigrant
workers,avitalpartoftheindustryhereintheUK.
ArecentNationalFarmersUnion(NFU)surveyrevealedthat
therewasa17%shortfallofworkersinMayofthisyear,withfewer
workerswillingtoworkinaUKthatisincreasinglybeingperceivedas
xenophobic.Evenifthiswerenotthecase,thereducedvalueofthe
poundtranslatestoreducedwagesforworkerscomingfromabroad,
furtherreducingtheattractivenessoftheUKasaworkdestination.
Therearefewalternativessourcesforthislabourtoo–thesameNFU
surveyshowedthatonly14ofthe13,400workersbetweenJanuary
andMaywereBritish.
Theworseningexchangerateisalsoasignificantproblemforboth
fruitandvegetables,regardlessofwhetherthelabourortheproducts
themselvesareimported–eitherway,priceswillgoup,andifwemove
moretowardsimportsthandomesticproduction,wealsoreduceour
foodsecurity,increasingourrelianceonthoseimports.
FPISub-CategoryReportJune2017
CurrentinflationFPI | 9.2% 12mthForecast | 7.2%
CGA-Prestige FPI Report - June 2017
95.594.7
95.994.8
95.9
94.1 94.495.2
96.3
98.5 98.7 98.897.7
101.3
102.8
101.3 101.8
106.0
107.6 107.4
105.5
109.4
106.6
108.4
106.4
110.6
92.0
96.0
100.0
104.0
108.0
112.0
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CPI - 13 Months FPI - 13 Months
PleasecontactCGAStrategyforquestionsrelatingtoresearchandcontent:
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