Salinas, CA: A strong and a cold late-season storm delivered record rainfall June 28 with daytime highs in the mid-60s. High pressure will soon build producing daytime highs from the upper 70s to mid-80s through July 5.
Fresno, CA: A strong and a cold late-season storm delivered record rainfall June 28 with daytime highs in the upper 70s. High pressure will soon build and quickly raise daytime temperatures. The Central Valley will reach a high of 108 degrees July 5.
Russet demand far exceeds supply in all shipping areas. Salinas Valley row crop shippers were seeing moderate to light demand on several key items.
TRANSPORTATION & FUEL
Demand for trucks on the West Coast exceeds availability. Freight rates are at the summer season's peak.
The price of crude oil increased $1.93 June 29 to $94.82 per barrel, which is 35 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of June 27 was $3.89, which is 32 percent higher than one year ago. The average price in California for a gallon of diesel is $4.15, which is also 32 percent higher than last year.
A strong and cold late-season storm June 28 produced measurable rainfall throughout much of the Salinas Valley and Watsonville. Daytime highs reached only the mid-60s, and as much as 0.5 inches of rain fell in Watsonville. This rain will act like a shot of fertilizer and encourage ample lettuce production into the week of July 4.
California's Central Coast is on the verge of much warmer temperatures July 2-4. Temperatures are forecast to reach into the mid-80s with overnight lows in the 60s. Shippers are somewhat concerned that the combination of rain so closely followed by heat may spark an increase in mildew. That being said, there's enough lettuce acreage under production that even a modest rise in mildew would not greatly affect the market.
Lettuce quality of late has been strong with good color, texture, weights and shelf life upon arrival. The lettuce market is expected to remain steady and reasonably priced heading into the week of July 4. Looking down range, most shippers concur that today's market will remain steady near current levels into mid-July.
Romaine and green leaf are in a similar situation as Iceberg lettuce. The June 28 rain will increase near-term production, and the warmer weather the weekend of July 2 may increase the threat of mildew. Ample acreage is under production, so a modest increase in mildew would have little effect on the market. Overall leaf quality of late has been very strong with good weights, color and shelf life upon arrival.
Regional leaf deals on the East Coast and in the Midwest are offering good supplies of leaf lettuce. The net effect is less demand for product from the West Coast. The leaf market in California will remain fairly quiet until the regional deals are hit with either excessive summer heat and/or rain. When this happens, and it will, demand unexpectedly swings back to California, and the leaf markets quickly react higher. For now, the West Coast leaf market will remain very reasonable heading into the week of July 4.
Broccoli supplies are ample from the Salinas Valley and Santa Maria. The June 28 rain acted like a shot of fertilizer and will encourage ample production heading into the week of July 4. The market is very reasonable, and even Asian crowns are in good supply. This is a good time to highlight California broccoli from California's Central Coast.
Salinas Valley and Santa Maria shippers continue to offer ample supplies of high-quality celery. The size profile is currently peaking on 24s. A two-tier market has developed as Santa Maria shippers attempt to lure orders and trucks away from Salinas. The overall market is expected to remain steady and reasonable heading into the week of July 4.
Production in Oxnard has faded substantially over the past month, and nearly all shippers have concluded their season. The annual 30-day soil moratorium in Oxnard begins July 15. New-crop celery from Oxnard will be ready by Thanksgiving.
A strong and cold late-season storm produced 0.5 inches of rain in Watsonville and 0.2 inches in Salinas June 28. A Watsonville strawberry salesman recently said, "This storm threw us a curve ball. We'll have to slow the harvest and be very selective over the next few days. Production will be down as much as 50 percent through the weekend of July 2." The decrease in production will be met with lighter demand now that the July 4 pull is over. The overall market is expected to hold steady heading into the week of July 4.
The wild card is the forecast of daytime highs in the mid-80s July 2-4. Shippers are hoping for breezy weather June 29 through July 1 so fruit on the vine has a chance to dry thoroughly before the heat arrives. Only time will tell if there are any long-term ill effects from the rain followed by heat.
It's been well chronicled that the New Mexico deal is off to a very slow start and will be plagued with poor yields and undersized onions well into July. The hard freeze in early February brought overnight temperatures between zero and 10 degrees in the onion-growing districts. Onion tops in countless over-wintered fields fell and did not recover. Production today in New Mexico is 20-30 percent below normal. It's been clear for many weeks that the Huron, CA, onion volume cannot compensate for New Mexico's shortfall.
