‘Things are not going to get much wilder than this.’ That is how I started my blog eight weeks ago. Purchasing prices here in South America went completely through the roof due to increased demand and a lack of supply. Meanwhile, we know that things did indeed get much wilder than that. With gas prices in Europe suddenly exceeding 1 euro per m3, leading to all sorts of speculations about production.
As to supply and demand in Ecuador, the market has cooled down again to reach a healthier balance. When production finally took off again, the purchasing price fell rapidly to its normal level, only to remain there until this day.
At the same time, however, demand in North America collapsed completely and quite suddenly, filling up the coolers in Miami again. It seemed as if everyone there needed a short break. Thankfully, this decline was partly compensated for by All Saints’ Day in Europe. Although the limited supply of freight space once again made it difficult to ship everything off.
Meanwhile, growers are enjoying the calm of November after this week’s Valentine’s pinch. However, Valentine’s Day is going to be tighter than ever! Like last year, expectations are very high. On the other hand, there is fear that the existing shortage of airfreight capacity will lead to an even more dramatic situation when the number of flowers cut increases at least threefold. Will Europe be prepared to pay charter rates of $4,00 per kg? And how will the euro-dollar exchange rate develop? After all, the steady rise of the dollar is making flowers more expensive.
Another concern is the availability of sufficient cardboard. There are massive delays in lead times at present, because, here too, cardboard has rapidly become more expensive and scarcer. Already, this has forced growers to improvise. In addition, the supply of fertiliser may become problematic in the near future, as the Chinese government has recently announced export bans on phosphate and urea to protect the domestic market.
We will be keeping close tabs on all of these developments as we approach 2022 and Valentine’s Day. Nevertheless, I predict that things are going to get wilder!
Victor van Dijk,
Area manager FM Group