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High processed prices for Chilean blueberries in late December were threatening fresh-market supplies, according to Scott Hulsey, vice president of procurement for Gourmet Trading Co. in Los Angeles.

He told The Produce News Dec. 29 that Gourmet Trading had enjoyed company record high volume loadings over the previous two weeks. The high blueberry volume on the water represented "a nice groove right now" for the company. “It is a trend that is expected to continue through the next two or three weeks,” he said.

The large blueberry volume coming from Chile very likely reflects industry volumes, thus forebodes “a slide in the market,” he said. “I am a little nervous on where this fresh deal is headed, with a possible market drop.”

He added, “A whole other element this year that was not in play before is that as the fresh market continues to drop, the processed market price in Chile is fantastic. As the fresh market approaches where it is forecast to be next week, the growers have to debate where to send their product. I think there could be a significant impact on exportable volume over the next couple of weeks if the fresh market does not rebound. And there is no indication it will.”

Mr. Hulsey said that the processed market “started to show life over the summer — in the July timeframe. A gradual increase in prices has come to a head now. It's full blown.”

Putting processed-market prices into fresh-market terms, he said that Chilean growers were getting the equivalent of about $24 for a 12-count pint flat. This is attractive vs. the fresh-market hurdles of international freight charges, packaging costs, phytosanitary inspection and rejection risks, as well as low-value U.S. dollar exchange rates. “Payment from the processors is in seven days. These are real-world factors for growers.”

The market is so strong because for the previous two years, processed blueberry prices were “absolutely horrible.” The good news for the trade is that low prices “opened more end-users for processed blueberries,” he said. “People really like them. Prices were so cheap that people used them like crazy. There was a huge inventory, but as things started to dry up, demand was roaring. As a result, that’s where we are now. ... Demand is through the roof. It is pricing like they’ve never seen before.”

This situation is “most impactful for a lot of these guys who are in the business of exporting fruit,” he continued. “They have all the packaging purchased, based on numbers. They have fixed costs, with [agricultural] guys on the ground. They are scrambling, saying, 'What are we going to do?’“

This scenario “is not our model,” Mr. Hulsey said. “We work with a grower who can export for himself.” That is, however, “the prevailing model. The growers bring raw product” for packing, and then the fruit is exported. Gourmet Trading is also “in the business of selling fruit. The fear is real. These growers, in light of a bad fresh market, may send a lot of fruit that way,” he stated.

Chile’s fresh blueberry export figures already might be showing the influence of domestic demand for processed market blueberries. Mr. Hulsey said that Chile loaded a total of 5.6 million tons in week 49. “In week 50, December 13-19, we saw 4.4 million tons loaded.”

He also said that there may be more than one factor in the volume drop, as Chile saw some labor strikes in week 50.

Still, Chilean blueberry volume was building in December, which suggests that the processed market was in play. “That is my hunch. I don’t know if that can be proven,” he said. “I think the numbers are significant enough in December that some external factors are at play.” If fresh blueberry exports continue to drop, “it’s going to be hard to argue that the reason is something other than the processed market.”

Mr. Hulsey said that his December arrivals of fresh Chilean blueberries “have been fantastic. I was walking in the cooler in L.A. yesterday. I kept commenting that every box contained a big, beautiful, hard piece of fruit. It is a shame that we are not selling for higher prices. The fruit quality is really there. If there is any time of the year you could depend on quality, it will be now.”

Despite the supply concerns, Mr. Hulsey said, “I am optimistic the fresh market will react. It’s a big time in the U.S. market for the consumption of blueberries. This is historically a large timeframe to move them. The market will be somewhat cognizant of where it should be. It will be competitive enough that we don’t lose the amount of fruit some guys are talking about.”