Demand the week between Christmas and New Year's is historically the slowest week of the year, and this year was no different.
TRANSPORTATION & FUEL
The Christmas tree pull is over, yet truck availability is expected to remain tight into mid-January due to a lack of manufacturing demand and drivers taking time off for the holidays. Truck availability is the tightest throughout the Northwest.
Crude oil prices fell $2 Dec. 28 to $99.36 per barrel, which is 32 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of Dec. 26 was $3.79, which is 15 percent higher than one year ago. The average price in California for a gallon of diesel is $4.04, which is 16 percent higher than last year.
Overnight temperatures in the desert were below freezing throughout much of December. The negative result was epidermal peel, which is widespread throughout the desert. Shippers are quoting all lettuce with blister and peel, and sales are exempt from frost damage.
The near-term weather forecast in the desert calls for rising temperatures, but "the damage is done and the rising temperatures are too little too late," according to a salesman for a large desert shipper. "Warming temperatures or not, the industry will battle epidermal peel well into mid-January. And that's assuming it doesn't freeze again between now and then."
A salesman for another large desert shipper added, "The recent excess supply of lettuce seems to be working through the system. Blister and peel will decrease yields. Demand the weeks of December 12 and [December] 19 was terribly light. The lettuce market has been depressed since mid-December and only has one direction to move: higher. We anticipate lightening supplies and somewhat improved demand beginning as early as the week of January 2. By no means do we see a runaway market, but rather a moderate push to the upside."
Shippers will combat the blister and peel by removing the affected outer wrapper leaves. The result will be smaller, pale heads and lighter carton weights. A two-tier market is possible between 24 and 30 count.
Romaine, Green Leaf, Red Leaf and Butter lettuce grown in the desert have been subjected to the same cold December weather as Iceberg lettuce. Desert leaf shippers are quoting Romaine lettuce with blister and peel, and discoloration once the blisters break open. The problem is widespread and its negative effects will persist into mid-January. The leaf markets of late have been very low and should rise.
Oxnard's proximity to the Pacific Ocean has keep December's cold overnight temperatures warmer than the desert. Oxnard shippers currently have leaf lettuce without blister and peel. Unfortunately, Oxnard's total leaf supply is far less than the collective desert. Buyers can expect Oxnard leaf to command a premium heading into early and mid-January.
The recent stretch of cold weather in the desert is keeping overall production below normal. The near-term weather forecast called for temperatures rising into the low 70s through Jan 3, but this will likely not offer a significant amount of near-term market relief because soil temperatures must rise in order for production to increase. Buyers can expect fairly steady prices in early January, and a wide array of sizing should be available, including Asian broccoli crowns.
The lion's share of nations celery is coming from Oxnard, CA, where there is a wide range in price. The recent stretch of cold weather has slowed growth and reduced stalk sizing, which has placed a premium on 18s and to a lesser extent 24s. Growers have an unusually high percentage of 30s and some shippers are dealing on block purchases. Some shippers are only harvesting half days in an effort to allow the celery extra time to grow.
Despite the forecast of warmer temperatures into early January, Oxnard shippers say that ground temperatures must rise before production can return to normal.
The celery market was holding fairly steady heading into early January. Buyers loading celery in Yuma will pay a premium for product but will save freight costs by not loading in the north. Desert grown celery will begin in mid- to late January.
Demand the week between Christmas and New Year's is historically the slowest week of the season, and shippers were still waiting to see how dry the pipeline is and to what degree receivers will reorder. The general consensus is foodservice and retail demand will remain soft into late January while demand from processors remains brisk. Odds are that processors and the fresh sector will compete for the same russet supplies this spring and drive prices higher.
The Burbank variety continues to command a premium over Norkotahs. Several Idaho sheds will pack Norkotahs into late January before switching to Burbanks for the duration of the shipping season.
Truck availability remains limited and rates are expensive. Buyers should plan well ahead and load trucks as they become available.
Growing conditions for the 2011 Northwest onion crop were well chronicled. The crop was delayed by cool temperatures through the early and mid periods of the growing season. Cold temperatures returned during the harvest accompanied by four different rains. The harvest, which was completed in early November, was one of the latest over the past 30 years.
Today's jumbo yellow market remains surprisingly very reasonable. One theory is that growers want to run certain lots they feel are worthy today but may not have the legs to store deep into the shipping season.
A major shipper recently stated, "Today we're pleasantly surprised with quality. Ask us again in January and February. Not everything is going to keep. Odds are we'll discover some negative surprises resulting in higher than usual shrink rates. For now, all we can do is wait and see".
The near-term yellow and red onion markets were expected to hold fairly steady and remain very reasonable heading into early January. Today's white onion market has a wide range of price based on color and quality. Longer range, the onion market January through March will be largely influenced by the amount of shrink in storage.
Truck availability is tight and will remain as such for the foreseeable future. Onion shippers report the ongoing rail car shortage is adding to the already tight truck market. Buyers should plan well ahead and load trucks as they become available.
Widespread frost continued in late December in California's Central Valley, with rural areas seeing temperatures in the mid-20s. Navel production is running at full capacity and quality is exceptional. Color is naturally full color with Brix between 11 and 12. Packouts are 75 percent Fancy and 25 percent Choice. Peak sizes are 88s followed by 72s then 113s. Sizing will gradually increase into late January.
Desert lemon production is down as much as 75 percent due to the harsh freeze in February 2010. Desert supplies will be light throughout the abbreviated season, which will conclude in late January instead of the customary mid-March. The impact will be increasingly felt as February 2012 approaches.
A Yuma lemon shipper recently stated, "Supplies of 140-count and smaller are very limited. We're even tight on our peak sizes."
Shippers are seeing a demand-exceeds-supply situation on choice 140-count and smaller. Today's lemon prices are steady because late December demand tends to be soft. Buyers willing to load independent fruit in Yuma may find savings.
Oxnard's sizeable crop will begin in late January and provide good supplies by early March. The modest Central Valley lemon crop has started and will increase production into January.
(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.)