Ups and downs of supply
Analysis of the past 156 weeks of the US grape market
The graph considers the weekly arrival to the USA markets, and the patterns of the supply and the resulting prices as a result of the seasonal supply.
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We observe a countercyclical price behavior as it should be expected, in the Central California season, from July to November, the supply is very high from twenty-five to forty thousand tons a week, the prices are the lowest, about 2 US$ per kg. The national shipping point prices (equivalent to full-container-load prices) oscillate around US$ per kg, and the wholesale terminal market prices, oscillate around 2 8 US$ per kg.
The California central season finishes by November, the market is supplied by Peru, the new comer to the world market, in only five years grapes became the top agricultural export item from Peru. Peruvian exporters obtain very high prices, the highest of the year because they are almost alone in the market for some weeks, just after California season ends, and before the Chilean supply arrives to the market. A Chilean technician mentioned that “Peruvian grape producers have done in 5 years what took 30 years to Chilean producers.”
Peruvian grape producers take advantage of that short term window orienting their harvest to those weeks, creating a short seasonal monopoly, and hence obtaining twice the prices the Californians obtain, about four to five dollars US$ kg, at shipping point level.
The Peruvian window is very short, the shortest, the earlier the Chilean harvest starts, late in December, in the 50th week, or early in the first weeks of January. The Chilean season lasts until early May. The price again, falls down to an average of about 2 dollars per kg at the shipping point level.
At the beginning of May after the Chilean supply disappears from the markets, the market prices rise again, not as much as in December but about 50% above the main season prices, getting to three US$ per kg , these weeks early in May can be considered as another seasonal window.
That particular window of opportunity is capitalized on by Mexico, Southern California and Italian suppliers, but particularly by Mexico whose shipments are about 25 thousand metric tons a week but only in May and July, lowering again the market prices.
The cycle is completed and again the Central California Season starts.
There is no such thing as “the grape”, there are dozens of grapes, many varieties of grapes with different attributes and prices. Different combinations of size, color, shape, sweetness, seeded or seedless, etc. that define the different grapes and the prices.
The aforementioned terminal market prices commented in the graphs above are the non-weighted average prices of the three most traded varieties, in all the USA terminal markets or shipping points. Let us analyze different varieties.
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As it would be expected, the seedless varieties, Sugraone, Thompson Seedless and Flame seedless have consistently higher prices than the seeded red globe.
The Red globe grape follows a stable price trend showing no significant variability in the prices along the year. However the seedless varieties prices are very sensitive to lower levels of supply, the terminal market prices almost triple from 2.5 US$ per Kg in the season to about 6 US$ per Kg, in the season of lower supply, especially at the end of the year. Even if the Thomson seedless, the Flame seedless and sugraone prices flow similar patterns the highest returns are for sugraone.
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In general, the organic grapes have about a 30% premium over the conventional grapes, the organic supply in the USA comes mainly from California and in much lower level from Mexico. The market that are more active buying organic grapes in the USA are Boston, San Francisco, Chicago and New York. The most traded organic grapes are the flame and sugraone; red globe and crimson, together with other varieties in lower proportion are also traded.
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Even if the three markets analyzed, Miami San Francisco and New York, follow a similar pattern for the flame seedless variety, in general Miami pays higher prices, followed by New York and then by Los Angeles.
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In the case of the red globe, comparing prices in the USA, Mexico and England we can see that New York pay the highest prices, and that Rotterdam and New Covent Garden prices lay in between.
In the case of Thompson Seedless grapes, the New Covent Garden and New York show that pay consistently higher prices, the Rotterdam markets has been sometimes the best market at the end of the year.
There is an increasing trend to cultivate Variety Club Grapes, proprietary cultivars, sold against fixed or variable royalties. These clubs sell their varieties to singular farms under different kind of agreements like per plant fees, per hectare fees, mandatory packing in given processing plants and exporters, and other conditions.
The value of those club grapes comes from the value of their attributes for consumers like taste color, caliber, shape, crispiness, etc.; to target different groups; paraphrasing Moskowitz, there is no such thing as the perfect grape, there are perfect grapes for different market segments.
Other attributes are valuable for the producer, like pruning costs - grape pruning is very labor intensive and costly - fungi resistance, yield, shelf life to have time to negotiate at good prices, earliness or late harvesting time to profit from singular weekly widows in the markets, avoiding competition with other valleys or countries.
The trend is toward seedless grapes; producers are not planting new seeded varieties any longer, many companies, universities and research centers are developing the future new grapes. Many new variables are developed but only a few will survive.
FAO statistics show that China is the biggest grape producer; Italy, France, USA and Spain are the other big producers. According to COMTRADE data, the USA is the biggest grape importer, Holland, Germany, England and China are the other large importers of grapes.
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