TRANSPORTATION & FUEL
Truck availability on the West Coast is adequate. Freight rates should begin to ease as September progresses.
The price of crude oil increased $3.32 Sept. 7 to $89.34 per barrel, which is 39 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of Sept. 5 was $3.87, 32 percent higher than one year ago. The average price in California for a gallon of diesel is $4.06, 29 percent higher than last year.
Lettuce acreage in California’s Salinas Valley and Santa Maria, CA, is purposely reduced during the summer months because of the competition from regional growing deals in Canada and the East. There is also strong competition for retail space from melons, grapes and soft fruit.
The chronic pattern of morning fog followed by sunny afternoons in the Salinas Valley has produced an environment ripe for mildew, and lettuce fields continue to suffer to varying degrees. In some cases, growers have been forced to disc entire fields due to quality. Harvest crews are forced to slow their pace and remove affected leaves, which can result in smaller heads and lighter weights. Shippers can also combat the mildew by harvesting lettuce three to five days early to ensure healthier, clean lettuce. Buyers should fully expect these trends to continue through much of September.
Light lettuce demand over the past weeks has overshadowed most production issues. Shippers sense the light demand will not be able to mask the continuing quality concerns on the West Coast. The market has been rock-bottom for several weeks and frankly cannot drop any further. Buyers should expect looming supply issues to test higher prices in early to mid-September.
Summer plantings along California’s Central Coast are purposely down, and the persistent fog pattern is causing mildew concerns, particularly in Romaine lettuce. The net result is lower yields and lighter production. Shippers are pushing Romaine prices higher, and the green leaf market will soon follow.
California shippers sense Hurricane Irene harmed regional leaf supplies in New Jersey. Shippers anticipate demand from East Coast receivers will soon shift back to California. Buyers should expect additional Romaine price increases and the beginning of higher green leaf prices.
There has been little change. California broccoli shippers continue to compete with Canada and Maine for U.S. market share in the Midwest and along the Eastern Seaboard. Overall, broccoli supplies outweigh demand and the market remains reasonably priced. Production of Asian-cut broccoli crowns has recently increased in California, and shippers once again offer a nice blend of bunch and crown product. The overall market was expected to hold fairly steady heading into the week of Sept. 12. Quality from Salinas and Santa Maria is excellent.
There is little change. Salinas Valley and Santa Maria shippers continue to offer ample supplies of high-quality celery. The size profile remains heaviest to 24s followed by 30s. A two-tier market exists 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 combined supply from Michigan and California currently outweighs demand and has created very reasonable prices. The market was expected to remain steady heading into the week of Sept. 12.
September will prove to be a significant procurement challenge for buyers. Strawberry production from Northern California has dropped between 33 percent and 50 percent since early August. Shippers are perplexed because this steep decline is several weeks early and typically occurs in mid- to late September. The Oxnard crop in Southern California will not be in position to pick up the slack until late September or early October. Buyers should brace for tight supplies, prorated orders and rising prices through much of September.
A noticeable quality variance exists in the Salinas Valley, and the best fruit is commanding a premium. Buyers must be diligent and select the hardier lots that can arrive on the East Coast with adequate shelf life. Receivers are encouraged not to get long despite the forecast of rising prices.
The current snapshot of Idaho’s Norkotah crop consists of light yields and medium to small sizes. Yields are 275-300 hundredweight per acre instead of the expected 350-400 hundredweight per acre. Overall sizes are leaning heaviest to 90s and 100s, followed by 80s. Buyers will pay a noticeable premium for 60s and larger, and any size No. 2 grade. Overall production is light because only a modest number of Idaho’s 36 packingsheds are running.
An Idaho salesman recently stated, “Our yields are down and we’re blowing through our early-season acreage ahead of schedule. There’s not a lot of size in the current diggings. The state needs September to offer warm days and temperate night temperatures in order for the crop to play catch-up and finish with a good size profile.”
It’s conceivable the 2011 crop will have 60-count f.o.b. prices twice as expensive as 100-count. Washington state is in a similar situation with light yields and smaller-than-usual sizing. Value-conscious buyers can find substantial deals in Washington on 90s and 100s.
Growers in Idaho and Washington will be tempted to delay the vine kill in an effort to gain additional size. Such tactics increase the possibility of being confronted by an autumn freeze in mid-October.
Onion buyers still have multiple growing districts from which to choose — California, Washington and Colorado. Modest supplies of Ontario, OR, onions are now available. Production is predicted to remain light all week and begin to increase the week of Sept. 12. Utah onions won’t be a factor until mid-September. California will continue to offer onions into mid-September while the New Mexico season is essentially finished.
Late-season California onions are a storage variety and the quality of today’s yellows and reds is excellent. Jumbo yellows from California are 80-100 percent 3.5 inches and larger in diameter. The first jumbo yellows from Ontario, OR, are 70-80 percent 3.5 inches and larger. Washington state production continues to rise with jumbo yellows closer to 60 percent over 3.5 inches. Red onion production is increasing in Washington. California red shippers still have good supplies of reds and remain competitive.
A good portion of the Ontario, OR, crop won’t be harvested until after Sept. 12. The front end of the harvest looks fairly good and the middle looks OK. The last third of the harvest has some shippers and growers concerned. The crop got in late and growing conditions during the spring and early summer were cool. The Northwest onion crop really needs extra “heat units” through the balance of the growing season. According to the National Weather Service, temperatures in September, and September through November should be normal. If this forecast is accurate, the latter portion of the onion crop will struggle to make size and growers will be tempted to prolong the harvest into late October or early November. Delaying the harvest increases the possibility of being confronted by an autumn freeze.
The upcoming Navel crop is at least three weeks late and will not start until late November. Shippers are reducing Valencia production today in an effort to spread the remaining supplies over a longer period of time and minimize a variety gap in November. Shippers will be forced to reduce production even further as October and November approach. The looming decline in production will pinch prices through the late summer and early autumn. Fruit being harvested today has been hanging on the trees through the summer heat and is beginning to show varying degrees of softness. Quality will not improve until new-crop Navels begin in late November. There was a chance of thunderstorms and showers Sept. 8-13.
California continues to offer good lemon supplies and a wide array of sizes from Oxnard. The crop is approaching late season, and the percentage of choice-grade fruit is on the rise. The price gap between fancy and choice grades will widen into late September. The market may soon ease on 140s through 235s. Quality will improve in October with the start of new-crop lemons in the desert. Production of the desert crop may be down as much as 50 percent due to the February freeze.
The season’s peak production occurred in late August. Shippers that were packing 25,000-30,000 cartons of cantaloupes per day the week of Aug. 22 have fallen to just 10,000-12,000 per day. Overall production will continue to fade into September.
Autumn is approaching, and the daylight hours are shortening. Today’s cantaloupes have a full slip and good netting. The best way to describe today’s cantaloupe color is tan with a green background. The Brix remains between 10 and 12, and today’s cantaloupes continue to offer excellent eating quality. Sizes are heaviest to 9s and 12s followed by 15s. Honeydew volume is steady and the market remains firm. Honeydew sizes are shifting to 6s and 8s with fewer 5s. Honeydew Brix is 12 and the eating quality is outstanding.
(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)