After several months of a relatively low level of activity, the bulk market “broke out” in the middle of January. Buyers, perhaps concerned about potential supply issues in California and the Southern Hemisphere, ramped up their purchases over the past few weeks. Suppliers in California continue to look for drought relief, as 2013 proved to be the driest year for California in recorded history. There continues to be a debate about the potential size of the drought-affected 2014 California crop. Both Chile and Argentina are reporting lower crop projections, as frost and other weather issues appear to have damaged yield potential in both markets. Australia and New Zealand both could see healthy outputs, although some growers in Australia may face some issue caused by the recent heat wave.

Suppliers seem to be gaining renewed strength, as demand numbers look promising in many markets. Chile has reported a record volume of exports in 2013, and current bulk pricing makes the Chilean market extremely attractive for red wine buyers. South African suppliers have a low level of carryover stock, and growers are hoping for a large harvest, as the weakening Rand continues to make South Africa a popular target for buyers from Europe and North America. European market reports are varied, as ample supply exists in Spain and Italy, while the demand is currently greater than supply in France.

It appears that the bulk market has found a pricing floor in many markets, as prices are now holding, and in some cases starting to strengthen. Actual crop sizes in the Southern Hemisphere will certainly help solidify pricing in the short term, but the view for the long term continues to be a balanced market.

Read the report