Spend Matters welcomes this guest post from Pamela Salimu, of Mintec.
In November last year we forecasted that prices for canned beans would fall even further than they did in 2014. A year on, prices have fallen by nearly 50% since May 2014 due to a combination of good production and lower demand.
Canned beans are generally made up of approximately 60% of navy beans, a type of dry bean, and around 35% of tomato concentrates, with the rest being water, sweeteners and flavoring.
The costs of U.S. navy beans reached record lows in 2015, with prices falling by 45% since May 2014. Prices fell from 64 cents per kg to 30 cents/kg in November 2015, a result of navy bean production increasing by 5% year-over-year, to 462,000 tonnes in 2015.
The acreage of navy beans is estimated to have fallen by as much as 9% y-o-y, to 227,900 acres. Despite this, prices have fallen due to good weather and the resulting in higher production. On top of that, there has been an ongoing fall in consumption and plenty of stocks left over from the 2014 harvest. When prices are low, farmers move to more profitable crops; therefore, a decline in acreage was expected.
The prices of tomato concentrate are also falling, currently down more than 20% since March 2014 and at 3-year lows. In California, the major producer of processed tomatoes, the 2015 production for fresh tomatoes is forecast at 14.5 million tonnes, up 4% y-o-y due to a 3% y-o-y increase in acreage of 293,000 acres. Nearly 90% of the fresh production is expected to be used for processing. Prices for tomato concentrate rose steadily between 2012 and 2013 due to a 50% y-o-y fall in Chinese production in 2012. This meant China imported more processing tomatoes, creating higher demand and therefore higher prices in the U.S., especially in the second half of 2012. However, the increase in U.S. production since 2014 has caused prices to fall steadily.
All in all, with prices of both major ingredients falling, the cost price of canned beans, not including sweeteners and packaging, has fallen by 45% since its peak in March 2014. The prices for aluminium and sugar have also fallen by 20% and 15% respectively in the same period, so it would seem to be a good time to buy canned beans.