Avocado prices still stratospheric

On Monday, Aug. 28, several wholesalers on the produce markets in San Francisco were quoting more than $100 per carton for what was left of the California avocado crop.

While most of the California crop was marketed by the end of July, some growers, especially those in the most northern avocado district near San Luis Obispo, held back a bit and were reaping the benefits of a tight market and diminishing supplies. But even fruit from Mexico, which was more plentiful, was returning big dollars. On Aug. 29, the Federal State Market News Service reported a range of about $78 to $85 for the most desirable sizes f.o.b. Texas border. But even size 60 fruit was pushing $70 and you had to go to 84s or smaller to find anything even near $40 per carton.

In discussing the situation on Aug. 24, Robb Bertels, vice president of marketing for Mission Produce in Oxnard, CA, said there continues to be the expectation that Mexican producers are going to ramp up supplies but with California and Peru’s production falling off dramatically in August, the market has remained hot. He said Mission has been telling its customers that the supply situation is about to change for about two months. But even when supplies pick up a bit so does demand and the market has remained extremely hot. The greater than $75 market during the last week of August was not an aberration but rather a reflection of the situation for most of the summer.

“We do believe that after Labor Day [Sept.4] Mexico is going to start to ramp up,” Bertels said, adding that it would still take at least a couple of weeks for better supplies to fill the pipeline and for the market price to start coming down. He indicated that it could be late in September or early October before there is promotion pricing.

Also speaking to The Produce News in that same late August timeframe, was Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA. He estimated that in late September smaller sized fruit — 60-70 size — could very well be at promotable prices, but the larger fruit — 48s and larger — probably wouldn’t drop to what is considered promotable prices until October. But with that said, Wedin added that the avocado has been operating with a new dynamic this summer. Though the f.o.b. prices have remained high, retailers across the country have promoted it quite well.

While $2.50 per avocado has been commonplace, there have been promotion prices at $1 a piece or four for $5. In addition, small avocados (84s and smaller) have been sold in bags at prices that are relatively reasonable such as at Trader Joe’s where they are typically priced in the $3-to-$4 range for a six count.

Phil Henry, president of Henry Avocado Corp. in Escondido, CA, also noted the new dynamic and said it appears young avocado devotees don’t balk at paying $2.50 for an avocado. He said they have a great deal of disposable income and high prices just don’t appear to be the same deterrent to millennials that they were to shoppers of another era.

Because of the volatility of supply and demand and how it has played out this summer, Henry was not comfortable predicting when the market will drop to what would be considered more reasonable levels. He said most predictions this summer have been wrong and he’s content to watch it play out.

But virtually everyone agrees that Mexico has a large crop on its trees. That 2017-18 crop is on the verge of being picked and more supplies are certainly going to be the result. During the summer, there were a few weeks when volume marketed in the United States approached and even surpassed the 40 million pound level, but often total volume was much closer to 35 million pounds. The U.S. market has proven that it can consume more than 50 million pounds in a good promotion week and 45 million pounds appears to meet normal demand. As of this writing Mexico’s producers have not yet publicly released the size of the crop that is currently on the trees, but experts do expect that weekly volume will start climbing.

Market Watch

the source pro-act

Western growing regions getting hit by rain, cooler temps

floral pulse