In EastFruit detailed raspberry market review for Ukraine, Serbia, Poland and Moldova, we concluded that raspberry prices, despite their shockingly low level for farmers, most likely have not yet reached their bottom. On the weekend of July 01-02, 2023, we continued receiving confirmations that the decline in prices in Ukraine continued.
According to raspberry market participants, over the weekend, the lower limit of purchase prices for raspberries from the small growers for the first time fell below the psychological barrier of 50 US cents per kg. In the raspberry growing regions prices reached UAH 18/kg ($0.49), and there were even the first attempts to reduce prices down to UAH 17/kg ($0.46). However, at this price, according to our information, there has not been a significant flow of people willing to deliver raspberries for processing.
What are the real price levels in the “class A” raspberry category in Ukraine?
Prices in the upper price segment have also changed over the weekend. At the beginning of the week large suppliers managed to sell “class A” raspberries at prices of up to 35 UAH/kg ($0.95) but by the end of the week, the upper purchase bar for many processors dropped to 30 UAH/kg ($0.81).
By the way, according to the freezers, in raspberries delivered by small growers, if they took a good care of the plantation, up to 70% of berries could qualify for the “class A” quality. Thus, when purchasing such raspberries for 18 UAH/kg ($0.49), the true cost of a high-quality product is only 25 UAH/kg ($0.68). Add to this some revenue that one could get from the remaining 30% and the economics of purchasing such berries will look very good!
Although, of course, there are additional administrative costs and the VAT, which many small growers do not pay. However, it is obvious that no one will completely exclude raspberries from small growers from the procurement plan if prices for it continue to be at a such a low level.
Serbian and Polish growers, who boycott what they consider low procurement prices for raspberries by their freezers, should understand that Ukraine is currently building a very competitive market position and if they want to stay in the market, they need to be realistic about the raw material prices.
How did the Ukrainian freezers react to the decline in raspberry prices?
Many processors in Ukraine entered the season with significant financial difficulties. It is also no secret that the demand for frozen raspberries on the global market remains very sluggish almost regardless of the price level. Therefore, before the start of the season, almost all processors planned to reduce purchases, and some had doubts that they would be purchasing any raspberries at all.
However, according to EastFruit, against the backdrop of such low prices for the raw material, many freezers have changed their plans and are now actively looking for loans to purchase as much raspberries as they can. They believe that with such a low purchase price, they will be able to easily win back the losses of the last season by offering frozen berries to the market at a very low price, which should lead to an increase in demand for the product.
Growing demand from the processors would have been a positive signal for the market under normal circumstances, however, a record raspberry harvest in Ukraine is unlikely to stabilize or support the current price level. Moreover, the summer raspberry season is just beginning, and Ukraine harvests the bulk of the raspberry crop from August till October, because remontant varieties account for around 65-70% of the total raspberry area in Ukraine.
The global market for frozen raspberries – are there any changes?
According to traders and processors, the global market for frozen raspberries is now stagnant. Those prices that are declared can hardly be considered relevant, since there very few real deals being made today. Shipments are made almost exclusively under long-term contracts, where the price was determined in advance.
It is expected that in the near future the first offers of frozen raspberries of the 2023 harvest from Ukraine will appear on the market, and that these offers will be able to activate the market. After all, it is known that Ukrainian traders always try to sell products at prices below the market. Therefore, the current price level of 2.4-2.5 euros for raspberries of the highest quality parameters (class A, 95/5) is likely to fall below this level in the near future.
As for raspberries in the lowest price category “crumble”, there is no demand yet, even at prices very close to 1 euro per kg. Since Ukrainian companies currently have most of the stocks of just such products, we do not exclude sales at extremely low prices in order to free up capacities for storing the new crop.
Price outlook remains bearish
In any case, all the news so far is negative for the raspberry growers in all countries of the regions. At the same time, the most difficult situation is in Poland and Serbia, where the freezers clearly understand that they have a choice between skipping the season altogether or buying raw materials at a high price with a high risk of losses for the second year in a row. However, skipping the season would mean losing the raw material base, as many farmers will also decide to exit this business.
Considering the above, the decision of Ukrainian freezers to borrow and buy more cheap raspberries for freezing looks very reasonable. It might actually work and increase Ukraine’s share on the global market substantially in 2023/24 season.
