Reasons to be cautious and reasons to be optimistic - Q1/Q2 commodity outlook

Our category management teams share their thoughts and predictions for the next few months, including 'reasons to be cautious' and 'reasons to be optimistic'.

In simple terms, we remain in a volatile market, particularly in relation to certain categories, and from April 2025, the impact of actual labour cost increases will start to be felt as the recent Budget measures are implemented.

As ever, the Equinoxe procurement teams will continue to work hard to minimise the impact of cost increases to your businesses.

REASONS TO BE... CAUTIOUS

Ongoing volatility in commodities, driven by climate change, global supply chain disruptions, and movements in energy and labour costs...

FISH

Cod and Haddock prices continue to rise with conflating pressures from quotas and demand from the US. Pricing from suppliers is looking inflationary in November based pricing with second submission pricing likely to increase further in the new year.

JUICE

Significant year-on-year price increases in Apples and Oranges has seen ready to drink and dispense juices increase between significantly. Global production challenges and adverse weather continue to impact supply.

BEEF

Demand for Beef has remained high going into the festive period. With high numbers of cattle being killed earlier in the year with fear of shortages, kill numbers are likely to continue falling into 2025.

Some suppliers have advised pulling back kill numbers by up to 20% per week. We expect H1 of 2025 to be challenging from a price and availability perspective.

CITRUS

Spain experienced severe flooding, with a year's worth of rain falling in just 8 hours, coinciding with the start of the new crop season. This caused significant crop damage, transportation disruptions, and landslides that destroyed farms in some areas. Citrus crops were particularly affected, leading to shortages and delays.

The regional government in Almeria estimates 5,000 hectares of greenhouse and vegetable infrastructure were damaged. Suppliers are closely monitoring the situation with growers.

COCOA/CHOCOLATE

Cocoa bean shortages in the four countries supplying 80% of global demand are due to underinvestment and adverse weather, including El Niño. Prices have surged, with a 151% year-on-year increase in December 2024 vs 2023, and a 25% month-on-month rise in December.

The situation is worsened by drought in the Ivory Coast, where rainfall in November was just 25%
of normal, raising concerns over further supply shortages.

COFFEE

There have been sustained and significant increases in the price of Robusta and Arabica Coffee beans over the last 12 months, with Arabica bean coffee market prices rising by 62% year-on-year in December 2024 vs. 2023 and Robusta by 81%.

LABOUR

In April 2025 the National Living Wage for those aged 21 and over will increase by 6.7% (77p) from its current rate of £11.44 per hour. Labour intensive contracts such as Facilities Management (FM) and Temp Labour will be the most heavily impacted by the increase.

REASONS TO BE... OPTIMISTIC

UK inflation slowing; key commodity movements flattening or slowing...

POTATOES

There are currently no major availability issues with Potatoes, and we do not expect any significant
problems for at least a few months. However, the reduction in seed area across the UK and Europe
means that there is likely to be supply problems at the end of the 2025 crop season (June/July).

SUGAR

The World Market price has dropped mainly due to availability in the market and a bumper crop
in Brazil. The outlook is still volatile due to investor activity, however current projections of Sugar production are at record highs for 2025.

MILK

Farmers are responding to the highest farmgate prices this year by increasing Milk production, evident in a 3.8% year-on-year increase.

Prices are forecasted to ease as we approach the spring flush, along with softening Cream prices. However, it is worth noting the spring flush has had a reduced impact on pricing over recent years due to cows now producing consistent yields throughout the year.