Salinas lettuce shippers were experiencing lower demand over the past month in direct proportion to the rise in production of California melons, grapes and stone fruit. California and New Mexico yellow onion shippers were seeing steady and fairly good demand. Idaho russet shippers had modestly improved carton demand.
TRANSPORTATION & FUEL
Demand for trucks and the cost of freight remain at peak levels and are expected to continue as such through July.
Crude oil prices increased $0.79 June 27 to $80.15 per barrel, which is 45 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of June 25 was $3.68, or 5 percent lower than one year ago. The average price in California for a gallon of diesel is $3.91, or 6 percent lower than last year.
For Salinas shippers, lettuce demand has fallen over the past few weeks in direct proportion to the rise in production of California melons, grapes and stone fruit. A salesman for a large Salinas lettuce shipper recently said, “Current lettuce supplies are ample compared to demand, which is light.” Another salesman added, “The Fourth of July pull is over and the weather forecast calls for near-perfect growing conditions into early July. We expect good supplies of high-quality lettuce for a while.”
Central Coast lettuce growers purposely reduce their lettuce acreage during the height of the summer season. Shippers are keeping a watchful eye on the local weather pattern and fog in particular. History tells us that persistent heavy and wet fog will increase the degree of fringe burn and eventually reduce yields. Coupled with fewer acres under production, reduced yields can result in rising lettuce prices. For now, the near-term lettuce market will remain very reasonable and offer high-quality product heading into early July.
Ample leaf acreage in the Salinas Valley has more than compensated for yield decreases and/or quality concerns since the season began in mid-April. The result has been a steady stream of very reasonable prices over the past two months. As with Iceberg lettuce, Central Coast shippers reduce their leaf acreage during the summer because of competition from melons, grapes and stone fruit. As well, Canada and several U.S. regions offer “homegrown” leaf supplies during the summer.
As it invariably happens, the regional leaf deals will eventually experience excessive heat during the summer months. When this occurs, leaf demand suddenly and unexpectedly swings to the West Coast and sends Romaine and Green Leaf prices higher in a hurry. For now, the near-term leaf market should remain very reasonable heading into early July.
Production in Watsonville and the Salinas Valley is currently at its season’s peak and should remain as such into the week of July 9. Shippers say supplies were ample for the Fourth of July holiday rush.
Not all fruit is equal and therefore buyers must choose carefully. There is a wide range in price based on labels and whether the fruit loads in Salinas or Santa Maria. Truck rates are very expensive, so Santa Maria shippers must be creative to lure orders and trucks away from the Salinas Valley.
The top strawberry labels are selling easily. At the other end of the spectrum, there are a few labels that are not worthy of East Coast destinations and are priced accordingly and kept in the western markets. The overall market may ease modestly heading into early July.
Weather in the Salinas Valley has been cool and inconsistent since the broccoli season began back in early April. Uneven weather patterns tend to produce peaks and valleys in supply. Overall broccoli acreage is down and shippers in both the Salinas Valley and Santa Maria have suffered from a substantial production drop since early June. Supplies are thankfully beginning to improve and market relief is just around the corner. Buyers once again have access to adequate supplies of Asian cut broccoli crowns.
The Salinas celery season is in its fourth week of production and supplies remain ample. Quality is excellent and the market remains very reasonable. This is a wonderful time to highlight new-crop celery from California’s Central Coast.
The Oxnard celery season is essentially over and growers will begin their 30-day soil moratorium on July 15. Santa Maria and Salinas Valley shippers will offer celery through the Thanksgiving holiday rush.
Truck freight rates are very expensive and foodservice buyers are focusing their purchases in the Salinas Valley. Shippers to the south in Santa Maria must be creative to lure trucks and orders away from Salinas. Buyers willing and able to load celery directly in Santa Maria will find discounts.
After six weeks of lagging production, Valencia availability is finally at seasonal levels. Sizing from the Central Valley tends to be large, which requires foodservice buyers to plan ahead when purchasing 113s and 138s. Quality is excellent and the crop is currently offering a high percentage of Fancy grade fruit. The market should remain fairly steady near current levels heading into early July.
The Central Valley harvest is complete and Oxnard growers have harvested 65 percent of their crop. Shippers who rely on Central Valley fruit must transfer fruit up from Oxnard or exit the market and focus on oranges. Overall lemon quality is excellent. A full array of sizes in both grades is available. Seasonal lemon demand is brisk and the market is expected to hold fairly steady heading into early July.
New Mexico shippers are in the midst of a production gap, which is expected between over-wintered and direct-seed onions. This annual occurrence takes place from late June to early July. Why? There is a natural timing difference between the varieties. Shippers haven’t yet developed an over-wintered variety to run longer or a direct-seed variety to begin earlier. Hence, New Mexico shippers will offer light supplies into the week of July 2.
New Mexico shippers are pushing the yellow onion market higher and California shippers are riding its coattails. Yellow onion receivers should buy today with the thought that f.o.b. prices, assuming dry weather, will ease beginning July 4-6. The red onion market is in a slightly different position. California red onion supplies are lightening while New Mexico shippers are finally sniffing around for a little extra business. Straight load red buyers are able to secure discounts.
Overall onion quality is good in both areas. The near-term weather forecast in New Mexico called for sunny skies and temperatures between 101 and 104 degrees through Tuesday, July 3. California shippers also expect clear skies, but daytime high temperatures were expected to reach only the upper 80s to mid-90s.
Assuming equal quality, the summer onion market boils down to delivered prices between California and New Mexico. The preferred mode of transportation is a flatbed truck, which allows the highway wind to whistle through the load and keep the respiring onions dry. A seasoned driver will fold the ends of the tarp toward the middle of the load during dry weather and cover the entire load when there is a chance of rain.
Idaho shippers report improved interest from retail and foodservice receivers across the nation. The carton market has firmed over the past week and some prices are higher. At least one Idaho shipper suggests the current carton market is higher because large supplies of non-A russets are temporarily being diverted to the processors. As a result, fewer cartons are being packed and carton inventories are lighter. Hence, it temporarily gives the impression carton demand is on the rise.
One Idaho shipper added that redirecting the non-A supplies back to the fresh market would quickly meet demand and likely saturate the market.
Idaho will have seamless supplies between old and new crop russets. Idaho shippers will continue to offer storage russet Burbanks through July and into early August. New crop Idaho russet Norkotahs will begin Aug. 6 from the center and western portion of the state. The Idaho russet Burbank harvest will start in early to mid-September near Twin Falls and Idaho Falls.
Colorado shippers are quickly approaching the end of their shipping season, which is expected to be complete by the week of July 9. New crop supplies from Greeley will start in early August and from the San Luis Valley in early September.