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Russian and Ukrainian demand support banana prices but hold little long-term hope

August 14, 2013

The website Fruit-inform has reported a state of stagnation in global demand for bananas, with high demand levels in Russia and Ukraine being the only exception to this trend. In June it reported that Russian and Ukrainian imports from January to May 2013 were 29% higher than their average of the last 5 years for these countries. According to Fruit-inform, this is attributed to the historically low banana prices on world markets, which are seen as being on average 30% less expensive than usual. It is these low prices that have served to boost demand in Russia and Ukraine, given that consumers incomes are relatively low in these countries.

According to the commodities website Indexmundi.com, banana prices by May 2013 were 21% below the peak levels of March 2012, and at their lowest level since the end of 2010. Fruit-inform argued that were it not for strong Russian and Ukrainian demand growth and unfavourable weather in Ecuador, banana prices could have fallen even more significantly.

However, Fruit-inform expects that the banana market to be forced to reduce prices in late June, as the EU and Russian market participants will start mass supply of inexpensive fruits, berries and vegetables, which will significantly affect the demand for bananas.

Data from the UK government on imported banana prices at Birmingham and New Spitalfields wholesale markets revealed the lowest average overall weekly banana prices in June 2013 since March 2013, with this trend common to ACP suppliers. In addition, prices paid to ACP banana suppliers in June 2013 were on average 8% lower than prices paid to dollar banana suppliers, with this being a consistent trend.