Global Market Review Banana

It has been a difficult season for bananas across the global markets this year, but the prospects are looking up in some countries. In the Netherlands, the banana market is recovering after a subdued summer, with rising prices and stable supplies. Germany, however, reports weak demand but maintains stable sales, with occasional oversupply requiring price reductions. Italy grapples with extremely low prices, particularly affecting banana ripeners who struggle with minimal profit margins. Spain, on the other hand, has restored balance in its banana production post-volcano eruption, with stable prices and increased domestic production.

South Africa faces low banana supplies and significantly higher prices due to weather-related challenges. In India, a deficit in rainfall and quality issues cast uncertainty over future banana production and availability. Meanwhile, China contends with typhoon damage affecting domestic production and shifts in import sources, while North America prepares for increased banana supplies, but pricing pressures loom as retailers adjust to changing market dynamics. Ecuador, the world’s leading banana exporter, sees growth in exports, driven by production dynamics, reduced shipping freight rates, and increased organic banana exports to the United States. Additionally, the country’s banana industry grapples with security threats related to the drug trade, investing heavily in security measures to protect its global export position.


Netherlands: Banana market picks up after tame summer sales

After somewhat tame summer sales, the banana market is currently picking up. “Prices for ripened bananas have now risen on the day trade to levels between 14-17 euros. But we have also had a bad period,” says a Dutch importer. For now, the delays in the Panama Canal have had little effect on banana supplies. “We see that Ecuador has lower production at the moment. Most of the fruit now comes from the Atlantic side, from countries like Costa Rica, Colombia and Guatemala, so they are on the right side. However, there is currently talk of also making the big sea vessels wait longer in front of the canal, so this threat does continue to hang over the market.” Besides stable sales towards retail, food service is a growing market for bananas.


Germany: No strong demand for bananas

The demand for bananas on the German market has not been particularly strong recently. The interest that was there could be easily satisfied without any effort. Mostly, traders have adjusted their supply to the subdued demand which resulted in a stable sales situation. Now and then the supply was too abundant. Price reductions were therefore needed if larger stocks were to be avoided. Mostly, this concerned the second and third brands, but in Munich the entire range of goods was affected. Overall, prices were still slightly above last year’s level.


Italy: No profit margins for banana ripeners

The banana market in Italy is experiencing very low prices. This is according to an operator in northern Italy who has one of the largest ripening facilities. In recent weeks, average prices for unbranded bananas have fluctuated between €9 and €12 per box, whereas a profitable price is at least €13-16. This is causing major problems for banana ripeners, who currently have no profit margins as costs exceed revenues. It is hoped that with the opening of schools next week, consumption will increase and with it prices. The weather in Italy at the moment is not helping: at 30-34°C, consumers are more likely to buy watermelons, melons and stone fruits than bananas.


Spain: Banana market back in balance

The island of La Palma has recovered its banana production capacity, which had been affected by the volcano eruption of 2021. The production of the Canary Islands had been reduced by 15% in 2022. Last year was a really atypical in terms of prices for the sector. The shortage caused by the volcano eruption resulted in a lack of supply that pushed prices up and allowed imported bananas to gain market share in Spain. But in 2023, there is once again balance between domestic and imported bananas due to an increase in the price of imported bananas during the first months of the year and the increase in the domestic banana production.

This year, prices have been more stable and they even dropped in the last few weeks due to the heat in July and August, which gave a boost to the yields in a period that is not the most favorable for canary banana sales, namely the summer. So far this year the volume of Canary bananas on the market has exceeded 235 million kilos compared to the usual average of 268 million kilos of bananas on these dates, which means 14% up. The prices paid for the fruit exported to the peninsula dropped by 26%, which has now been sold for 70 cents per kilo compared to its usual average. Before summer it was around 95 cents.


South Africa: Banana supplies still ‘bitterly low’, prices 120% higher

As a result of tropical cyclone Freddy (the record tropical storm that remained active over Mozambique and northeastern South Africa for five weeks over February and March) as well as frost two months ago, banana supplies are still “bitterly low”, says one trader, and demand remains weaker as a result of economic pressures.

Banana supplies are almost 50% lower than a year ago and conversely prices are 120% higher: R11.60/kg (0.6 euro) at the Johannesburg fresh produce market.

A trader who does a little business on the municipal market, supplying mostly retail and processing, says at the fresh produce market they’re getting about R180 (9.5 euro) per 18kg box for class 2 medium bananas.

“Volumes should be picking up next week,” says a trader, “But then all the banana producers will probably overwhelm the market with masses of bananas at one go.”


India: Lack of rain causes uncertain times

Indian bananas are headed into hard uncertain times going forward, due deficient rainfall in the primary growing bowl of Maharashtra. Prices have started hardening already due increased consumption, because of the approaching festive season, with added pressure being created due uptick in demand from Middle East and Persian Gulf. This is happening despite a 40% higher plantation for this season. There are some quality issues, and underweight hands continue to impact the availability by drastically limiting the quality product export volumes. In summary the outlook for the coming months is rather bleak on the quality and availability front.


