Russet shippers were experiencing continuing strong and rising demand on all packs and grades. Row crop shippers have seen persistent minimal demand since the holiday season. Northwest yellow and red onion shippers are seeing modestly improving demand.
TRANSPORTATION & FUEL
Trucks are plentiful in California and Arizona, but rising fuel costs are pushing freight rates higher.
Crude oil prices rose $1.07 March 7 to $105.78 per barrel, which is 28 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of March 5 was $4.09, which is 6 percent higher than one year ago. The average price in California for a gallon of diesel is $4.45, or 8 percent higher than last year.
Iceberg lettuce from the California and Arizona deserts is free of epidermal peel and overall quality is excellent. Today’s lettuce offers good weights, color and shelf life upon arrival. Ideal growing conditions since late January continue to produce an overabundance of lettuce.
The continuing big story remains the lack of demand. A Yuma, AZ, lettuce salesman recently said, “Historically, the slowest demand period of the year is the week between Christmas and New Year’s. Demand has been that light since the holiday season. I’ve been in the business for 25 years, and have never seen such a long stretch of minimal demand. I know it’s not the case, but it seems as though receivers just don’t care.”
For now, early to mid-March remains an excellent time to highlight high-quality Iceberg from the Southwest desert at very reasonable prices. The next possible change in the lettuce market will occur in mid- to late March, when the desert begins to conclude the winter season. Looking down range, the brief Huron, CA, season is expected to start the week of March 26 or April 2.
Leaf lettuce from the California and Arizona deserts are free of epidermal peel and overall quality is excellent. Romaine, Green Leaf, Red Leaf and Butter lettuce offer good color, weights and shelf life upon arrival. Mild weather through at least March 13 should ensure the continuation of high-quality leaf into mid-March.
Today’s leaf markets are very reasonable and should remain as such into mid-March and beyond. This remains an excellent time to highlight high-quality leaf lettuce from the Southwest desert.
Production is transitioning north and declining desert supplies are allowing local shippers to push broccoli prices noticeably higher. New-crop supplies from California’s Central Coast are compensating for the decline in the desert, and a two-tier market is forming based on loading districts. The near-term market will rise further and buyers will pay a premium to load broccoli in the desert through the remainder of March. Broccoli quality is excellent in all West Coast growing areas.
Ideal growing conditions, light demand and ample supplies have created a very reasonable Western celery market. Prices are very attractive and quality is high from Oxnard, CA, and the Southwest desert near Yuma.
Buyers can choose from a full array of sizes in both shipping areas. The near-term weather forecast suggests growing conditions will continue to be good well into the week of March 12. Mid-March will be an excellent time to highlight high-quality celery from California and Arizona.
Central Valley growers are suffering the negative effects from the cold January temperatures. Shippers say that quality is off slightly and bin counts are down as much as 50 percent. Fruit sizing is oddly small for this late in the deal and is peaking on 88s and 113s instead of 72s and larger.
This scenario is a problem from which most shippers will not recover through the remainder of the Navel season, which extends into late April. Some of the smaller shippers are already concluding their season. The market is firm and poised to rise in the near term. The Central Valley experienced freezing overnight lows March 6-8.
Desert lemon production was down as much as 75 percent this winter season due to the harsh freeze in February 2011. The desert lemon season started this past October instead of early September, and concluded in late February instead of late March. This premature conclusion has stabilized the market. Trucks now have to load new-crop lemons in Oxnard, CA, or the Central Valley.
Consumption of russets from processors (including frozen, dehy and flakers) has always been noticeably larger than the fresh industry. Processor purchasing habits continue to have a significant influence on the price of fresh russets paid by foodservice distributors and retail outlets.
Processors like to keep a 60-day supply of russets on hand and they started this season with only 20 days. Today, processors have 34 days on hand.
Processor export demand remains significantly higher than one year ago and processors are struggling mightily to keep up with orders. Processors are aggressively buying russets on the open market and paying prices noticeably above the fresh market. It’s understandable that some Idaho growers and packingsheds are diverting an increasing percentage of their remaining supplies to the process markets.
Idaho russet supplies in storage are down 10-15 percent from the 10-year average. Combine this shortfall with the strong processor demand, and the result is increasing fresh prices for retailers and foodservice operators.
Idaho packingsheds are slowly but surely switching from Norkotahs to Burbanks, which have a smaller size profile. As a result, prices of the larger carton counts are rising faster than the general market. The carton market is advancing every few days and shippers are pricing orders the day of shipment.
Buyers are advised to stay well ahead of inventories and assume replacement costs will be higher. Shippers are pricing orders the day of shipment.
For the second consecutive week, Northwest onion shippers saw moderately improved jumbo yellow and red onion demand. Jumbo yellow prices are steady for now but have the increasing likelihood of rising without advance notice. Jumbo red prices are modestly higher and will continue to rise in the near term.
The Mexican growing areas received 12 days of unwanted rain in February. The quality of white and red onions crossing into the United States is inconsistent and, at times, sub-par. As a result, Ontario, OR, shippers are seeing moderately improved jumbo yellow and jumbo red demand since mid- to late February. The bottom end of the jumbo markets has tightened and are not nearly so sloppy.
The colossal and super colossal yellow markets have gained considerable momentum since late February because the size profile of the remaining crop in storage is noticeably smaller. Most Ontario shippers will continue to pack yellows and reds into mid- or late March. A few will continue into late April. Washington state shippers have yellows and reds into late April or early May.
Texas shippers vividly remember last year’s collision between the Mexican and Texas onion deals. The overlap of heavy supplies in March and early April led to excess supplies and poor markets. Texas shippers have done two things to avoid a repeat of last year’s glut. First, acreage under production in this year’s Texas crop is down 25-30 percent. Second, growers have planted a higher percentage of long-day varieties, which means the heavier production will be harvested mid- and late season.
Only subtle changes are expected in the near-term jumbo yellow and jumbo red markets. Looking further down range, prices have been so low for so long that the market can only go up at some point. This remains an excellent time to buy yellows and reds because the markets will only move higher as spring approaches.