North America is seeing supplies of avocados come in from three different regions and prices are being pushed around accordingly.
“California should be done by the middle of August. I think they’re ending earlier than usual and one of the main reasons why is that pricing has been so good this year. With prices as high $2.30/lb. on certain sizes, there’s a big incentive for all California growers to pick,” says Keith Slattery of Stonehill Produce Inc. in Capistrano Beach, Ca.
California’s crop size is down significantly this season. “The estimate was 170 million lbs. vs. last year at 375-400 million lbs.,” says Slattery. “They’ve been going at 10-11 million lbs. a week but in August, we’ll be looking at 3-4 million lbs. a week until they finish up.”
That shortage has pushed up pricing in California. “We had a price jump right around Easter and then it declined a bit,” says Slattery. “But as Mexico raised prices, California followed. In April, fruit averaged at $1.70/lb. Then it came back down to $1.30-$1.40/lb. and then jumped back up. It’s peaked now though because it went as high as $2.30/lb. and it’s now gone back down to $1.85-$2/lb.”
Peru is also shipping avocados and North America will likely continue to see arrivals from Peru until middle to late August. “Peru took advantage of the high prices and diverted a lot of fruit initially intended for Europe,” says Slattery. “It didn’t match the Mexican pricing though. But a lot of the handlers used them for some of their programs so they could lock in a hard price against a rising Mexican market.”
That said, a slow down in demand for Peruvian fruit may be ahead. “In the next few weeks, demand for Peru will start dropping,” says Slattery. “Last week they brought in 17 million lbs. We’re tracking demand for Peruvian fruit much lower. So with heavy arrivals over the next four to five weeks, the industry could get out of balance quickly.”
The Flora Loca crop
And then there’s Mexico, where the old crop should finish up in two weeks and the ‘Flora Loca’ crop is under way. Slattery says high pricing is factoring into the picking patterns of growers. “A lot of growers aren’t used to these high peso prices. It got over 100 pesos/kilo when it was on the old crop and in high elevations,” says Slattery. “Now they’re picking in the lower elevation and those growers are more used to 20-30 pesos/kilo. But pricing in the fields yesterday was at 50-60 pesos/kilo so it’s still a lot higher than they’re normally getting. You’re getting a lot more growers willing to pick at these prices.”
Looking ahead, Slattery predicts that when both California and Peru finish up with their fruit, another price increase could happen. “There’ll be another jump between August and September when Mexico is needed for 100 per cent of the supply.”