China: Typhoon hit Chinese domestic banana production

China imports bananas from the Philippines, Cambodia, Laos, Vietnam and Ecuador. Domestically it produces bananas in Guangdong, Guangxi, and Sichuan. In July, typhoon Tali made landfall in Guangdong and regional banana orchards suffered heavy losses. Banana production in Guangxi was also affected, with some growers reporting losing their entire crop and severely damaging their banana trees. Typhoons cause huge damage to banana trees. Not only do they cause fruit drop and tree damage, but they also cause waterlogging and root rot due to flooding.

China’s banana imports account for 10% of global imports. Supply from emerging exporters Vietnam and Cambodia has increased rapidly, with a total import volume of approximately 800,000 tons, a year-on-year increase of 13%. Supply from the Philippines fell. China’s imports from Ecuador have fallen since the onset of the pandemic, driven by high transport prices, and increasingly sharper price differences compared to bananas from Southeast Asia. Meanwhile, Cambodia’s exports, of which 90% go to China, plummeted nearly 25% in the first half of 2023 compared to a year earlier. Weather conditions in Cambodia caused this decline, and low prices moved farmers into growing other crops.


North America: Pricing pressure on bananas ahead

Supplies of bananas are increasing. Right now bananas are coming from Ecuador, Costa Rica, Honduras, Guatemala and Mexico, all regions with slightly more production, thanks in part to El Nino.

At the same time, demand is strong. However, the market price for bananas is low given there is more fruit available.

However, many retailers are heading into contract season. “A lot of producers selling to Europe are going to be forced to bring their fruit to the U.S. or other markets in Asia given the limit testing the European Union is introducing for bananas,” one shipper says.

That’s likely going to put downward pressure on pricing. However, growers and shippers also continue to contend with cost increases. “Now banana producers in Central America are facing a strong increase in labor costs and a much weaker dollar,” he says. “The devaluation of the dollar, in most banana producing countries, represents a 10-15 percent reduction in income.”

However, some banana producing countries such as Honduras and Guatemala have currencies pegged to the U.S. dollar and are better positioned to continue offering bananas at the same prices.


Ecuador: 6.99% more fruit exported in the first 7 months of 2023

Ecuador’s banana exports accumulated from January to July 2023 stood at 220.17 million boxes, 6.99% higher than what was exported in the same period of 2022.

“The increase in exports is due to 3 factors,” explains a marketer and exporter. “The first of them has been the dynamics in production, since the main suppliers of bananas to the United States such as Guatemala, Costa Rica and Colombia produce less bananas in the winter, unlike Ecuador, which produces more bananas at that time. In fact, this first semester of 2023 there was a growth in exportable production in relation to the first semester of 2022 of approximately 9.5%.”

“Secondly, the reduction in shipping freight rates, which are already at normal levels, unlike the previous year when they even doubled and tripled in some destinations (generating high inflation in world markets such as the European Union, the United States, Russia etc.); although freight rates to Russia are still high. The above has meant that the cost of importing bananas has been reduced.” Exporters say they are able to export and meet the demand for bananas from Russia, but it has to be based on 100% pre-payment. Last year it was a big challenge for Ecuadorian exports to get funds following sanction on Russian banks etc. After dropping, volumes to Russia have stabilised again. Another exporter from Ecuador has a representative in Belarus to supply both that market and Russia with bananas, which are not easily obtained from other supplying countries anymore.

“Finally, a large part of the organic bananas exported by Ecuador have gone to the United States, and that is why there is an increase in banana exports to this country.”

The strong growth of +23.54% in imports from the EU-27 – the largest importer of Ecuadorian bananas – stands out in the first 7 months of 2023, driven by the increase in those who are already the largest buyers on the continent: Netherlands, with almost 16.2 million boxes of bananas, increased its imports by 16.08%; Germany acquired 9.7 million boxes (+39.50%); Italy bought 8.1 million boxes (+10.96%); Belgium, 6.9 million boxes (+6.64%): Greece, 6.5 million boxes (+42.07%); or Slovenia, 4.9 million boxes (+59.57%), among others.

On the other side, Spain had the biggest drop in imports in the EU, reducing them by 46.62% to 766.5 billion boxes.

After signing a free trade agreement, exporters of bananas in Ecuador say they are making further contact and hoping to increase sales to the Chinese market. They will then be ready to send more as soon as the deal is signed.

Additionally, besides the focus on banana production and exports, as the world leaders in exports, Ecuador’s industry has to closely watch the drug trade, as they often use banana shipments to distribute drugs around the world. This causes major harm to the reputation of the country and industry. Ecuador’s banana cluster says the industry spends an annual $100 million on security threats to combat the scourge and help secure their industry’s top export position worldwide. This includes video surveillance equipment, extra security personnel and a host of other measures.

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