Central Coast row crop shippers were seeing modest to moderate demand on most key items. Russet supplies far outpace demand. Onion shippers were expecting a bullish undertone and potentially a strong seller’s market during the winter season.
The second hot spell in as many weeks was expected to continue through Oct. 18 in Salinas, CA, with daytime highs in the mid-80s. Temperatures were expected to drop into the mid-60s by Oct. 21 then settle into the low 60s Oct. 23. There is a 40 percent chance of more rain Oct. 22-23.
In Huron, CA, daytime highs were expected to be in the mid- to upper 80s through Oct. 19 before easing into the mid-70s by Oct. 22. There was a 30-40 percent chance of more rain Oct. 22-23.
TRANSPORTATION & FUEL
The stone fruit and melon seasons have concluded and the demand for trucks in California has fallen accordingly. Freight rates will drop again when the winter lettuce season begins in Yuma around Thanksgiving.
Crude oil prices increased modestly Oct. 17 to $92.60 per barrel, which is 37 percent below record levels of July 2008. The nationwide average price for a gallon of diesel the week of Oct. 15 was $4.15, which is 9 percent higher than one year ago. The average price in California for a gallon of diesel is $4.44, or 9 percent higher than last year.
The Salinas lettuce season is drawing to a close. A few shippers have already transitioned to Huron and all will be harvesting Central Valley lettuce by Oct. 29.
As always, the transition period to Huron presents a unique set of challenges and increases the possibility of low yields, off quality and volatile markets.
Buyers should watch for quality challenges and rising costs heading into late October and early November.
The weather over the past three to four weeks has been far from ideal. The Central Coast and Huron experienced heat followed by rain in late September.
Current temperatures are once again well above normal, with cool temperatures and more rain in the forecast beginning Oct. 22.
The quality of the last lettuce fields in Salinas remains sound with good weights, texture and color.
As can be expected, late-season lettuce from Salinas may have somewhat reduced shelf life.
The first Huron lettuce blocks will offer a wide range in quality. Shippers say seeders may be present in 30 percent of the fields.
The larger story in Huron is the autumn presence of a soil-borne tomato disease, which hinders growth and results in poor yields.
A salesman for a Salinas shipper with operations in Huron recently told me, “Our thought was to get to Huron as soon as possible. We’d rather enter fields ahead of schedule and minimize the possible problems facing the industry. Each new block will offer better quality.”
It appears that the lettuce industry will face poor yields in Huron beginning the weeks of Oct. 22 and Oct. 29. The brief Huron season will continue into the weeks of Nov. 5, Nov. 12 and possibly Nov. 19. The Yuma lettuce season will begin the week of Nov. 19.
Romaine and Green Leaf supplies are ample from the Salinas Valley. It’s late in the season and buyers should expect shelf life to be reduced. The current market is very attractive with little risk heading into the week of Oct. 22. Buyers are encouraged to order quantities that can comfortably be moved upon arrival.
Most leaf shippers will remain in Salinas until Yuma begins in early to mid-November. Only a handful of Huron lettuce shippers will offer leaf lettuce.
Oxnard shippers started their autumn leaf program in September and will have increasing supplies as early November approaches. Leaf prices heading into the early November market will follow and ride the coattails of the Iceberg lettuce market.
Production from the Salinas Valley and Santa Maria has outpaced demand for the past several weeks. Quality is excellent and prices are very attractive. Santa Maria shippers must be extra creative to lure orders and trucks away from the Salinas Valley.
California’s total production should increase further by Oct. 25 with the beginning of the Oxnard celery season. Shippers hope the continuing return of Canadian customers and the upcoming holidays will increase demand and spark a market rally.
The Thanksgiving pull is slated to start Nov. 8 and continue through Nov. 16.
The California strawberry deal is in transition from Salinas and Watsonville to Oxnard, which is now the primary shipping district on the West Coast. The expected rains Oct. 22-23 in Salinas would likely force the conclusion of the local season.
Production from Mexico is on the rise and crossings into McAllen, TX, will rise over the next few weeks.
