Information for fruit and vegetables business in CIS
Wholesale Companies of Ukraine May See a Loss in Profits Due to Stable Cabbage Prices
According to the information provided by "Agrooglyad: Vegetables and Fruits", a weekly journal of the Ukrainian produce business, in the fall 2005 many enterprises and farms put cabbage in storage with the expectation of a significant price increase. However, they are presently puzzled by the stable price on this crop. Tetyana Getman, Project Manager of "Agrooglyad: Vegetables and Fruits" says, "A majority of those in the market expected the prices to go up in January, however, it has not happened yet. Moreover, judging from some of the signs, we can almost definitely see a decrease in cabbage prices".
Analysts are not certain about possible changes in cabbage prices in the months ahead. Still they verify that today's cabbage price can ensure a profit for cabbage producers and wholesalers who were able to purchase their supplies at the beginning of the harvest when wholesale prices did not exceed $0.23/kg.
Those wholesalers who should worry are ones that purchased cabbage in late November speculating to sell it in January at a higher price. The only option now is to sell the product at a loss. To recover storage and transportation expenses, as well as actual cash spent to purchase the cabbage, wholesale companies should sell the cabbage at least $0.37-0.40/kg to provide minimal profit. Of course wholesale companies will try to hold on to cabbage as long as possible-hoping prices will increase and farmers' supply will run out. The current prices are enough to satisfy farmers. However, there is a distinct possibility that some wholesalers will start selling their cabbage at a loss in the near future.
"Cabbage is a specific vegetable with regards to price formation", says Maxim Yenchenko Market Information Specialist of the Agricultural Marketing Project. "Cabbage consumption is very stable; there are practically no imports and exports. All seemingly insignificant variations of the usually supplied volumes lead to a very rapid price change in the market. Within recent years we witnessed some very interesting situations when in April 2003 the wholesale cabbage price was $0.58-0.68/kg, in April 2004 - $0.04-0.05/kg, in April 2005 - 0.58-0.78/kg".
According to the preliminary estimations by the Agricultural Marketing Project, cabbage production in 2005 was 5% less than in 2004, but 17% more than the recent six recent year average. The forecast of cabbage production and prices for 2006 will be published in February's issues of "Agrooglyad: Vegetables and Fruits" weekly, in conjunction with its work with the Agricultural Marketing Project.