Big volume week doesn’t quell avocado demand
Even in a week when almost 63 million pounds of avocados were available for sale in the U.S. market, demand continued to outstrip supply and the FOB price remained extremely high.
During the week of April 25, distributors were quoting $75 for a carton of 48-size avocados from Mexico FOB Laredo, TX, which is the crossing point for most of Mexico’s production. The going rate for California 48s was FOB $78 at the Southern California packingsheds. Smaller fruit was also fetching top dollar as 60s were in the $60s and even the smallest fruit was above $50 per carton. Organic avocados were $5-10 more at $80-85 for the most popular size.
The 62.9 million pounds packed and shipped during the week ending April 24 was the second-largest week of the calendar year, only surpassed by the first week of March when 63.8 million pounds were available for sale. A look at total volume for the year compared to 2021 gives a good indication as to why prices are so strong. Through week 16 in 2021, U.S. shipments of avocados topped 967 million pounds. This year, only a little more than 800 million pounds have made it to market in that time frame, representing a 17 percent drop in volume.
The market price for avocados has been very strong since January, but it received an unintended bump from the USDA in mid-February and has been steadily climbing ever since. During Super Bowl weekend (Feb. 12-13), shipments from Mexico were suspended because of a threat to a USDA inspector who was conducting inspections in a Michoacan packingshed. The week-long suspension impacted shipments for two weeks with Mexico only sending about 40 million pounds to the U.S. market during that period, which was only about 40 percent of what typically would have been shipped.
The voluminous 63.8-million-pound week occurred after shipments were once again allowed, but the shortage created heavy demand and the market started to rise. In March, it was mostly in the $50s for the top size while in early April, the FOB was in the $60s. Easter week always results in a significant drop in supplies from Mexico as that heavily Catholic country observes several holy days with no work. During the week ending April 17, Mexico only sent 21.7 million pounds to the United States, its lowest week of the year except for the suspension week.
Looking at his sales sheets, Rob Wedin, senior vice president of the Grown Division of Calavo Growers Inc., told The Produce News that on April 11, the FOB price was $69 on conventional 48s, jumping into the $70s the following day, which is where it has remained. Another packer-shipper, Gahl Crane, sales manager for Eco Farms in Temecula, CA, expects the FOB price to fall only because it is hard to imagine it going any higher.
But volume projections indicate the market may stay right where it is at for the next four to six weeks…at least until Peru starts to move into its volume shipments to the U.S. market. During May, the Hass Avocado Board, which collects data projections from the various points of origin and publishes them on its website, shows U.S. weekly volume of 50-55 million pounds in each May week. If the past two months are indicative, that would appear to be about the right amount of avocados to keep the market price at its current level. That would be just about the same volume shipped in April, albeit with a difference in volume sourcing.
In May, Mexico’s volume is expected to decline from about 40 million pounds the first week of the month to about a 30-million-pound pace by the end of the month. California’s volume is expected to increase from an average of less than 9 million pounds per week in April to 13 million pounds a week in May. The current projection calls for Peru’s volume to hit close to 5 million pounds per week at the end of May before ascending to double-digit weekly volumes in June and reaching for 18-19 million pounds on a weekly basis in mid- to late July.
Wedin said Peru has raised its projection of U.S. bound shipments significantly as it eyes this very strong market. The country’s avocado exporters are predicting that more than 230 million pounds will come to the U.S. market this season, mostly from mid-June through August, but continuing into October.
Patrick Lucy, president of Del Rey Packing Co. in Fallbrook, CA, is anticipating that Peru might get started earlier with volume shipments to the United States because of the very strong market.
Crane believes that just the presence of Peruvian fruit will help tamp the market price down as three countries offering fruit for sale tends to do that. Lucy added that Colombia will also be in the picture from mid-May to mid-July. The total volume from that country’s producers is only expected to top 13 million pounds, but Lucy said the addition of that fourth player will help moderate the market.
Another potential factor is the beginning of shipments from the state of Jalisco into the United States. For the first time ever, certified growers and packers in Jalisco can ship Hass avocados to the United States. The 2022-23 crop from Jalisco will mature a bit before the new crop from Michoacan so shipments are expected to start arriving in June.
Calavo has long had a presence in Jalisco with a state-of-the-art packingshed. For many years that fruit has been going to other markets, including Canada and Asia. Wedin expects shipments to begin to head to the U.S. market in mid-June. It is unclear what volume of fruit will come to the United States as those growers and packers have established markets in other areas. However, for the most part, those sales have been discounted, specifically because Jalisco growers did not have the potential to sell to the more lucrative U.S. market. Given that opportunity this year, one would expect many packers to search out the best market for their fruit.
Photo courtesy of Liz West.