Insights May 2020
Insights May 2020
- Avocado prices ease as COVID-19 results in reduced demand from the hospitality sector in Australia and globally, as well as increased supply in domestic markets.
- Potato and carrot prices to return to long term averages as supply ramps up in line with typical seasonal trends, some downside risk to potato prices if demand from the hospitality sector remains subdued for an extended period.
Avocado prices are set to ease further as demand from the local hospitality sector, and offshore markets decline amid COVID-19 closures. Around 10-20 per cent of Australia avocados are consumed via cafes and restaurants, this
equates to over 8,500 tonnes of avocados.
Some of this supply is being redistributed to supermarkets which is contributing to a decrease in wholesale price. Volumes on the domestic markets are expected to increase as the season switches for the lesser preferred Shephard
variety to the popular Hass variety.
Prices have eased 43.1 per cent since February and are currently 16.2 per cent below April 2018 levels. As new season Hass avocados become more widely available prices could fall below the lows seen in 2018.
This is expected to lift consumption which could go some of the way towards offsetting extra supply as a result of a forecast 10 per cent increase in production in 2020. Export volumes may not be as heavily impacted as other
commodities as March to April is historically a low volume period for exports, with most avocados exported between May to December.
The availability of air freight has improved on the back of government intervention which will help maintain export volumes that totalled 4,272 tonnes in 2019 or approximately five per cent of production, with growth in Singapore, Malaysia and Hong Kong.
Australian’s are purchasing more staple fruit and vegetables as consumers switch from eating out to cooking at home. Root vegetables such as potatoes and carrots have experienced a notable rise in demand from domestic consumers however this has been contrasted by a fall in demand from the hospitality industry.
Carrots have been in particularly high demand and prices have increased 46.5 per cent since February, prices are expected to ease as supply increases heading into winter.
The price of potatoes has remained relatively unchanged due to a decline in demand from the hospitality industry tempering demand increases from consumers. Demand is expected to remain steady for chipping potatoes destined for home consumption, but prices could come under pressure as storages for frying potatoes, which would have been consumed in cafes and restaurants reaches capacity.
Sources: Ausmarket and Avocados Australia
*Root vegetable price index includes potato, sweet potato, carrot, beetroot, parsnip and swede.