Posts Tagged “recession”
RaboBank has released its North American Agribusiness Review for February 2023, provided a market outlook on several products for this year, including fruits and vegetables, considering a disinflationary process that has started in the U.S.
The report indicates that: “The disinflationary process is going to take a significant amount of time. Therefore, we do not expect the Fed to cut rates in 2023, despite our forecast of a recession in the second half of the year. The Fed will have to keep rates high to squeeze inflation out of the economy.”
However, at least for products like fresh vegetables, seafood, and milk, prices have already started to drop from the beginning of the year.
After a year where food inflation reached double digits, consumers will be happy to see some decrease in grocery prices in general by mid-year.
Fruits
The report analyzes a couple of fruits in the market individually. Avocados have seen a consistent decrease in price since Sept. 2022 by almost 50% year-on-year. With record-setting crops and high volumes from Mexico, prices have dropped considerably.
On the other hand, apple prices have increased caused of shorter crops in WA, causing low availability of some varieties. By mid-February, some non-organic varieties reported up to 53% price increases year-on-year.
Strawberry prices also increased 11% year on year with increased demand, the report shows, however, that a record high acreage planted in California gives hope that availability will improve during 2023 and prices may normalize.
Orange and lemons, showed a 5% and 7% decrease in shipping point prices, a consequence of California’s increased citrus production.
Vegetables
Vegetable prices are expected to decrease, slowly but surely, as supply pressures ease.
“In January, the fresh vegetables CPI was the fastest dropping index at 2.3% month-on-month, showing retail prices reacting to upstream’s price ease,” said the report.
Potatoes seem to be the most complicated product, with the lowest production since 2010 with just 397m cwt. As a consequence, prices have reached a historic high, with a 75% increase year-on-year.
In general, prices for carrots, celery, cucumbers, sweet corn, and bell peppers, are all up year-on-year caused by a combination of short supplies and strong demand.
Consumers should expect lower prices, but it won’t be a quick process, so experts ask for patience when it comes to buying fresh produce at your local grocery store.
By Kenneth Cavallaro, Jr., ALC Boston
Trucking recession? According to a recent Bank of America survey, demand for trucks is actually down 58%. Consumers are spending less money on material items such as televisions and clothing and instead funneling more of their hard-earned funds towards services, reports the U.S. Bureau of Economic Analysis. Kantar’s Entertainment On Demand streaming analytics reveal streaming subscriptions are up 88% since the beginning of 2022. More people are using companies like DoorDash and Grubhub for food delivery. Meanwhile, electricity prices are expected to climb on an average of 20% across the United States this winter and natural gas costs are predicted to increase 36% according to the U.S. Energy Information Administration, presumably further leading to less discretionary spending on material items. What does this mean for the trucking industry?
Our industry is all about supply and demand. The latest data from S&P Global Market Intelligence shows freight rates have continued to fall as global trade volumes slow due to shrinking demand for goods. Freight rate forecasters utilizing the Cass Index have indicated that “freight rates are leveling off and set to slow sharply in the months to come.” So yes folks, we are truly in a trucking recession. Thankfully, with 70% of all goods in the United States moved by the trucking industry, this will eventually resolve. The last recession hit in 2007 and lasted almost two years.
So where do we go from here? Federal investment in our country’s roads, highways, and bridges over the next four years will make it easier for trucks to make on-time deliveries. Drivers will likely see their lives improved by programs like our innovative ALC tracking app, which creates an easier flow of information and allows better estimating on loading and unloading times once they reach shippers or receivers. In addition, our app supports better tracking and provides us with an easily accessible timeline of how the customer’s load is progressing.
Transportation of produce and other refrigerated items leads to even higher rates, partially because of increased fuel usage during wait times for loading and offloading, as the load must be kept at a precise and constant temperature. In addition, wait times are frequently increased when produce coming fresh from the field needs time to cool or produce coming off the truck must undergo quality inspections. Situations such as these increase the amount of fuel the truck requires to keep the reefer running, causing the rates for produce transportation to soar higher than rates to transport non-perishable goods.
With many trucking companies struggling due to the harsh conditions of the current market, company mergers are coming more into play. More trucking companies will likely move in this direction in 2023 if the market does not improve. This would allow more companies to stay afloat, instead of lessening the amount of trucks on the road. Continued urbanization will also allow truckers to traverse parts of the country that were previously off-limits, allowing deliveries to reach more people in less time. There will always be peaks and valleys as we ride this trucking rollercoaster, so buckle up, pull down the lap bar, and hang on for dear life because it is going to be a bumpy ride.
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Kenneth Cavallaro, Jr. is a Senior Transportation Broker in the Boston office. He began his career at the Allen Lund Company in February of 2019. Kenneth has been in the transportation industry since May of 1999. He holds a Bachelor of Arts in Communications from Salem State University.
Avocado prices have fallen sharply over the past month due to an oversupply of Peruvian avocado. The decline is spurred by fears of recession impacting the consumption of relatively expensive food products, according to agriculture commodities data group Tridge.
Tridge data reveals wholesale prices of avocado in Mexico dropped by 47% month-on-month, and avocado prices in the U.S. also fell by 27% month-on-month.
Colombian avocado prices also fell by 39% month-on-month.
“The price downturn is due mainly to oversupply,” Tridge reported.
“Peru has been increasing avocado export by 25% every year for almost five years, and this year, its export volume has increased by 30%.”
There is an “avocado disaster” in Europe because of oversupplies, and U.S. and Asian markets are starting to exhibit similar market reactions.
Additionally, some avocado market participants observe consumption of avocados is falling because people are buying fewer avocados while high inflation and recession affect household income. In some countries, avocados are sold lower than the farmgate price, Tridge reported.