Market Report: February 2014

RPI Summary

Annual RPI ended 2013 at 2.7% – having remained pretty static since falling under 3% in October. This after spending the prior 9 months (from January through to September ) at 3% to 3.5%.

Of the other commodities tracked; beef, fish and cereals all suffered a mini upward blip in price increases during November before tailing off in December. Dairy, meanwhile, dipped in November whilst pork fell sharply to finish the year down -1.2%.

Food and catering RPI has fallen steadily over the last quarter from 3.6% in September down to 2.1% in December.


Traditionally, prices tend to ease following the festive season as budgets tighten and demand falls. However, this year inventories are lower than normal so recent increased throughput of prime cattle in the early weeks of 2014 has led to a holding of prices. The fundamentally tight supply situation still remains and if demand should begin to pick up again prices will follow. RPI for the 12 months to December 2013 showed an increase of 6.4%, this versus 6.8% for the same period in 2012, with prices at £4.00 kg in July compared to £3.50 kg in the same month of 2012.

Fresh and frozen beef volumes sales decreased overall 2.9% in the year to January 2014. Falls were experienced in all categories except second quality stewing meat where it increased by just 0.1%.

The biggest variances though were felt in frozen ready meals (down 16%) and chilled ready meals (down 13%). Consumer spend for the year was 3.8% more than the previous one, buying just 2.9% less beef.


Shortages due to adverse weather and reduced feed is likely to drive prices up unless consumer demand continues to fall away.


The UK dairy RPI stabilised during the latter part of 2013 remaining around the 2.5% mark from September onwards.

UK monthly milk production in December 2013 was 1,151m litres – some 10.7% increase year on year. Overall, market prices for this sector remained fairly stable throughout 2013 with sterilised milk seeing the largest increase. During December there was a slight fall in prices paid to milk producers resulting in a UK average farm gate milk price of 34.3 pence per litre (at current prices) – this a 14% year on year increase.

With UK milk at a 12 year high for the month in January (1.2bn litres – 2% higher than December 2104) there is some speculation on the impact should the trend continued into the spring (a report by DairyCo proposes) – “Is there enough capacity and demand in GB to make use of it all, or will supply be managed through price reductions?” If global demand remains strong, UK prices should not be too adversely affected but the report worries whether capacity will limit UK processors’ ability to direct the milk into commodities.


British dairy farmers look forward to a favourable outlook for 2014 as they gear up to increasing herd sizes, improving efficiency and productivity in preparation to reaching quota targets in 2015.


GB finished pig prices were relatively stable in the quarter running up to Christmas with average prices during December only slightly lower than November at 171.31p/ kg. However, prices have since fallen with the RPI for pork ending the year at -1.2% – good news maybe? Over the last 3 years, seasonal trends in the pig market have begun to change where lower prices in the first two months of the year is now normal before they rise again until the summer, easing back until September before moving upwards again towards Christmas.


If the latest trends are followed, expect prices to maybe fall a little further before rising again through the second quarter. Prices may remain firm if consumers continue to substitute pork dishes for pricey beef.


Fish RPI followed a somewhat wavy pattern throughout 2013, beginning at 3.7% and enduring peaks in April (7.1%), August (5.6%) and November (5.6%) before ending the year at 4.3%.

More recently, the unprecedented bad weather has reduced fishing time and “exaggerated the price of fresh fish”, the National Federation of Fishmongers warned with wholesale haddock prices up 53.8% year on year to £1,474 a tonne, plaice up 51.2% to £1,246 and whiting up 44.2% to £1,675 (The Grocer). As a result, restaurants, fishmongers and fresh fish suppliers are expected to pass on a rise of around 10% to consumers. That said, “Businesses like restaurants and independent fishmongers who use fresh fish will feel the rise but it will even out very quickly as stock levels go back up to normal again.” says Tom Pickerell, technical director at Seafish.

Cod, however, bucked the trend and fell 7.9% year-on-year to £939 a tonne – so, cod and chips all round!


