Truck availability on the West Coast is adequate. Freight rates were expected to remain near the summer season’s peak heading into mid-August.
The price of crude oil fell $1.90 Aug. 3 to $91.89 per barrel, which is 37 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of Aug. 1 was $3.94, 34 percent higher than one year ago. The average price in California for a gallon of diesel was $4.14, 32 percent higher than last year.
Light production from California’s Central Coast is being overshadowed by even lighter demand. The market attempted to push higher the week of July 25 but fizzled due to weak sales. Shippers say supplies are light enough to warrant higher prices but demand is simply too light for the market to gain traction. Quality from Salinas, CA, and Santa Maria, CA, is excellent.
There is little change from late July. Lettuce acreage in Salinas and Santa Maria is purposely reduced during the summer months because schools are not in session and the strong competition from seasonal melons, soft fruit and grapes at the retail level. This lighter production leaves less room for error should problems occur either in California or in the regional deals in Canada, the Midwest or along the East Coast.
Some Salinas lettuce shippers continue to battle isolated cases of mildew. As needed, shippers will harvest lettuce three 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. Other shippers are noting occasional “puffy” heads, which also leads to lighter weights. These patterns are expected to continue into mid-August.
Regional deals throughout Canada and the Eastern United States have endured bouts of 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. An extended wave of unexpected business could turn the tide and produce stronger prices and possibly a seller’s market. For now, light demand is curbing sales and preventing the market from gaining any true momentum.
California’s Central Coast leaf market remains in a similar situation as Iceberg lettuce. Summer plantings are purposely down and excessive heat may soon negatively affect quality in the regional growing areas. An extended wave of unexpected business could quickly change the dynamics of the leaf market and produce a market rally. For now, light demand is curbing sales and preventing the market from gaining any true momentum.
Strawberry supplies from Salinas and Watsonville, CA, continue to tighten and shippers still expect a steeper-than-normal decline beginning in mid-August. Shippers say dark colored fruit began to appear in late July. A salesman for a large Watsonville shippers 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 rising prices.”
A quality variance has surfaced in Salinas and Watsonville. A two-tier market has developed and the better-known labels are commanding a premium. This trend will likely become more pronounced as August progresses. Buyers should expect additional price hikes throughout the month of August.
A much anticipated high onion market in June and early July never materialized. Production from New Mexico normalized in mid-July and will likely 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 currently adequate enough to meet today’s demand.
The jumbo red market in California has recently been very reasonable, especially compared to the New Mexico f.o.b. market. Today, California red onion shippers are gapping and overall production has quickly fallen since late July. New Mexico shippers find themselves short of reds and are buying California red onions to supplement their own light supplies. The jumbo red market is strengthening and has the potential to move noticeably higher in the near term.
Weather in California was forecast to be sunny and hot through Aug. 9 with daytime highs in the mid- to upper 90s and overnight lows in the mid-60s. New Mexico had a 10-20 percent chance of daily rain showers and thunderstorms through Aug. 9. Daytime highs were forecast to range from 99-101 degrees.
New-crop direct-seed yellow onions from Washington state were to start Aug. 4 and reds Aug. 6. Initial volume was expected to be light. New-crop onions in Ontario, OR, will not start until late August and the bulk of the crop is not expected to be harvested until after Sept. 10. The upcoming crop in the Northwest could be described as “late and too many unknowns” because of cold spring and early summer growing conditions. The growing uncertainty of the Washington state, Oregon and Idaho crops is adding strength to today’s market.
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 suggests the possibility of celery demand switching back to California and sparking a market rally.
The California lemon market recently increased on both grades of 95s through 200s. Patchy morning fog was forecast to continue in Oxnard, CA, through Aug. 9 with daytime highs in the 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 that starts in October could be down as much as 50 percent because of the February freeze. Current overall quality is strong. Lemons are available in Oxnard and California’s Central Valley, and can load with Valencia oranges.
The California orange market recently increased on fancy 88s through 138s, and all choice sizes except 72s. Daytime temperatures were forecast to range in the mid- to upper 90s through Aug. 9. 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 expected to push higher as schools reconvene. Overall quality is strong with good sugars. Oranges are available for loading in the Central Valley followed distantly by Oxnard and Riverside, CA. 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. What production they have 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 West Coast. Peru has received clearance to export Hass avocados to the United States. Supplies will arrive throughout August and total volume will be modest. The overall market will remain terribly expensive heading into mid- and late August.
The West Side melon season got off to a late start and offered very light volume in early to mid-July. Shippers struggled with undersized cantaloupes through the weekend of July 23. Today, shippers have a typical size profile of cantaloupes heavy to 9s and 12s followed distantly by 15s. The cantaloupe market has recently eased and prices are now very reasonable. Honeydew volume is finally increasing and was expected to have reached seasonal levels by Aug. 6. Like cantaloupes, honeydew sizes are large. Honeydew prices have not eased as much as cantaloupe prices and remain firm at current levels. Sugars are good and the eating quality of today’s melons 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)