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Strong asparagus market expected to continue through summer

by Tim Linden | August 11, 2010
Cool early-summer temperatures in Mexico have combined with colder-than- usual winter temperatures in Peru to create a demand-exceeds-supply situation this summer for asparagus.

Typically, Mexico is the major early-summer asparagus producer, and Peru's volume increases throughout the summer to its typical peak in October. This year, however, Mexico has less volume than usual, and although Peru’s volume continues to increase every year, low July temperatures did not allow growers to jumpstart the production and take advantage of the hot market. Adding to the lack-of-supply situation has been a very tight airfreight market from Peru, which has exacerbated the issue.

In mid-July, Rick Durkin, business development manager for Crystal Valley Farms in Miami, said that Peruvian asparagus had an f.o.b. Miami price of about $26 per carton. "This compares to a $15 or $16 market a year ago. One hundred percent of the cost increase is being driven by transportation costs."

He said July 16 that one of the major freight carriers was locked in a dispute and was not providing any freight space. By the end of July, it appeared as if Miami-based Arrow Air was out of business and would not be providing airfreight space for Peruvian asparagus shippers this year. Mr. Durkin added that the temperatures in the northern Peruvian production areas July 16, which are the first to come into production, had fallen to about 36 degrees Fahrenheit the night before. “Asparagus needs nighttime temperatures at 50- 55 degrees Fahrenheit and daytime temperatures in the 70s.”

However, it is winter in Peru, and these temperature ranges were not unusual for July. The Crystal Valley Farms executive said that supplies are always spotty in July but even more so this year because of the extremely cold temperatures and virtually no warm days in the first half of the month.

Many others in the deal agreed with Mr. Durkin’s volume assessment, but some said that by the end of the month, other factors also contributed to the higher f.o.b. prices in Peru. Mike Parr, owner of Team Produce International in Miami, said in late July, “There has been a big price jump recently. It went from $28 to $37 overnight. That may sound good, but it’s not healthy. When the price gets that high, demand drops quickly.”

Jeff Friedman, sales manager and vice president of Carb-Americas in Pompano Beach, FL, agreed. “It’s tight right now,” he said in late July. “The current situation is being driven by the importers and the buyers in Peru.” He added that while low volume was creating high prices, it was not being fueled by U.S. consumer demand for asparagus. He predicted that the price would drop quickly once supplies increase.

The consensus opinion in late July appeared to be that the decrease in supplies resulted in the typical higher prices but that the market would fall when supplies pick up in mid- to late August.

Leo Rolandelli, general manager and president of Jacob, Malcom & Burtt in San Francisco, expects to see tight supplies from Peru again later in the year. “Prices have been higher than normal,” he said July 28. “So the Peruvians knocked all the ferns down [in an attempt to increase the harvest and take advantage of the good prices]. Asparagus is a cycle crop, and now they are going to be out of cycle.”

Like most others, he predicted that supplies will be at their peak in September and October. However, Mr. Rolandelli believes that around the middle of November, there will be a shortage again. If that is the case, the industry should expect strong asparagus prices again for the November and December holiday season when consumer demand is typically very good.

(For more on Peruvian asparagus, see the Aug. 16, 2010, issue of The Produce News.)