The climate plays a big role in the banana supply chain, with warmer weather and a lot of rain impacting volumes in especially South American growing countries. Ecuador saw 1,6% less exports up to July, 2024. This is mainly due to climatic factors leading to lower yields.
In North America, the banana supply is lower from across Latin America. Storms in Mexico and Guatemala caused damage while rain and high temperatures impacted the trees. Demand was generally low, mainly due to summer holidays. In China, Filipino banana exports plummeted. Unfavourable weather conditions in the Philippines have led to reduced banana volumes and higher prices. Vietnam could take advantage of this by filling the gap in China. After higher demand over the past two seasons, Cambodia and Laos also expanded their banana growing to compete with the Phillipines, as it is fast falling out of favour with China.
The demand for bananas was generally lower in many countries across Europe due to the summer vacation period and hotter weather. The Canary Islands of Spain has the opposite problem to other growing countries – high temperatures and climate change are contributing to overproduction on the islands. This led to an ongoing price crises for Canary Island bananas that has been dragging on since July, seriously affecting farmers on the island. Italy has seen a stable market, with consumption unchanged since last year.
Germany has had limited demand due to the holidays. Retailers had to reduce supply to avoid surpluses. In the Netherlands, banana prices are on average higher than last year with the summer holiday, heat and bananas that is said to not go together, causing a dip in the banana market. In South Africa flooding together with a cold winter impacted banana supply. In southern Mozambique, where much of South Africa's bananas are grown, temperatures dropped to only 2 or 3C, burning the foliage.
Ecuador: Climate causes lower export volumes
Banana exports from Ecuador, the world's biggest exporting country for this fruit, from January to July 2024 stood at 216.51 million boxes, 1.66% less compared to exports in the same period of 2023. This is a decrease of 4.09 million boxes in absolute terms.
The banana growers and exporters associations in Ecuador report that, "due to different climatic effects such as variations in cold temperatures at night – early morning, and increase in solar radiation during the day; as well as excess rainfall in several banana producing areas, causing the plantations not to have their normal physiological developments, therefore the yield of the bunch (ratio) is lower than the historical ones of previous years, for which production has been reduced approximately until June by 2% less than in 2023."
A grower and exporter noted that the current 2024 season is hotter, with higher temperatures that's good for banana production, but it does bring other challenges. "This year, we had a hot season with very high temperatures which is good for production. But when it reaches levels at risk for many days, the plants come to a stress situation which affects the quality too. We have faced this situation in the last two years and the results have been very hard economically. By now, the production hasn't reached the normal levels yet. It's still low."
North America: demand for bananas competes with domestic consumption
The supply of bananas in the US from Latin America is low. Storms in Mexico and Guatemala have damaged a lot of plants. Also, high temperatures, rain and a lack of sunshine is causing the plants to grow slower and ultimately, lowers the weight of the stems growing.
While the quality is still strong on organic bananas, there is also a supply shortage from some banana-producing regions. As for demand, it is softer which, coupled with greater supply, often leads to a drop in pricing. That said, 'back to school' generally increases demand.
Overall, banana supply in the US is anticipated to continue to drop with production costs still increasing and a weak dollar relative to the currencies in Latin America. Meanwhile, local markets are becoming more attractive to ship conventional and organic bananas to. These markets aren't enough to absorb all the fruit that big countries such as Guatemala, Colombia, and Ecuador produce. However, the surrounding countries are untapped markets.
China: Filipino banana exports to China plummet, domestic supply stable
The export of Filipino bananas to China has seen a sharp decline, with Vietnamese bananas now dominating the market. This shift is largely due to unfavourable weather conditions in the Philippines, which have led to reduced banana production and higher prices. Meanwhile, Vietnam's banana harvest was delayed, extending the export peak until April. Although Filipino bananas are still favoured for their taste, their decreased availability and higher costs have made way for the rising quality and affordability of Vietnamese bananas, which are increasingly preferred by Chinese consumers, along with imports from Cambodia.
Industry sources note that the robust banana market in early 2022 and 2023 encouraged countries like Vietnam, Cambodia, and Laos to expand their banana plantations, further impacting the demand for Filipino bananas.
Geopolitical tensions have also contributed to the decline in Filipino banana exports to China. Ongoing disputes in the South China Sea and rising political friction between the Philippines and China have led some Chinese consumers to avoid purchasing Filipino bananas. In response, importers have reduced orders, fearing oversupply and unsold inventory.
Domestically, Guangdong and Hainan remain key banana production areas. In Guangdong, banana prices range between ¥4.20 and ¥4.80 per kilogram, with moderate supply and average market activity, while demand from traders has declined. In Hainan, prices range from ¥4.60 to ¥5.00 per kilogram, with limited supply and moderate demand, with traders restocking only as needed.
Spain: Price crises for Canary Islands continues due to overproduction
The price crisis for Canary Island bananas has been dragging on since July and is seriously affecting Canary Island farmers. "The supply of Canary Island bananas continues to be much higher than demand, which is usually at its lowest in July and August, coinciding with the summer holiday period," explains a wholesaler.
High temperatures and climate change are contributing to overproduction on the islands, with weekly supply exceeding demand. "We were coming from a few months in April, May and June with a shortage of produce and very strong demand, but in July it started to get too hot and production accelerated and the market went downhill," he recalls.
