Salinas Valley leaf lettuce shippers were seeing a substantial spike in demand. West Side melon shippers were experiencing strong early-season demand, while California and New Mexico yellow onion shippers are seeing steady and firm demand. Idaho russet shippers are experiencing modest carton demand.
TRANSPORTATION & FUEL
Demand for trucks and the cost of freight remain at peak levels and will continue as such through July.
Crude oil prices increased $2.20 July 11 to $86.10 per barrel, which is 41 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of July 9 was $3.68, or 6 percent lower than one year ago. The average price in California for a gallon of diesel is $3.89, or 5 percent lower than last year.
The recent heat wave in the Midwest and eastern parts of the country has primarily affected leaf lettuce and celery. The Iceberg lettuce market is benefitting from rising leaf prices, as receivers reconsider the more reasonably priced Iceberg lettuce. This secondary demand has helped push lettuce prices moderately higher since late June.
Lettuce prices going forward are a function of how badly the eastern leaf crop is damaged and how long it will take to recover. For now, Iceberg lettuce prices are expected to hold fairly steady at current levels heading into the week of July 16.
Central Coast lettuce growers purposefully reduce their lettuce acreage during the height of the summer season when West Coast melons, grapes and soft fruit are plentiful. 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, Iceberg quality is strong with good weights, texture and shelf life upon delivery.
California’s Central Coast shippers purposely 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 local leaf supplies during the summer.
The regional leaf deals have recently been hit with excessive heat, which has diverted a heavy surge of unexpected demand back to the West Coast. The leaf markets soared practically overnight because California shippers simply don’t have the supplies to cover the unexpected demand. The extent of the damage is not fully known. Only time will tell the degree of the damage and how long it will take regional growers to recover. For now, leaf prices are expensive and buyers should plan well ahead.
Production in Watsonville and the Salinas Valley is expected to remain at its season’s peak through July 20. Production in late July will gently taper into early August, then drop noticeably in mid-August.
Not all fruit is equal and therefore buyers must choose carefully. There is a fairly wide range in price based on labels and whether the fruit loads in Salinas or Santa Maria. Truck rates are quite 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 because they offer strong quality and a long shelf life.
At the other end of the spectrum, there are some lots not worthy of East Coast destinations and are priced accordingly. The overall market will hold fairly steady the weeks of July 16 and July 23.
Broccoli supplies in the Salinas Valley and Santa Maria have been abundant since mid-June. Quality is excellent and a full array of packs, including Asian-cut crowns, are available. The recent hot spell back east should have little effect on the West Coast broccoli market. Broccoli prices are expected to remain attractively priced heading into mid-July.
The recent heat wave in the eastern United States and Canada stressed the local celery crops, but the full extent of the damage is unknown. Demand unexpectedly swung back to California July 3 and caused the West Coast celery market to spike in a very short period of time. West Coast prices remain very expensive as eastern growers continue to assess the damage.
Midwestern and eastern receivers continue to supplement their needs with celery from Salinas and Santa Maria, CA.
The delivered price difference between California and the local source is extremely large, and many receivers are lured by the vast savings of local product despite the unknown level of quality.
Keep in mind that West Coast growers purposely reduce their summer acreage so they don’t have to compete with the regional deals. California shippers simply don’t have the availability of product to cover the unexpected surge in demand. The overall celery market will remain very expensive until the regional celery growing districts work through the heat stress issues. How long this will take is unknown.
The brief Bakersfield season will continue to offer cantaloupes through the weekend of July 15 and honeydews through the week of July 16. The West Side melon season is fully underway and the current hot spell will produce an extra surge of fruit in the near term. A full array of sizes are available and overall quality is excellent. Prices are very reasonable and, in the big picture, don’t get much lower.
Daytime temperatures along the West Side approached 110 degrees July 9-11. Melons mature faster than they can grow when the temperatures get that hot, resulting in a higher percentage of midsized fruit. Temperatures were expected to hit 103 degrees July 12-13 then ease into the high 90s by July 15. Temperatures early in the week of July 16 are expected to be in the mid-90s.
The National Weather Service issued a heat warning in California’s Central Valley July 9-11 and daytime highs approached 110 degrees. Such high heat will cause chlorophyll to back flush in Valencia oranges and create a green cast on the outer skin. This is cosmetic only and does not affect the eating quality in any way. Valencia sizing is larger than usual for early July. The market will hold fairly steady heading into mid-July.
The Central Valley harvest is complete and Oxnard growers have harvested 70 percent of their crop. Overall quality is excellent and a full array of sizes in both grades is available. Seasonal lemon demand is strong, with the bulk of California’s lemon supplies coming out of Oxnard. The market is expected to hold fairly steady heading into mid-July.
New Mexico shippers have worked through the transitional gap from transplants to direct seed and the recent rains. Shippers say the current yellow onion size profile is unusually heavy to mediums. Historically, the split between jumbo and medium yellows is 70-30, but over the next two weeks the split is expected to be just 40-60. This will place a premium on jumbo yellows and produce lower prices on mediums.
A two-tier jumbo yellow market will likely develop based on the percentage of onions over 3.5 inches in diameter. Buyers need to be alert and understand that not all New Mexico jumbo yellow onions are necessarily equal.
California’s Central Valley is in the middle of a hot spell, with daytime high temperatures reaching 108 July 11 followed by highs of 103 July 12-13. Highs were expected to ease into the mid-90s beginning the week of July 16.
The heat is not an issue as long as shippers do not allow sacks of curing onions to stand in the fields day after day. The heat is not a concern for unharvested onions. California shippers have good supplies of jumbo yellows, which are 80 percent 3.5 inches and larger. Near-term prices in California will ride the coattails of the New Mexico market.
Assuming equal quality, the summer onion market boils down to delivered prices between California and New Mexico. The preferred mode of transportation is a flat-bed 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 towards the middle of the load during dry weather and cover the entire load when there is a chance of rain.
The current russet market is flat and, frankly, depressed. The 2012 autumn crop was planted two weeks early and will in all likelihood be harvested two weeks ahead of schedule.
Armed with this information, processors will forego purchasing large quantities of old-crop russets this summer and instead wait for the early supplies of new-crop russets. The russets not purchased by processors are being diverted to the fresh market. The result is an excess supply in the fresh market and very inexpensive prices.
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 are expected to 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.
New-crop supplies from Greeley, CO, will start in early August and from the San Luis Valley in early September.