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Insights September 2020

7 September 2020 |Horticulture
Workers in the field

Insights September 2020

7 September 2020 |Horticulture
The September update provides an analysis of production and pricing trends for Australian horticulture producers.

Overview

  • Strong citrus demand and a gap in supply will aid the outlook of higher prices in September particularly for limes.
  • Bananas are likely to be in higher than usual supply for this time of year due to favourable growing conditions. This has resulted in weaker prices compared to 2019.
  • Loose leaf lettuce varieties have experienced favourable growing conditions leading into spring. Availability is high however prices in Victoria are likely to come under pressure in September. In contrast demand is back to 100 per cent in Western Australian following COVID-19.

Demand for fresh citrus remains strong, driven by health-conscious consumers and a reduction in supply for some categories. The average price for oranges in August was 10 per cent higher than year ago levels. However, it was limes that showed the highest average price growth, over 2.5 times higher than year ago levels. It was widely thought that lime prices would suffer due to a lack of foodservice demand, which may have initially been the case. However, demand has strengthened as consumers find ways to include immune boosting foods into the weekly shop. A decrease in supply from Queensland due to frost damage earlier this year also contributed to the rise in August prices. It’s likely that prices will remain well above average in September with demand unlikely to retreat.

The supply of banana’s is expected to remain above the seasonal dip which would generally cause prices to rise from August to December. The seasonal decline in supply would generally correspond with cooler, dryer growing conditions. However, rain has followed cooler weather over the past month which has been conducive to growing bananas. As a result, prices are expected to remain below year ago levels during September.

Loose leaf lettuce varieties are in good supply in both Western Australia and Victoria. Warmer weather combined with adequate rainfall will be a trend over the coming months and is likely to lead to further supply growth. Demand has bounced back in Western Australia following COVID-19 lockdowns however Victorian demand from foodservices remains subdued. Prices are slightly lower than this time last year however they remain above the long-term average for this point of the season.

Looking at viticulture, the recent anti-dumping investigation into Australian wine exports to China poses a significant risk to future demand given the scale and recent growth of the Chinese market, particularly for bottled red wine. Australian wine exports to China were worth $1.07 billion in 2019/20, accounting for 37 per cent of the total value of wine exports from Australia. Given the timeline of the investigation, the volume of wine produced from the 2021 wine grape crush and the state of wine consumption (in response to COVID-19 and economic conditions) in 12 months will be significant influences on the impacts of any trade access restrictions imposed by China.

 

Sources: GTIS, Ausmarket and Rural Bank
*Citrus price index includes oranges, lemons, mandarins and limes.
*Tropical price index includes bananas, mangoes, pineapples, passionfruit and paw paw.

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