Shippers remain baffled, if not stumped, that the much anticipated runaway market has not yet appeared. Why don't we have a demand-exceeds-supply onion market? Two reasons: light demand and limited transportation.
Market News reported that California and New Mexico are producing a combined 300 loads per day and that Mexico, oddly enough, is contributing another 30 loads. The United States traditionally absorbs 370 to 400 loads per day at this time of year. Light demand is the only plausible explanation why a shortfall of 40-70 loads per day is not resulting in a runaway market with jumbo yellow prices considerably higher than today's levels.
Limited truck availability is adding to the light demand. A truck shortage means there are more onion orders than there are trucks to haul the onions to market. Transportation cannot keep up with production, and onion supplies build at the source. The net effect is that a tight truck market curbs demand for product.
It's been hot in New Mexico, and field maturity has advanced. Fields are as much as one week ahead of schedule. Early maturing fields are softening the effects of the light production. The danger is that the combination of light production and advanced maturity will eventually create even a larger shortfall. Adding to the concern are temperatures in Huron, CA, which will soar from 79 degrees June 29 to 108 degrees July 5.
All the necessary ingredients are in place to produce a demand-exceeds onion market. Today's market is fragile, and it wouldn't take much additional demand to quickly send prices higher.
Today's russet market is demand exceeds supply. Storage supplies are legitimately light and falling into fewer hands with each passing week. Colorado's early exit has placed extra pressure on Idaho shippers who are struggling to minimize or prevent a gap between old- and new-crop russets. Adding further pressure are Northwest processors who find themselves in need of extra product and are willing to pay top dollar for the few remaining supplies.
The cold spring has delayed the progress of new-crop russets. Idaho shippers speculate that the harvest will begin Aug. 22-28, which is weeks late. An Idaho salesman recently said, "On one hand, we have processors and fresh buyers competing fiercely for limited old-crop supplies. On the other hand, persistent cold temperatures throughout the spring will delay the start of the new-crop harvest, and we are forced to stretch today's remaining light supplies in order to prevent or minimize a gap between old and new crop. We have to balance today's excessive demand and light remaining supplies to make sure we don't run out of supplies in August."
Fresh buyers are trying to stay ahead of inventories and the rising market by loading additional product. This extra demand contributes to the frenzy and fuels even higher prices. Shippers are so overwhelmed with business that they are taking orders only from regular customers two to four days in advance of loading and establishing prices the day of shipment. This is a runaway market, and prices will continue to rise daily in the near term.
Patchy fog will persist in Oxnard through July 5 with daytime highs near 70 degrees. Strong summer demand will push the lemon market higher in the near term. Overall quality is strong. Lemons are available in Oxnard and the Central Valley, and can load with Valencia oranges.
A strong and cold late-season storm delivered rain showers throughout the Central Valley June 28-29. Daytime high temperatures were considerably below normal and reached only the 70s. Highs will quickly rebound and reach 105 degrees the weekend of July 2.
The sizing profile of the Valencia crop is fairly typical and offers traditional percentages of most sizes. The market on small oranges is strong, and shippers recently increased prices on choice 88s, 113s and 138s. Overall quality is strong with good sugars. Oranges are available for loading in the Central Valley followed distantly by Oxnard and Riverside. Oranges and lemons can load together in either district.
The five-month struggle with light volume and undersized carrots from California is thankfully over. Shippers said that the production of jumbo and plug carrots has returned to normal levels. Quality is excellent, and jumbo prices may ease modestly in the near term.
The Mexican Hass avocado season is in its twilight stages and will offer only smatterings of volume through the remainder of the summer months. What production there is will be "second bloom" fruit, also known as "La Flora Loca." The quality of this fruit may be suspect.
The 2010 California crop produced a record 575 million pounds. This year's production has fallen 55 percent, to 260 million pounds. The 10-year average in California is 380 million pounds. Bottom line: California cannot compensate for the production drop in Mexico.
The strong seller's market will continue until late July or early August with the introduction of new-crop fruit from Chile. When it arrives, price relief will be only modest.
(Bill Armstrong is a self-employed produce broker who operates Armstrong Marketing in Salinas, CA. His column appears here every Wednesday afternoon/Thursday morning. He may be reached by phone at 888/484-0800 or at ArmstrongMarketing@comcast.net)