Apple market strong with no letup in sight
Apple market strong with no letup in sight
Fall has begun, and with it the harvesting of apples coast to coast, which should typically mean good supplies and good pricing. But the apple market, which has been fairly hot all year, has remained strong through the transition from last year's crop to the new crop and there is no letup in sight.
"Demand is very good," said Nancy Foster, president and chief executive officer of the U.S. Apple Association in Vienna, VA. The prices are good, and we are happy about that. It looks like it is going to be a good year.
Total apple volume for the 2008-09 marketing year is estimated to be in the 215 million- to 218 million-bushel range, which puts the size of the crop near 2007 levels. However, there were some weather issues in the Northeast and northern Midwest, which has somewhat reduced the size of the fresh output from those regions. Washington state, which typically supplies more than two-thirds of the nations fresh apple production, looks to have a good crop, though it might be down a couple of percentage points from last year, with the early estimate pegging the crop at near 97 million cartons (compared to 99 million last year and 105 million during the record year of 2004). Factor in a reduction in world supplies while world demand has increased, and the result is a classic case of demand outstripping supply.
In late September, Washington was about one third of the way through its harvesting period, moving apples into cold storage, controlled-atmosphere rooms and into the marketplace. The f.o.b. price ranged from the lows $30s to $40 for most varieties and sizes, with at least the trendy Honeycrisp market topping $60 per carton.
Roger Pepperl, marketing director for Stemilt Growers Inc. in Wenatchee, WA, said that the gap between last years crop and the new crop initially led to a strong late-summer market that has stayed strong as the new varieties become available. He credited very strong demand for the strong market.
Mr. Pepperl said that while Washington supplies are not that different than in previous years, combined with the reduction from other districts, there are probably fewer apples on the market. This situation comes at a time when he believes demand is climbing largely because consumers have more choices.
The Stemilt executive said that in days gone by, the volume might have been similar, but it was dominated by the Red Delicious variety, which has been waning in popularity for more than a decade. Today, there are many different varieties on the market, giving retailers more SKUs and consumers more choices. Consumers evidently like those extra choices and are eating more apples. Export demand is also putting pressure on that side of the equation.
Ms. Foster said that apples offer an excellent retail value even at a higher- than-usual price, and it appears that consumers are flocking to them, even if the sizes of their pocketbooks are shrinking. All indications are that demand is up, she said. Number one, the crispness and juiciness draws the consumer in, and number two, apples are still a very good value.
Howard Nager, vice president of marketing for Domex Superfresh Growers in Yakima, WA, said that while supply-and-demand forces have caused the f.o.b. price to climb, increased production costs have also played a role. On the input side, costs have gone through the roof, he said. Of course, everyone is being impacted by higher costs and growers are no different.
For that reason alone, he said that growers were looking for higher prices this year, and it looks like they are going to get them.
Mr. Nager also pointed to an increase in many emerging world markets as playing a significant role. Russia has emerged as a significant buyer of fresh produce, as have some new markets in Asia and the Southern Hemisphere.
Mr. Pepperl said that the weakness of the U.S. dollar is another factor because the nations apples are priced attractively around the world due to the favorable exchange rates in many countries.
Peter Gregg, a spokesperson for the New York Apple Association, confirmed that apple production is down this year. He said that in 2007, growers harvested a record 31 million bushels, with a little more than half of that going to the fresh market. In 2008, the total crop has been estimated at around 24 million or 25 million bushels about a 20 percent reduction. And hail problems may reduce the fresh crop even more. Washington producers had heard that New York shippers would be down as much as 40 percent, although Mr. Gregg did not agree with those numbers. He said that a final fresh packout of 12 million to 13 million cartons sounded reasonable, which would be about 20 percent less than last year.
Though the market is hot, shippers say they will stick to their original game plan and reserve enough fruit for year-round marketing. We have to take care of our customers all year round, said Mr. Pepperl. We have many retail partners, and we have to provide them with fruit for 12 months.
Mr. Nager said that while it might be tempting to jump on a hot market, the prudent shipper will spread his or her volume over a 12-month period. At the beginning of the summer, the market was very hot, and some shippers did open up CA rooms early to take advantage of that. We didnt. We waited and we were rewarded at the end of the summer with even higher prices.
Mr. Gregg said that even though New York has much less volume than Washington, its shippers are just as disciplined and will market the crop over the entire year.
Being a tree crop, it is difficult to increase volume overnight, so it appears the apple market will remain strong for the foreseeable future. Mr. Pepperl said that many growers in Washington, including Stemilt, did put in new plantings this past year and there are some orchards producing this year for the first time. However, he does not expect a tremendous increase in the near future based on increased acreage.
