All posts tagged crop yields

Hedging commodities to protect market prices

Gin & Tonic

It’s been a devastating year for those dealing in citrus fruits. Unusually high temperatures during the flowering period in the key growing regions of Valencia and Malaga has affected pollination of crops and stunted flower growth in Spain. At the same time, an outbreak of citrus black spot on the Eastern Cape has delayed the picking season in South Africa. With crop yields falling in both regions, supply has shifted to Argentina, but torrential rains during the harvesting period there have led to severe disruptions and delayed seasonal shipping to European markets.

Together, it has been the perfect storm for citrus fruits, with crop yields down by more than 35 percent, their highest mark in eight years. Consequently, supermarkets in Europe have passed along their higher costs at the till, increasing consumer prices of lemons 25 percent from last year.[1]dailymail.co.uk/news/article-3614261/Lemon-shortage-forces-price-citrus-fruit-Britain.html Similarly, lime prices are skyrocketing as Mexico has been unable to meet excess demand and Brazilian traders have responded by placing a stranglehold over market prices, charging up to £2 per kg of limes.[2]telegraph.co.uk/news/2016/05/27/global-lemon-squeeze-causes-supermarket-prices-to-soar/

Lemons and limes may not seem all that interesting as one reaches for an afternoon snack, save for those suffering their way through the infamous Master Cleanse, but in fact they are used in large quantities on a daily basis by restaurants and bars in cocktails, sauces, and marinades. The current shortage has meant that those restaurateurs and bar owners buying on the open market will either be unable to source their requirements of citrus products, or pay dearly for the privilege.

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