According to Asprocan, the Association of Banana Producer Organizations of the Canary Islands, some 7.5 million kilos of Canary Island bananas are coming onto the market for the 34th week. However, the market can only absorb around 5 million kilos and at low prices for the farmers. This has led to the destruction of large quantities of bananas, although retail prices remain high. In fact, for this week, another million kilos are expected to be destroyed, making a total of three million kilos discarded in August. The wholesaler recalls that "before the outbreak of the pandemic, large-scale retail accounted for 60% of banana sales in the Canary Islands, whereas now it is around 80%. This, in part, causes a certain 'funnel' effect in marketing and sales prices to the end consumer remain high compared to the prices paid in the field", he points out.
On the other hand, according to the wholesaler, banana prices are now above those of Canary Island bananas, with stable demand, because "generally, more bananas are not sold because they are cheaper". He also points out that the overseas banana's share has risen from 50% to almost 60% in recent years in Mercabarna, the second largest wholesale market in Spain and the largest in terms of fresh food sales volume in Europe. "And it seems that overseas bananas will continue to gain share in the coming years," he adds. The situation in the Canary Islands banana market could improve with the start of the school year.
Italy: Stable market
In Italy, banana consumption has not changed much compared to last year. On the contrary, the annual curve has remained stable. "Normally, consumption drops in summer, so as soon as some extra goods arrive from abroad, the market suffers. This did not happen this year. No large quantities arrived in the country from Central and South America (Costa Rica, Colombia and Ecuador) to cause prices to fall, said an operator in central Italy. After the summer, with the return to school, consumption should increase again. In the first weeks of September, supermarkets are planning promotions that should help to increase purchases. "We will have to wait and see whether the product supply remains the same or increases. But it is a bit too early to say. One thing is for sure: there will be no supply or logistical problems". According to the operator, the world banana market has been stable this year: 'normal', not exceptional, demand has allowed stable sales.
A leading banana trader based in northern Italy also confirms this situation. "As always, summer is the period when the product is sold at its lowest. However, bananas are still in high demand in supermarkets and wholesale markets, but it is also true that the period of increased demand starts in September when schools reopen. At the moment, the price of a carton of bananas ranges from €16 to €26: the former for ordinary bananas, the latter for top-of-the-range branded bananas". The operator adds that, according to some rumours, the availability of bananas from Costa Rica, Colombia and Guatemala will not be very high in the coming weeks. However, these are just rumours and will not be confirmed until the autumn months.
According to one wholesaler, there is currently a shortage of plantains in terms of quantity (almost 50% less) and quality. "After slow sales in June and July, as with other products, demand for plantains has picked up since the beginning of August, but there are not enough quantities available in Europe. In addition, prices are very high at the point of origin: Ecuadorian plantains cost almost 20 dollars. In week 34, our selling prices therefore showed an increase: green plantains from Ecuador are around €28-30 with a tendency to rise, and the ripe product from Colombia and Costa Rica went from €26-30 to €35-40". The plantain market is therefore expected to be buoyant from the end of August-the beginning of September.
Germany: Limited demand due to the holidays
The holidays resulted in very limited demand on some markets. Although retailers responded by reducing their supply, some of them had to lower their demands over the course of the week if they wanted to avoid surpluses. In some places, the entire range was affected by the reductions, but in some cases only the prices of second or third brands fell.
The Netherlands: Banana prices are on average higher than last year
"Heat, holidays and bananas never go together," says a Dutch importer. So for that reason, the banana market showed a dip in the past three weeks. "But we are not complaining. Banana prices are on average higher than last year and last week, the market rebounded. With that, we have had a shorter summer dip than other years. Currently, the price hovers around 12 euros, but we are coming off a situation of 10 euros. I do expect this upward trend to continue. We won't start seeing super-high prices, but I do think prices can stay at a stable level. I think banana consumption is at a higher level than other years. Perhaps because bananas are among the cheaper fruits in the supermarket anyway and other fruits were offered at higher prices. Since the war, we export more bananas to Ukraine. Previously, those exports were via Odessa, but they now come in via northern Europe. Besides, retail contracts continue anyway. Organic bananas have also become a fairly large product group for us. I see that share increasing, not by leaps and bounds, but gradually."
Southern Africa: Flooding and cold winter impacts bananas
Banana bunches are smaller, with more marks and quality issues this season, says a Gauteng fresh produce market agent: flooding played a role, as did the cold of six weeks ago, the same event when temperatures fell as low as -8C to significantly damage citrus orchards in southern Limpopo. Even in southern Mozambique, where much of South Africa's bananas are grown, temperatures dropped to only 2 or 3C, burning the foliage in banana orchards.
Consequently, the market isn't flooded with bananas, but supply is better than this time last year when there was very little stock on the market, the trader continues, and made up of a lot of second grade. According to AMT agricultural market analyst, banana supplies decreased by 16% over the past week and they expect that by October, a banana price of R10 (0.5 euro)/kg is not inconceivable.
Currently, the average price is R8.30 (0.42 euro) per kilogram, or around R130 (6.6 euros) per 18kg box. Second grade medium sized bananas trade between R110 (5.58 euros) and R150 (7.6 euros) for an 18kg box, while the prices for first grade sizes are R20 to R30 (1.5 euros) higher.
Every year, the banana market is characterised by a concertina effect, says a grower. "We're now in a period with somewhat less banana supply for the coming two months as a result of slower winter growth. In around two or three months banana supply will increase." Traditionally there is a temporary shortage during December and January which soon evens out, and this constitutes the 'concertina effect' of banana supply in Southern Africa.
The dreaded Panama TR4 strain remains contained on a few banana farms in northern Mozambique.
Next week's topic: Onions