The tables have turned for the table grape market. Just a few weeks ago, prices for seedless grapes were high as the pipeline all but dried up between the South American and Mexican seasons. Now Mexican growers are harvesting, packing and shipping at full steam, which is applying enormous pressure to the market and leaving a lot of fruit sitting in warehouses at the border. Suppliers say that unfortunately, this has been one of the best seasons for overall quality, but retailers have largely been promoting other summer fruits ahead of grapes, and demand is subsequently low.
“As we head to the 4th of July holiday, there will certainly be no fireworks coming out of Mexico, as marketers continue to proposition growers to stop harvesting,” said Ira Greenstein of Direct Source Marketing. “The industry can no longer keep up with daily crossings as overall demand has slowed considerably on all seedless varieties. The overall effect for growers south of the border won’t be felt for several weeks, but we’re already seeing wholesale terminal markets inundated with volumes of Mexican seedless table grapes being sold at well below break-even levels.”
He added that instead of buying the low-priced Mexican fruit, some are instead seeking out California grapes. “There are some retailers who refuse to stock Mexican fruit and instead are paying a premium for domestic supplies from the Coachella Valley. All the while growers in Arvin, California are crossing their fingers that the majority of volume from both regions can be flushed through the system before they start harvesting by the 10th of July.”
Mexican Flame Seedless volume already surpasses last year’s total
According to the most recent USDA crossing report, the industry received close to 2.5 million boxes of red seedless this past week alone. With such large volumes crossing the border, warehouses are filling up and marketers are busy trying to clear the backlog in order to maintain the fruit’s condition. With a total of 7.3 million boxes of Flame Seedless already having crossed the border, this surpasses the total for the entire 2018 season.
“With so much volume crossing the border into the US market, FOB pricing is almost an afterthought as the majority of fruit is being sold on consignment,” Greenstein explained. “Marketers are doing their best to keep fruit moving through the system, before old and aging inventories begin to condition-out and growers receive next to nothing. Pricing for premium quality Mexican red seedless currently ranges from $9.95 on medium/large, $10.95-11.95 on large and $12.95-$14.95 with the mostly market at $12.95 for XLG. Sweet Celebrations and other proprietary varieties are still hanging in with pricing ranging from $14.95-$16.95, although many markets are more concerned with movement than price.”
“Flames from Coachella are fetching a premium with pricing currently ranging from $16.95-$20.95 with size and condition being the determining factors,” he continued. “Mexican marketers will continue to keep their foot on the gas, but without solid retail support in place, it remains to be seen whether the industry will be able to move through the balance of red seedless currently left hanging and in cold storage.”
Green seedless inventories also building
Large volumes of green seedless are also making their way into the US. Suppliers are facing the same issues as with red seedless – too much production and not enough demand. According to Greenstein, there seems to have been a miscommunication as retailers are not promoting grapes as much as other fruit, despite the very large volumes coming across.
“Growers refuse to stop packing, even knowing the fruit they send across the border will likely be sold at a loss,” he said. “We’ve seen excellent size and good eating quality on Mexican green seedless, but very few promotional ads in weekly circulars. There was a disconnect in communication between marketers and retailers, and the industry has been ill-prepared to handle the flush of volumes that’s entered the market over the past 10 days. Pricing on good quality green seedless currently ranges from $9-10.95 on medium/large, 10-11.95 on large and $12.95-$14.95 with the mostly market at $12.95 for XLG fruit.”
And there is more on the way. “Reports indicate that significant volumes from Caborca in excess of 4 million boxes have yet to be harvested. As the industry struggles to move through existing volumes, it’s unclear how marketers will handle such a significant influx of fruit without strong retail support. The terminal markets will also be unable to move through all the consignments, leaving growers only to manage through heavy losses for the second straight season.”
Red Globe prices remain steady
Greenstein said Red Globes are about the only grape variety that are profitable on the US market at the moment, due to the reduced acreage. Prices remain close to where they have been the last few weeks. Black seedless are also largely holding their ground, with a slight reduction in prices. There isn’t the same volume of black seedless crossing the border as there is of red and green, although demand remains soft and volumes are inventories are steadily building.
“There are only a few shippers with supplies [of Red Globe grapes] available, although not many retailers stock a seeded grape during this time of the year,” Greenstein observed. “Pricing currently ranges from $16.95-$18.95 with size and condition being the determining factors. Retails [on black seedless grapes] remain elevated and are not conducive for steady movement, even though overall quality and condition has been very good this year. Pricing currently ranges from $10.95-$12.95 on large and $12.95-$14.95 on x-large for premium quality fruit.”
For more information:
Direct Source Marketing
Ph: +1 (914) 241-4434