"Demand is very good," said Nancy Foster, president and chief executive officer of the U.S. Apple Association in Vienna, VA. The prices are good, and we are happy about that. It looks like it is going to be a good year.
Total apple volume for the 2008-09 marketing year is estimated to be in the 215 million- to 218 million-bushel range, which puts the size of the crop near 2007 levels. However, there were some weather issues in the Northeast and northern Midwest, which has somewhat reduced the size of the fresh output from those regions. Washington state, which typically supplies more than two-thirds of the nations fresh apple production, looks to have a good crop, though it might be down a couple of percentage points from last year, with the early estimate pegging the crop at near 97 million cartons (compared to 99 million last year and 105 million during the record year of 2004). Factor in a reduction in world supplies while world demand has increased, and the result is a classic case of demand outstripping supply.
In late September, Washington was about one third of the way through its harvesting period, moving apples into cold storage, controlled-atmosphere rooms and into the marketplace. The f.o.b. price ranged from the lows $30s to $40 for most varieties and sizes, with at least the trendy Honeycrisp market topping $60 per carton.
Roger Pepperl, marketing director for Stemilt Growers Inc. in Wenatchee, WA, said that the gap between last years crop and the new crop initially led to a strong late-summer market that has stayed strong as the new varieties become available. He credited very strong demand for the strong market.
Mr. Pepperl said that while Washington supplies are not that different than in previous years, combined with the reduction from other districts, there are probably fewer apples on the market. This situation comes at a time when he believes demand is climbing largely because consumers have more choices.
The Stemilt executive said that in days gone by, the volume might have been similar, but it was dominated by the Red Delicious variety, which has been waning in popularity for more than a decade. Today, there are many different varieties on the market, giving retailers more SKUs and consumers more choices. Consumers evidently like those extra choices and are eating more apples. Export demand is also putting pressure on that side of the equation.
Ms. Foster said that apples offer an excellent retail value even at a higher- than-usual price, and it appears that consumers are flocking to them, even if the sizes of their pocketbooks are shrinking. All indications are that demand is up, she said. Number one, the crispness and juiciness draws the consumer in, and number two, apples are still a very good value.
Howard Nager, vice president of marketing for Domex Superfresh Growers in Yakima, WA, said that while supply-and-demand forces have caused the f.o.b. price to climb, increased production costs have also played a role. On the input side, costs have gone through the roof, he said. Of course, everyone is being impacted by higher costs and growers are no different.
For that reason alone, he said that growers were looking for higher prices this year, and it looks like they are going to get them.
Mr. Nager also pointed to an increase in many emerging world markets as playing a significant role. Russia has emerged as a significant buyer of fresh produce, as have some new markets in Asia and the Southern Hemisphere.
Mr. Pepperl said that the weakness of the U.S. dollar is another factor because the nations apples are priced attractively around the world due to the favorable exchange rates in many countries.
Peter Gregg, a spokesperson for the New York Apple Association, confirmed that apple production is down this year. He said that in 2007, growers harvested a record 31 million bushels, with a little more than half of that going to the fresh market. In 2008, the total crop has been estimated at around 24 million or 25 million bushels about a 20 percent reduction. And hail problems may reduce the fresh crop even more. Washington producers had heard that New York shippers would be down as much as 40 percent, although Mr. Gregg did not agree with those numbers. He said that a final fresh packout of 12 million to 13 million cartons sounded reasonable, which would be about 20 percent less than last year.
Though the market is hot, shippers say they will stick to their original game plan and reserve enough fruit for year-round marketing. We have to take care of our customers all year round, said Mr. Pepperl. We have many retail partners, and we have to provide them with fruit for 12 months.
Mr. Nager said that while it might be tempting to jump on a hot market, the prudent shipper will spread his or her volume over a 12-month period. At the beginning of the summer, the market was very hot, and some shippers did open up CA rooms early to take advantage of that. We didnt. We waited and we were rewarded at the end of the summer with even higher prices.
Mr. Gregg said that even though New York has much less volume than Washington, its shippers are just as disciplined and will market the crop over the entire year.
Being a tree crop, it is difficult to increase volume overnight, so it appears the apple market will remain strong for the foreseeable future. Mr. Pepperl said that many growers in Washington, including Stemilt, did put in new plantings this past year and there are some orchards producing this year for the first time. However, he does not expect a tremendous increase in the near future based on increased acreage.
