OVERVIEW GLOBAL BANANA MARKET

Competition is getting tougher in Latin America. Costa Rica is expanding their production and Ecuador feels the consequences. In most European countries, the demand peaks in the first months of the year. The only exceptions are Poland and Italy. India is looking to boost banana exports, mostly within its region, but also to Europe. The Chinese market is shifting to imports from Ecuador. In the US, a price war is a threat to small businesses. Australia is investing in a laboratory to develop a banana variety that is resistant to the dreaded TR4.

Ecuador: more competition from Costa Rica

Every year, the number of producers increases. The production was good, but competition in Central America is getting tougher and this is reflected in the prices of bananas, which are 50 cents cheaper than in previous years. Ecuador suspects that this is due to Costa Rica's greater production. As regards exports, the country sees demand increasing in Japan, South Korea and Dubai.

The rain has hampered the harvest in Colombia, but production continues to increase. Europe is by far the main consumer of the country's bananas, accounting for 75% of the exports. The US is second with 15%. In the coming years, Colombia wants to find new export markets, also in Asia. The prices are pretty good and demand is stable. The country wants to produce bananas in the conflict areas. At present, 20% of those areas are devoted to banana cultivation.

The production volumes had been somewhat disappointing due to the weather, but the supply is now back to normal. The heavy rains of the past few weeks have not delayed the harvest. The country sees demand rising especially for organic bananas. As for exports, the sector expects them to grow by 15% this year. Also, many growers are interested in switching to organic cultivation.

Last year, the country exported 120 million boxes; a record figure. Costa Rica's banana production is growing, and the demand is also increasing. The share of exports of major brands like Chiquita and Del Monte is on the rise; proportionally, there is less free trade.

The peak months for banana sales are currently underway. Traditionally, consumption during the first months of the year stays at a good level and importers feel the market pull. We come from a period when there were fewer bananas available, but now the supply is rising again. "Interestingly, the market for organic bananas continues to grow. It is still a niche market, but demand is on the rise at various fronts. The wide range of children's bananas, budget bananas and organic bananas, sometimes in combination with Fairtrade, ultimately results in additional demand," said an importer

The first four months of the year are usually the best months for banana sales. In general terms, the market is calm and there is "nothing special going on." The prices for green bananas are now slightly going up, while the "yellow" prices are more stable. Green prices are the purchase prices for the importer/ripener who will later sell the yellow bananas. The price of the yellow banana is always a little behind. According to a trader, it is difficult to get higher prices for bananas. "Making the product more expensive for customers today is not easy anymore." Although there are several brands available on the market, there seems to be a preference for Chiquita bananas.

At this time, the market is stable. Both supply and demand record no significant changes, either upwards or downwards. Traditionally, the demand increases slightly in the first months of the year and the supply may drop somewhat, but since most of the banana market is fixed in contracts and little is traded on the spot market, the price barely changes. The exchange rate may be affecting the trade in the spot market, but volumes there are very small. Last summer, however, traders noted that there was an impact on the price when the pound lost value against the dollar. A trader says that the supply from Ecuador has not faced any issues, although Costa Rica and Colombia had bad weather. These weather conditions only took a toll on free trade. Importers diversify their business by offering other services or products. For example, there are importers who expand the range of exotics, while others invest in logistics services.

On the French market there are currently many African bananas available. A trader says that there are shortages in the supply from Latin American and Caribbean countries. Colombia, Guadeloupe, Martinique and the Dominican Republic are facing shortages. Thus, the prices for premium bananas are high and the demand is shifting to Class 1 bananas, whose prices are more affordable. The dollar makes imports difficult. According to an importer, it is not easy to get a contract with a better price, so there are many companies in Europe losing money.

A Polish banana importer describes the situation in the Polish market as "not great." The sales of yellow bananas are not in proportion with purchases in the northern ports of Europe. Last week, the spot price of Ecuadorian bananas stood between 10.50 and 11 dollars. That price increase has not yet been reflected in the price level of yellow bananas. There are promotions underway that advertise the sale of bananas at low prices. In general, sales are not spectacular at this time of the year. According to a trader, the price should be higher and the situation should be better. On the wholesale markets, the supply remains stable. The low temperatures do not give sales a boost. Furthermore, the school holidays have a negative impact on sales in parts of the country. In recent years, a number of niche products, such as red bananas, baby bananas and plantains, have also hit the market, but they remain small products.

The market share of imported bananas continues to rise at the expense of Canary bananas. This applies especially in the southern Mediterranean regions. In Northern Spain, the consumption of imported bananas is smaller. Imported bananas have approximately a 40% share of the Spanish market, while Canary bananas account for the other 60%. In recent years, prices have become more competitive because tariffs on imported bananas have been reduced. Spanish supermarkets use these bananas as part of promotions to attract more customers. Imported bananas are therefore cheaper than the Canary bananas and the quality has also improved. Colombia has flooded the market over the past six months. Consequently, the prices have been under pressure. At this time, Canary bananas are 60 to 70 cents more expensive than imported bananas. In the winter months (February to March), demand peaks and prices rise; however, the supply is limited. The supply of Canary bananas remains stable at around 6 to 8 million kilos per week. The import market is less stable. European importers use Spain to dump surpluses and stabilise the market.