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by Mark Greenberg of Fisher Capespan
Market update week 18 table grapes

Table Grapes:
The 2011-12 Chilean table grape season is drawing to a close with the last of the
Crimsons and Red Globes arriving on the east coast this week.

Crimsons have been enjoying a number of weeks of sales at US$ 20 – 24 for large codes and a price of US$ 18 - 20 for medium. But the Sonora harvest is getting underway with Perlettes and a small volume of Flames expected to cross next week. Flame crossing volumes will gradually increase such that by Week 21 (in time for US Memorial Day Weekend ) we expect the market will see a good volume available in the market. The Coachella harvest will also get underway with Flames starting next week and building to stronger commercial volumes by Week 20.

The reality of Mexican and California Flames shortly coming into the market will start to put some pressure on Chilean Crimsons, especially in the hands of those sellers who are still carrying substantial inventories. So, while the price of Crimsons this week was US$ 20 – 24, we are seeing more chains demanding lower prices. More US$ 18 business will be taken in Week 19 and 20 as the season cleans up.

Red Globes continue to arrive in manageable volume and they are selling at US$ 14 – 18.

With the Chilean grape season all but done, it is perhaps not inappropriate to offer
some general comment upon it as 2012 was not an especially easy season for Chilean producers. Readers will recall that the early fruit from the Atacama region was diminished by spring snow and freezing weather. The early Copiapó grapes that did arrive were often of small sizes and of marginal quality and were not terribly successful in gaining retailer interest. The market started to gain momentum in early February, but just as the season got into a rhythm, Flames ended abruptly and the market found itself with no red grapes to speak of. Prices on the spot market surged, but prior commitments kept average selling prices down (even as sellers tried to back-off on their pre-commitments).

The back end of the grape season was characterized by white seedless arrivals with
erratic condition and Crimsons that were slow to get color, but which arrived in good condition and moved well through the market.

The season also hi-lighted some structural issues affecting the Chilean table grape
business. Most importantly, water and labor shortages in Copiapó have changed the
economics of grape production in the region. Mining companies are attracting much of the available labor in the region and are able to pay well for it. The miners are also buying cultivated land for the water rights and in the process are taking many hectares of table grapes out of production. One might expect this to create a decrease in supply that will push table grape prices up to a level where those who remain in production can be profitable. But California continues to produce high quality late table grapes which offer chain stores an attractive alternative to what many retailers see as very expensive early Chilean table grapes. That the Chilean Peso has continued to appreciate against the US dollar and the Euro (again, primarily due to the mining industry’s strength) has also taken its toll. The high prices obtained in the market are returning fewer and fewer pesos to the grower whose biggest expense, ironically, is the labor that he pays for….in Chilean pesos!



Chilean table grape exports to the US declined last year by almost 10%. This was, by and large, a good thing. It showed the world that Chilean grape producers are not exclusively reliant on the US retail trade. This season in the US, there was feeling of scarcity of fruit (or, at least the absence of a surplus) in most weeks of the season which gave rise to fairly stable seasonal pricing. The only weakness in pricing was the early under-sized fruit and the poor condition Thompsons (which often got more than they deserved - but not as much as they could have obtained had their condition been better). Many chains that could not fill their grape needs this season may well approach next season with a more sanguine view of the benefit of fixed programs.

Apples:
Total Chilean apple departures to the USA are running at levels similar to last season with an increased volume of Granny Smith, an off-setting decrease in Royal Galas and an increase in "other varieties" including Pink Lady, Cripps Pink and Fuji.

In spite of a strong market for domestic apples through the North American autumn
and winter, retailers have not moved over to imported apples with any collective
enthusiasm. Imported apple inventories are growing with the expectation (hope) that US retailers will increasingly move to imports as domestic Royal Gala supplies dry up and as quality of the domestic product declines. What is moving is fruit designated for slicing programs as slicers appreciate the greater pressures of the fresher imported fruit.

Today, on light movement, Royal Galas are moving at US$ 22 - 24 for 90`s and US$ 24-26 for 70`s and 80`s. Grannies are moving very slowly at US$ 24 - 26 for 90`s and US$ 26 – 28 for 70`s and 80`s.

Citrus:
Anticipation is mounting for the start of the Southern Hemisphere citrus season as
California navel stocks are declining and soft citrus is all but gone from grocery shelves. Chile has already started to ship its first light volumes of clementines to the USA.

The first Peruvian clementines will also depart Callao this weekend.
The first arriving fruit from Chile (expected in Week 20-21) will likely sell for US$ 40 – 42 (perhaps even higher) in the value-added package. The market will continue to be very strong through May and into June as arriving volumes are expected to be light, exporter expectations high and chain stores all looking for fresh sweet citrus. Peru will have a presence in the soft citrus market with the first clementines expected to arrive in the third week of May. South Africa’s easy peelers will begin to arrive later in June and onward.


Publication date: 5/7/2012


 


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