Demand-exceeds-supply still fueling hot lettuce market
by Tim Linden | December 06, 2009
Though one might have suspected that the hot lettuce market would cool down after the Thanksgiving weekend, that was not the case as the f.o.b. market on both Iceberg and Romaine lettuce remained above $30 Tuesday, Dec. 1.
There appeared to be no letup on the immediate horizon as demand still exceeded supply. "I'm not the right person to call to find out how the lettuce market is," quipped Denny Donovan of Fresh Kist Produce LLC in Salinas, CA, though the information he provided turned out to be especially telling. "We're out of the deal for the next two weeks. But at least this week there is some lettuce around, and some guys are quoting prices. Last week no one had any lettuce at all," he said the first week of December.
It is precisely that type of situation that has led to the demand-exceeds- supply dynamic. Mr. Donovan, who is on the Fresh Kist sales desk, said that the firm's production from California ended a couple of weeks early and that its Yuma, AZ, production is a couple of weeks late, causing the firm to have a shortage of supply. "We are in this gap situation because of Mother Nature."
Mr. Donovan said that a couple of weeks of high temperatures might help solve the sparse display problem, but again Mother Nature was not cooperating. Temperatures in the high 60s and low 70s might seem balmy to New Englanders as winter approaches, but those numbers represent downright chilly days in the Arizona desert. "I think acreage is down in all the districts because of the bad markets we've had for the last 18 months," Mr. Donovan said. "I think we could see a strong market for the next 30-60 days."
Steve Church, director of operations for Church Bros. LLC, which is also headquartered in Salinas but has growing deals in both California and Arizona, concurred with the notion that the market could remain strong for the foreseeable future. He said that reduced acreage is one culprit, but just as important has been the cutting of young fields over the past month.
Mr. Church explained that growers and shippers have been trying to keep up with demand by cutting young fields to fill their orders. This not only results in reducing the number of fields available for harvest as the deal moves ahead, but it always reduces yields per field as the crop is cut at a less mature stage.
He said that while a look at historical data might reveal a "typical" softening of the market the week after Thanksgiving, "there is nothing typical about the deal right now. Once you start cutting ahead, it is hard to catch up."
Like Mr. Donovan, Mr. Church said that the weather plays an important role, and it currently is not cooperating. October rains in California's Salinas Valley reduced that area's November production, and cool weather in Arizona has not helped fill the gap.
Even as supplies are expected to increase in mid-December, that will be just about the same time that demand is expected to peak again for the Christmas holiday, which could once more send market prices soaring through the roof.
While the other lettuce varieties and staple vegetable items such as broccoli, cauliflower and celery were not experiencing the same demand-supply imbalance as Iceberg and Romaine, they were in strong marketing situations. Boston and Green Leaf were selling for around $20 per carton Dec. 1, while Red Leaf was around $25. Spinach was in the $10-$13 range, while broccoli was mostly $15-$17 for crown-cut broccoli, and $2 lower for cartons of bunched broccoli. Cauliflower was trading at $10 to $12 Dec. 1, while celery was in the $13-$15 range for the larger, two dozen-to-the-carton size.