The imported table grape market on the USEC remains weak, sloppy and sluggish. There had been some hope (or perhaps wishful thinking) that by the end of Week 5, on the back of diminished Flame loadings from Chile, that the table grape market would bottom out and prices would start to strengthen. But that is not going to happen so fast.
Consider the numbers: by the end of week 5, Chile had landed 11.3 million cases of table grapes on the USEC or more than two-and-a half times the volume that arrived over the same period last year. Coolers are full and wholesale markets are flooded from coast to coast with fruit that was either delivered on consignment in the first place or got there by virtue of a retail rejection.
It would be incorrect to say that grape sales have not picked up in the last week. They have. Indeed, there are finally red seedless grape promotions that are moving fruit. But the reality is that fruit continues to arrive faster than it is being sold and the pier-side storage facilities on the USEC are jammed to the ceiling. To complicate matters, much of the product is older than optimal. So it stands to reason that some of the product being put into distribution is showing its age and there can be no doubt that rejections are increasing as sellers are forced to take chances with older product. But, ironically, retail pricing remains high suggesting that, for now, retailers are happy to take the “dollars” even if the number of cases sold declines.
1.1 million cases Chilean Flames to arrive
In week 5 almost 1.1 million cases of Chilean Flames will arrive and it is becoming a logistical challenge to find space to store the product. Prices continue to soften such that the USDA is quoting Chilean Flames at US$ 16 – 18 for Large (700), M-Large (500) at US$ 10 - 12 and X-Large (900) at US$ 18 - 20. Shippers will rail at these prices, but they are not far from the truth. Certainly, there will be sales above and below the range in the spot market, and program prices are certainly higher. But these prices are a good indicator of the state of the market. In addition, the fruit that is getting these prices is fruit that has arrived over the last three weeks, not just fruit that arrived in Week 4!
Two weeks ago, the conventional wisdom or, rather, the conventional hope, was that the red seedless market would start to strengthen in Week 6 as Flame arrivals declined and stocks came into better balance. But this is not likely to happen. Until retail pricing declines and inventories reduce, nobody is going to raise prices. Right now, sellers are doing everything in their power just to hold onto P/O’s. Perhaps by the end of Week 7, we will see some tightening up of red seedless supplies and a commensurate firming up of the price . But for now, that’s only hopeful guesswork.
White seedless market also trending down
The white seedless market is also trending down, in part on the back of the weak red seedless market and in part on the strength of substantial arrivals of Sugarones and Thompson Seedless from Chile and Sugarones from Peru. Indeed, Chile will land over 1 million cases of white seedless grapes on the USEC in Week 5 and a similar volume in Week 6. And, as is the case with Flames, there is a substantial inventory of Peruvian and Chilean white seedless already in the storages. The difference, though, is that white seedless grapes tend to show their age faster and with much of this fruit having over two weeks of storage on it, this could become a problem, especially as the white seedless market is not likely to strengthen any time soon.
In Week 5, the Large (700) white seedless are selling at US$ 18 - 20 and M-Large (500) are moving at US$ 16 – 18 with some sales lower. X-Large (900) are moving at US$ 20 – 22. The market is softening and we expect to see prices notch down in Week 6.
For more information:
Mark Greenberg
Capespan North America
Tel: (+1) 514 739 9181
