Market Information
Coconut
Over the past year, coconut prices have risen due to factors such as lower harvest yields, increased global demand and rising production expenses. These challenges have directly impacted costs, making it necessary to adjust our pricing to maintain product availability and quality. The main factors driving price increases are as follows:
• The lack of adequate rainfall has hindered coconut production, and despite the dissipation of the poor weather at the beginning of Q3 2024, the resulting supply shortage is likely to sustain price inflation until at least Q2 or Q3 of 2025. Prices are 60% higher than January 2024.
• Consequently, coconut prices in 2025 are expected to surpass the 2024 average, not only in Thailand but also in other key coconut-producing nations such as Indonesia, the Philippines and Vietnam.
• Beyond supply shortages, domestic demand in Thailand remains high, with local market prices significantly exceeding those offered by processing factories, further contributing to price increases.
• Additionally, rising international demand—particularly from China, where coconut consumption is increasing—will continue to exert upward pressure on prices throughout 2025.
Rapeseed Oil
UK rapeseed oil prices remain volatile, with old crop months slightly higher since January and new crop prices firming due to favourable winter weather improving crop prospects. However, production recovery may fall short of 2023 levels as rapeseed planting was limited, and uncertainty persists over potential trade tariffs on Canadian and Chinese imports. The EU’s 2025-26 rapeseed production is forecast at 19 million tonnes, a 13% increase from 2024-25 but still below 2023-24 levels. The EU depends on imports, with Ukraine supplying 63% of the total, while demand for rapeseed is driven by rising biodiesel usage and sustainable aviation fuel mandates.
Soy Oil
European soy oil prices have risen due to strong biodiesel demand, competitive pricing, and reduced supplies of alternative oils. Weather disruptions in South America have tightened global soybean supplies, with Argentina suffering drought-induced yield losses and Brazil facing harvest delays from heavy rains. Volatility persists as markets react to changing supply and demand conditions.
Palm Oil
European palm oil prices remain volatile, driven by tight supplies, seasonal production declines, and disruptions from heavy rains in Malaysia. January production and stocks are expected to fall sharply, while demand may pick up ahead of Ramadan. Indonesia’s export levy increase is shifting demand to Malaysian palm oil, but concerns persist over the delayed and economically challenging B40 biodiesel mandate.
Sunflower Oil
Sunflower oil prices have recently softened but remain higher than rapeseed and soybean oil, curbing UK demand mainly to retail and niche markets. Tight supplies from the EU and Ukraine, worsened by extreme weather and drought, have slashed yields, while farmers hesitate to sell due to heavy losses. Russia continues to export aggressively, especially to China and India, though little reaches the EU. High Oleic Sunflower Oil (HOSO) prices are exceptionally high due to constrained supply. Global production has dropped by 6 million tonnes compared to 2023-24, with sharp declines in the EU and Ukraine. Future recovery depends on better yields and planting success, with some optimism for new crop months (October onwards), though uncertainties around weather and planting persist.
Wheat
The UK agricultural market faces challenges with surplus wheat and barley supplies, declining animal feed demand, and geopolitical tensions affecting trade. Wheat imports hit record highs, but future imports are expected to slow. Weather conditions in Europe and Brazil show signs of improvement, aiding crop development, while concerns persist over dry regions in Russia. Tariff policies by President Trump and UK government decisions, such as ending the Sustainable Farming Initiative, add uncertainty. Despite favourable weather aiding planting and fertilization, heavy old crop stocks and market pressures keep prices low, with growers likely to limit supply post-harvest unless values rise.
Eggs
Avian Influenza is disrupting the egg market in the UK. With the country being 88% self-sufficient in egg production, the increasing number of impacted farms and the introduction of prevention zones have led to a decline in supply, particularly affecting free-range eggs. This shortage is contributing to rising prices.
Chicken & Poultry
Poultry prices have risen steadily over the past three to four weeks, impacting both fresh and three to four weeks, impacting both fresh and frozen chicken and turkey products. This trend is largely due to significant outbreaks of avian flu, with Hungary experiencing the most severe effects compared to Poland and Romania. As one of the EU’s largest suppliers of live birds and eggs, of the EU’s largest suppliers of live birds and eggs, Hungary’s challenges have created a ripple effect across the market.
Additionally, reports indicate that two major producers in Poland have ceased production for 30 days to quarantine, further exacerbating supply shortages. This has resulted in notable scarcities across suppliers, including Smithfield’s market. Among poultry cuts, chicken fillet and thigh meat have been particularly affected by these disruptions.
Impact of New US Trade Policy
The new US trade policy, including a proposed 25% import duty on Canadian rapeseed/canola exports (96% of Canada’s 2024 exports), could lower Canadian prices and boost US soy oil prices, though the tariff has been delayed. Another key change is the exclusion of imported Chinese used cooking oil (UCO) from US clean fuel tax credits, creating market uncertainties. In 2024, China’s UCO exports surged by 44%, with the US and EU as major buyers, but the EU may increase imports in 2025 to offset US reductions. EU demand is also rising due to sustainable aviation fuel mandates and restrictions on cheaper Chinese biodiesel. These will not be the last tariffs we see coming in over the future months.
Beef & Lamb
Beef prices remain a significant concern, with no indications of a decrease in the near future. Even lower-cost cuts have seen price increases, while prime steak cuts have reached record highs, showing no signs of stabilisation. The new British lamb season is on the horizon, but until it begins, pricing is expected to remain volatile due to limited supply. Early-season lamb from Australia and New Zealand is also priced significantly higher than last year, driven by similar supply shortages.
Freight
Spot rates for shipments from Asia to Europe and the Pacific have fallen sharply, influenced by seasonal factors like Chinese New Year and the February 1st realignment of shipping alliances. The trajectory of freight rates remains uncertain and depends on global events. If the Red Sea crisis persists, rates may rise with increasing demand in summer. Alternatively, resolution of the crisis and the reopening of the Suez Canal could cause oversupply, leading to lower freight volumes and a steep decline in spot rates, potentially to pre-pandemic levels. Additionally, the US trade war could decrease consumer spending, further driving down rates despite ships rerouting around Africa.