The Mintec price of US bananas declined by 35% to USD 0.35/lbs between 1st April and 2nd September, in line with lower seasonal demand and an oversupplied North American banana market.
US demand for bananas typically declines in the summer months, as consumers often favour summer fruits such as watermelons. Nevertheless, COVID-19 has had a bullish impact on banana demand, although the impact has not translated into banana pricing due to the vast banana supply in the North American market.
Key exporters to the US market, Ecuador and Guatemala have witnessed similar bearish price movements, amid rising production. During 2019, Ecuadorian producers planted an estimated 4,000 hectares of new bananas, and additionally replanted another 4,000 hectares. These new plantations began to produce at the back end of 2019 and led to higher exportable production volumes for 2020. However, COVID-19 has affected key Ecuadorian export markets, and bananas intended for foreign destinations have been available on the domestic market.
Since the turn of the year, the Mintec price for US and Ecuadorian bananas have displayed a positive correlation (r=0.58). The impact of an oversupplied Ecuadorian market, can be felt across most of the North American banana market. Accordingly, the correlation coefficient highlights that to an extent there is a interrelated relationship between the US and Ecuadorian banana prices, since the US depends on Ecuadorian exports.
Going forward, the Mintec price of US bananas is expected to rise in the next few months, in line with an uptick in demand with the end of the summer season in the US.