Our prayers of support go out to the Ukrainian people as they defend against the unjust Russian invasion. If you’d like to make a financial contribution, there are links at the bottom of this article to reputable charities helping Ukrainian citizens in need of aid.
Why should we care in North America?
Thomas Friedman, author of the book, “The world is flat,” wrote, “And then around 2000 came Globalization 3.0, in which the world went from being small to tiny…Supply chains cannot tolerate even 24 hours of disruption. So, if you lose your place in the supply chain because of wild behavior, you could lose a lot.”
In other words, global trade in the 21st century is not without risk. To some small degree, every person will feel the effects of war in Ukraine.
Undoubtedly, the people of Ukraine are paying the highest price for this invasion. The loss of life and freedom is immeasurable and cannot be belittled by comparatively trivial economic realities. Still, the adverse economic effects of this war are an inescapable fact, and it is vital for global economic health to traverse them the best we can.
Russia is the third-largest oil producer globally and supplies 40 percent of Europe’s natural gas. Sanctions have not targeted Russia’s gas and oil sector for economic reasons. Still, uncertainty breeds volatility, and sanctions are likely to accelerate.
The decision over the weekend to remove select Russian banks from SWIFT (financial network for sending financial wires) will increase the collateral damage of sanctions. This past week, crude oil prices soared over $100 a barrel for the first time since 2014. Fuel prices drive agricultural input costs, fertilizer and delivered freight. As a result, energy inflation is expected to worsen.
Ukraine is also a country rich in tech professionals. With more than 200,000 software developers, many technology companies throughout the world, including our own company, rely on the people of Ukraine.
ProduceIQ Index: $1.06 /pound
Week #8, ending February 25th
Blue Book has teamed with ProduceIQ BB #:368175 to bring the ProduceIQ Index to its readers. The index provides a produce industry price benchmark using 40 top commodities to provide data for decision making.
What does this mean for domestic fresh produce markets?
Costs will be higher in the long term. Known as the breadbasket of Europe, Ukraine has significant water and fertile land for agricultural production. With an estimated 100 million acres of arable land and about 25 percent of the world’s reserves of black soil, agricultural products are Ukraine’s largest export.
Though Ukraine primarily exports non-perishable crops, corn, wheat and barley comprise 73 percent of agricultural exports, Ukraine also has significant specialty crop production. Over the last eight years, Ukraine shifted the exports of fruits and vegetables from Russia to Europe.
Losing Ukraine as a supply source may force Europe to rely more heavily on South America. In this regard, the U.S. is in competition with Europe for a limited supply of produce items from Peru, Chile, and other South American countries.
One of those overlapping items for export to Europe is blueberries. On the global market, Ukraine’s blueberries compete with Peru, the largest exporter of blueberries globally.
It so happens that it’s an easy time to be a U.S. berry buyer. Blueberry prices are at a ten-year low by a healthy margin. Prices are forecast to stay lower for a couple more weeks thanks to ample supply from South America and Mexico.
Blueberry prices fall for the 4th week to $13 for 12 1-pint clamshells.
Slowed strawberry growth in California brought on by cooler weather is doing little to halt hemorrhaging prices. At under $10 on Friday, prices fell 32 percent over the previous week. Markets typically soften this time of year as ideal growing conditions in three major growing regions leaves markets flooded and product cheap. It’s time to promote!
At a monumentally cheap $13, raspberry prices are down again over the previous week. The champagne fruit got lost trying to find its skybox and ended up in the nosebleeds. However, in response to a tightening of Mexican export volumes, prices should begin to even out in the next couple of weeks.
Lettuce markets are on the move again. As the year draws closer to spring, lettuce markets begin another transition period. Within the next five weeks, lettuce production in Arizona will phase out as California’s lettuce production ramps up.
It’s not uncommon for quality issues to arise in response to past-peak growing conditions. Right now, Iceberg and Romaine quality is fair with the occasional sunscald, wind-burn, and heavy dust. Expect markets to remain fluid through March.
Romaine prices begin to ascend as quality and availability are constrained.
The department of agriculture is reporting Hass avocado prices again. Markets are up +16 percent over the pre-suspension price levels. As inventory levels are restocked, markets should return to their ‘new normal’ ranges within a week or two.
Avocados, size 48, return to even higher prices after the 1-week suspension.
Please visit our online marketplace here and enjoy free access to our market tools which created the graphs above.
The ProduceIQ Index is the fresh produce industry’s only shipping point price index. It represents the industry-wide price per pound at the location of packing for domestic produce, and at the port of U.S. entry for imported produce.
ProduceIQ uses 40 top commodities to represent the industry. The Index weights each commodity dynamically, by season, as a function of the weekly 5-year rolling average Sales. Sales are calculated using the USDA’s Agricultural Marketing Service for movement and price data. The Index serves as a fair benchmark for industry price performance.