Mexican fruit will be available for shipment from Yuma in mid-November and dovetail nicely with the start of the winter lettuce season.
The near-term market will remain very expensive and buyers should continue to order quantities that can comfortably be moved upon arrival.
The Central Coast has produced a glut of broccoli over the past several weeks. The current heat spell (mid-80s through Oct. 18) will continue to accelerate maturity and ensure ample supplies through the week of Oct. 22.
A Salinas salesman recently told me, “For every glut there is an opposite and equal gap. We foresee that a sizable production gap will begin late the week of October 22 or early in the week of October 29. Only time will tell how this plays out and if they will be enough demand to push the market higher.”
The near-term market should remain very attractive through at least Oct. 24. Quality is good with isolated cases of hollow stem. The Mendota crop will start Oct. 25. Assuming good weather, the desert season will begin the weeks of Nov. 5 and Nov. 12.
California Valencia orange shippers are once again struggling with scarce supplies of 113s and 138s. Availability of these small foodservice oranges will fade even further as November approaches.
Buyers will struggle to find small oranges until the Navel season begins in earnest the week of Nov. 12.
Buyers able and willing to switch to 88s will have uninterrupted supplies and far fewer problems.
The Coachella and Yuma lemon harvests are underway and total production from California and Arizona is ample. Overall quality is excellent and shippers have good supplies of 115s and smaller in both grades.
The Oct. 1 stock report reinforces the underlying bullish tone in today’s onion market.
The report shows a nationwide decline of 6.9 million 50-pound sacks compared to one year ago, which represents a decrease of 8.66 percent. Nationwide holdings are down 8.1 percent from 2010, down 8.5 percent from 2009 and down 7.6 percent from 2008.
Ontario, OR, and Washington state hold 60 percent of all the remaining onions in storage. Current holdings in Ontario, OR, are down 19.42 percent from last year and Washington state is down 8.9 percent.
Holdings with three key Ontario, OR, shippers are down 50 percent, 25 percent and 15 percent, respectively. Many storage cellars throughout the Treasure Valley were not filled this season.
On average, Ontario, OR, yields are down 10-20 percent and the overall size profile has a wide variance from lot to lot.
There is a wide swing in sizing but the average is about normal. Because of the wide variance, there will be times when a shipper is seeking foodservice (jumbo) business and other times retail (medium).
An Ontario, OR, salesman recently told me, “Early-season domestic shipments are noticeably ahead of schedule. U.S. acreage is down 5.8 percent, Northwest yields are down, not all cellars are full, and export sales to Asia are expected to be brisk. We have the makings of a strong seller’s market.”
Washington state shippers said their yields and average sizes are both below par. They expect heavy export sales to Asia all season, which would match nicely with their extra percentage of medium onions.
Ontario, OR, shippers will benefit indirectly from brisk export sales because they would not necessarily have Washington state shippers climbing over their shoulders competing for domestic market share.
The price that foodservice receivers will pay for onions now through March will hinge greatly on the timing and degree of export business to Asia. The near-term market can be viewed as “pushing slightly higher” and receivers can buy with confidence that the onion market holds very little, if any, risk.
The facts of the 2012 crop are clear: lots of big russets. The harvest is complete and the initial surplus of excess supply seems to have pushed through the shippers’ hands.
Shippers now have the option of keeping russets in storage, but they must adhere to a scheduled release program or risk being caught with excess storage supplies later in the shipping year.
In a broad stroke statement, an Idaho salesman recently said, “The size profile is large, especially in the Norkotahs, which is currently the predominant variety. Demand has picked up over the past week from retailers and foodservice operators for the mid- and small-sized russets. This modest price increase is unexpected, but very much welcomed.”
Another Idaho salesman added, “The Northwest pushed a lot of russets eastward during the harvest. Those shipments are now back East and the pipeline for big russets is packed tight. It will take some time for receivers to work through the surplus of large sizes. F.o.b. buyers can name their price on large cartons.”
The recent flurry of interest for mid- and small-sized russets is encouraging, but there is a long way to go.
Generally speaking, prices for large russets will remain very attractive through the holidays. The near-term carton market will hold near current levels.