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Will growers keep the record expensive cabbage in stocks for too long?

Unusual developments in the market of cabbage in Eastern Europe and Central Asia may lead to severe price shocks in the market in the coming weeks. EastFruit experts draw attention to the fact that cabbage prices in the region have stabilized at a record high level, but growers that have stocks of high-quality cabbage are in no hurry to take advantage of it and get super profits.

“Prices for quality cabbage in Russia reach $0.75 without VAT in Russia, about $0.60 in Belarus and Ukraine. At the same time, vegetable growers have stocks, but they do not sell them. Due to this, the import of cabbage from Poland to Ukraine has now begun. Egypt is already exporting cabbage to Russia. Russian importers are forced to buy cabbage even in Kyrgyzstan, Iran and Uzbekistan, but the supply from Uzbekistan and Kyrgyzstan is now limited, and prices are also record high. The customs terminals in Iran are overcrowded, as everyone wants to export cabbage, but the logistics are quite expensive,” Fedir Rybalko, international consultant of the Food and Agriculture Organization of the United Nations (FAO), says.

According to the expert, logistics issues create difficulties in exporting to Russia, where there is still a severe shortage of cabbage. “North Macedonia partially covered this deficit, but there is a break in harvesting between varieties of super-early greenhouse cabbage now, and there will be no tangible supplies from this country until mid-February,” Fedir Rybalko explains.

“Ukrainian farmers remember the years when cabbage prices exceeded $1/kg by spring and expect similar developments. Therefore, they are in no hurry to sell. Growers of cabbage in Russia and Belarus also wait for a price increase and do not sell. However, if we assess the volume of sales of cabbage seeds in Uzbekistan, we should soon expect a record high supply of cabbage from Uzbekistan. In Kazakhstan, officials also talk about successful mass planting of early cabbage in the southern regions of the country,” the FAO expert adds.

Will cabbage prices rise in February 2022 and reach the records by spring, or will farmers miss the opportunity to make good money and face an oversupply of cabbage? Andriy Yarmak, economist at the FAO Investment Centre, believes that the second, negative scenario on the cabbage market cannot be ruled out either.

“Cabbage is the riskiest product in the fruit and vegetable sector. Prices for cabbage on the same date in different years in real prices can differ by 20 times! According to my experience, the “jackpot” on cabbage can be hit on average once every 5-7 years. There are relatively reasonable prices for cabbage every 3 years, and 1 year out of 3 brings losses. However, the situation has recently begun to change, and the changes are associated with a sharp intensification of export-oriented vegetable production in Uzbekistan, Kazakhstan and Iran. Tajikistan and Kyrgyzstan are also gradually catching up to them. We also expect surprises in the coming years from the dark horse of the region, Turkmenistan. These countries have been seeing record high prices for cabbage and massive purchases by importers from the Russian Federation for several months now. It is easy to understand how local farmers react to them,” says Andriy Yarmak.

He notes that the first early cabbage in the southern regions of Tajikistan and Uzbekistan will be harvested next week. Thus, the wholesale batches will reach the European regions of Russia by the second week of February. “Uzbekistan will ship cabbage, primarily to Russia, since prices are much higher and logistics is easier in Russia. However, I think shipments to Ukraine will also start by mid-February. By the same time, early cabbage from the southern regions of the EU and the Balkans will become available on the Ukrainian market. The main question here is how much Uzbek cabbage will cost after it is delivered to the Ukrainian market? It is also interesting to see how local farmers will react to imports – will they continue to keep cabbage in storages, or will they sharply increase the supply on the market?” Andriy Yarmak explains.

If forecasts of a sharp increase in cabbage production in the Central Asian countries come true, the cost of cabbage delivered to Ukraine and Russia may be much lower than current prices, even taking into account the margin of importers. This will probably make local producers to start selling, putting even more pressure on prices. In April, local early cabbage becomes available on the market in Ukraine. Thus, it is quite risky to count on a further rise in cabbage prices by spring, given the factors mentioned above.

EastFruit

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