Traceability will come under increasing scrutiny due to the revelations that 685tonnes of illegal fish and seafood products were seized as “fake foods” in a U.K raid as part of a global crackdown on products flouting the labelling laws and regulations. This tonnage represents more than half of previous tonnes of foods impounded globally. The foods were found to be poorly preserved, incorrectly labelled and lacked the required traceability documents. As natural fish stocks dwindle and we become ever more reliant on farmed fish and a smaller range of species, prices are bound to be forced upwards by tighter management of imports.


Cereal RPI had a slight wobble in the last quarter of 2013, rising to 4.1% before ending the year at 3.5% – around 0.5% higher than January

HMRC UK cereals trade data for November 2013 showed the biggest monthly decline in UK wheat imports so far this season. November imports were 129.5Kt, 91.7Kt less than October and also 90.4Kt less than the same month 2012. This significant decline is in line with expectation given the better quality of the domestic crop and the higher opening stocks as a result of a much more favourable harvest in 2013 compared to 2012. The cumulative wheat import figure for the season (Jul-Nov) was slightly up on 2012/13 (+0.15Mt).

Maize, however, showed the biggest monthly increase with UK importing 92.5Kt more maize in November, than October, bringing cumulative imports of maize for the season so far to 738.8Kt – versus 536.5Kt for the same period last season.


The damage caused by the winter weather conditions have yet to be calculated on forecasts for the forthcoming growing season.

Other Markets

Potatoes … potatoes prices have softened by 40% during the past 6 months compared to the same period in 2013. This chipper outlook is unlikely to last unless the ground dries out swiftly in time for re-seeding.

Fuel and Energy … so, the above inflation energy price rises of the last 6 months are exerting real and significant pressure on the hospitality industry with 90% of restaurant owners surveyed in the latest Bookatable Dining Index citing this as making the biggest dent on their hard earned profits.

Joe Steele, CEO of Bookatable, says, “Many restaurants operating today have worked hard to survive the economic decline, but now face similar challenges that consumers will recognise from their own households, as food and energy prices soar. This is a real concern for the restaurant industry as well as diners, as profits and growth suffer, the cost of eating out is impacted.”

Green grocery … despite the much maligned, miserable weather, the last quarter has been steady and shaped up marginally better than the same period the previous year – primarily due to rain not being accompanied by such cold temperatures. However, all eyes are on the crop-planting season which is fast approaching. Hopefully, the worst that Mother Nature can throw is now behind us.

Looking forward, the push to promote British produce will continue in 2014 – so look out for those wonderful Cox’s Orange Pippins!

In other news

The Carbon Trust has recently launched a new report that urges businesses to assess their reliance and exposure on scarce resources and consider whether their future needs will be adequately covered, particularly in our ever-increasing resource challenged environment.

Land, energy, water and materials are proving to be the major battlegrounds with, for example, a potential 40% gap between available water supplies and water needs by 2030, with some critical materials becoming in short supply as soon as 2016. Can we afford to leave tackling these issues until later? Well, whilst 2016 may still seem a way off, failure to consider these issues may mean your current business model struggles to cope further down the line. Meanwhile, those competitors who adapt now are able to limit risk, exploit opportunities, strengthen long-term resilience, and drive business returns.

Finally … researchers at a U.S. military lab in Massachusetts are closing in on a new Pizza recipe that doesn’t require any refrigeration or freezing and will last for 3 years! Apparently, pizza is the number one request for soldiers in the field but, until now, giving it the necessary longevity for survival rations has proved elusive – the moisture in the tomato sauce, cheese and toppings ordinarily lead to soggy pizza which in turn provides the perfect conditions for mould and disease. However, scientists have now resolved these issues but remains to be seen whether the product will pass the ultimate test – 3 months down the back of the sofa!


The flooded garden of England has yet to reveal its forecast, however uncertainly is now the norm. For the commodity groups produced independently of CAP such as dairy, pork, poultry and vegetables, fluctuations in supply, demand and price will be subject to the regular vulnerabilities of climate, energy, exchange rate and regional conditions.

The commodity groups such as beef, lamb, root vegetables and cereals will be subject to the changes and decisions as producers make preparations for uncoupling of CAP EU subsidies.

Businesses will be well advised to shore up their supply chain to be able to guarantee the same premium level of quality and consistency their consumers have enjoyed thus far.