Demand for California melons continues to outpace light supplies. Persistent heat in the Midwest and along the East Coast could stress the local leaf crops and divert demand back to California.
TRANSPORTATION & FUEL
Truck availability on the West Coast is adequate. Freight rates should remain near the summer season’s peak heading into early August.
The price of crude oil fell July 27 by $2.19 to $97.40 per barrel, which is 34 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of July 25 was $3.95 — 35 percent higher than one year ago. The average price in California for a gallon of diesel is $4.15 — 33 percent higher than last year.
Lettuce acreage in Salinas and Santa Maria is purposely reduced during the summer months because schools are not in session and because there is strong competition from seasonal melons, soft fruit and grapes at the retail level. This lighter production leaves less room for error in the event that problems occur either in California or the regional deals in Canada, the Midwest or along the East Coast.
Some Salinas lettuce shippers have recently been battling mildew. When necessary, shippers purposely harvest lettuce four to five days early and remove extra wrapper leaves to ensure healthy, clean lettuce. The result is lighter volume, lighter weights and the occasional pale color. It is no surprise that a few Salinas shippers continue to offer cello wrap 30-count. This pattern was expected to continue into early August.
Regional deals throughout Canada and the Eastern United States have been enduring excessive heat since early July. It would not take much more heat stress to negatively affect quality and force buyers to consider shifting their business back to California’s Central Coast. Should this occur, California would not necessarily be able to pick up the slack and adequately address the unexpected additional demand.
A salesman for a Salinas lettuce shipper stated July 20, “I recently sold two loads of lettuce to Canada. I can’t remember the last time this company shipped a sizable lettuce order to a regional growing district in July.”
An extended wave of unexpected business could turn the tide, resulting in stronger prices and possibly a seller’s market.
California’s Central Coast leaf market remains in a similar situation as Iceberg lettuce. Summer plantings are purposely down and excessive heat is on the verge of negatively affecting quality in the regional growing areas. An extended wave of unexpected business would quickly change the dynamics of the leaf market and key a market rally.
Broccoli supplies along California’s Central Coast are declining after several weeks of ample production. Salinas shippers are nudging bunch 14-count prices higher and finding little resistance. Crown supplies, especially the Asian short-cuts, have declined considerably since July 20. The crown market is just beginning to react and has the potential to move noticeably higher through August 3.
Salinas Valley and Santa Maria shippers continue to offer ample supplies of high-quality celery. The size profile continues to peak on 24s followed by 30s. The market is noticeably higher for the limited supplies of 36s and 48s. A two-tier market has developed in California, as Santa Maria shippers attempt to lure orders and trucks away from Salinas.
The Michigan celery deal will compete with California for U.S. market share through the summer months. The continuing hot spell throughout the Midwest has increased the possibility that celery demand would shift back to California and spark a market rally.
Strawberry supplies from Salinas and Watsonville are tightening, and shippers expect a steeper-than-normal decline beginning in mid-August. Shippers said that dark-colored fruit is beginning to appear.
A salesman for a large Watsonville shipper stated, “It’s a bit concerning to see some dark fruit on the vine in late July. This usually begins to occur in mid-August. Receivers are encouraged not to get long despite the strong likelihood of the next price increase in early August.”
A quality variance is surfacing in Salinas and Watsonville. A two-tier market is beginning to build and the better-known labels are commanding a premium. This trend will become more pronounced as mid-August approaches. Buyers should expect additional price hikes throughout August.
The much anticipated high onion market in June and early July never materialized. Production from New Mexico normalized in mid-July and should remain as such through the duration of the shipping season, which ends in mid- to late August.
Jumbo yellow supplies from California and New Mexico are more than enough to meet today’s moderate demand. A large jumbo red price difference exists between New Mexico and California. The variance is so large that some New Mexico shippers are bringing in California reds to supplement their needs.
Weather in California is dry with daytime temperatures expected to be in the mid- to high 90s through Aug. 2. New Mexico had a 20-30 percent chance of daily rain showers and thunderstorms through Aug. 2. A few New Mexico shippers are temporarily out of onions due to the spotty but heavy rain.
New-crop direct-seed onions from Washington state should start between Aug. 1 and Aug. 3. New-crop onions in Ontario, OR, were not expected to start until late August, and the bulk of the crop likely will not be harvested until Sept. 10 or later.
Flat-bed trucks are the preferred mode of transportation because the highway wind whistles through the load and keeps the respiring onions dry.
Prices recently increased again on all grades of 140s and larger. Patchy morning fog was expected to continue in Oxnard through Aug. 2, with daytime highs in the upper 60s to low 70s. Continuing strong summer demand is stair-stepping prices higher each week. Chilean lemons are available on both coasts and volume is on the rise.
Looking down range, production of the desert crop, which starts in October, may be down as much as 50 percent due to the February freeze. Current overall quality is strong. Lemons are available in Oxnard and the Central Valley, and can load with Valencia oranges.
Daytime temperatures were forecast to be in the upper 90s to low 100s through Aug. 2. The sizing profile of the Valencia crop remains fairly typical and offers traditional percentages of most sizes. The market on small oranges is strong on 88s, 113s and 138s, and is slowly pushing higher. 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 Mexican Hass avocado season is essentially complete and will only offer smatterings of volume through the remainder of the summer months. Production out of Mexico will be second bloom fruit, also known as “La Flora Loca.”
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. The bottom line is that California cannot compensate for the production drop in Mexico.
Limited new-crop Chilean supplies are arriving on both the East Coast and the West Coast. For the first time Peru has received clearance to export Hass avocados to the United States. Supplies will arrive throughout August and total volume is expected to be modest.
The cool spring and early summer continues to heavily influence the West Side melon market. The season began late and offered very light volume in early to mid-July. Shippers continued to struggle with light production and undersized melons through the weekend of July 23.
A salesman for a Mendota shipper recently stated, “This is a weird year for West Side melons. We just can’t seem to get started and it’s nearly August.”
Today, shippers are seeing an increase in the melon size profile, but production remains below normal. Looking forward, shippers are optimistic that production would climb to seasonal levels beginning July 28-30. Even with the pending volume increase, shippers will play catch up into early August to meet the pent-up demand that has been building from the beginning of the season.
Daytime temperatures in Mendota, CA were expected to be sunny and hot through Aug. 2, with highs in the upper 90s to 100 degrees. This much needed heat should encourage more production. Sugars are good and the eating quality of cantaloupes currently is very good.
(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)