By Mark Greenberg from Fisher Capespan
Retailers give table grapes smaller displays
found some momentum after languishing through the holiday period and into the first two weeks of January with a motley selection of small Chilean Flames, tired Brazilian Festivals and elderly California red seedless. At the end of Week 5, while there is table grape movement, retailer commitment remains somewhat indifferent.
Table grapes have historically competed well for shelf space in the winter months and have held their own against the berries, melons, stone fruit and cherries. But so far this season, many retailers have chosen to give table grapes smaller displays at higher retail prices opting for more revenue out of reduced grape real estate. Part of this may also be retailers’ collective disillusionment with grapes as a premier item due to the expected shortage of imported product. Many have chosen, rather, to focus on staple items like apples, which are flying out of the stores!
Chilean experts have been saying for the last few weeks that the Chilean table grape harvest is running at least one week earlier than last season. Through Week 5, table grape arrivals on the east coast were at the same levels as last season. But with a significant jump in Flame and Superior arrivals in Week 6, by the end of next week, Chile will have landed 3% more grapes on the east coast than over the same period last year. It is expected that by Week 7, the increase over last season will be even more dramatic as the earlier harvest of Flames in Aconcagua and Rancagua hit the market in full swing. Red seedless grapes will continue to outpace white seedless by a factor of 2 to 1.
Red Seedless
Chilean Flames are selling on the east coast in a price range that reflects the
continued preponderance of small and medium sized product. The market this
week (on moderate sales movement) was at US$ 18-20 for X-Large (700), US$
16-18 for Large (500) and US$ 10-14 (mostly US$10-11) for Medium (300).
Flames.
Chains have started to promote Flames and it is expected that promotions will
gain strength as we move toward the middle of February when arrivals will be
strong and general fruit size will presumably be more attractive.
It is not anticipated that Flame prices will decline from this general price range in the foreseeable future. Arrival volumes are stable and manageable and with more
promotional activity in the market anticipated, the volumes will be absorbed. Of
course, as larger sized fruit becomes more widely available, promotional pricing
could take the top end of the X-Large (700) down a notch or two. We expect
February promotions will range US$ 16 – 17 with the higher paying promotions
getting the 700 code fruit.
If, however, there is insufficient promotional activity in the market, the heavy
expected volumes from Aconcagua, Metropolitan Region and Rancagua creating
heavy arrival volumes in Weeks 7, 8 and 9, could push the Flame market lower.
White Seedless
White seedless arrivals remain light with only 410 thousand cases expected on the
east coast in Week 5 and 675 thousand in Week 6 (perhaps less as the vessel
scheduled for the end of the week will only have her cargo available in Week 7).
The result of this is a spot market price of US$ 20-22 for X-Large (700) and US$
16-18 for Medium (500). The volume of white seedless in the market should
probably dictate a higher price than is being observed. However, the relatively
slow grape market combined with a focus that is fixed squarely on Flames, have
conspired to hold white seedless prices only US$ 2 above their red seedless
counterparts. As a general comment, the quality of white seedless grapes has been
erratic with more than normal surface discolouration in Sugarones and some
ambering in the Thompsons.
The coming two or three weeks should not see any major change in the white
seedless price structure as volumes increase incrementally. It is only when weekly
arrivals exceed 1 million cases that we will start to see a softening of the price
structure (and additional focus on white seedless promotions).
Black Seedless
Black seedless prices remain robust on relatively light volumes. Fewer than 375
thousand will have arrived by the end of Week 6. Prices for black seedless are
US$ 24 – 26 (mostly US$ 24) for X-Large. But this price is poised to soften as
greater volumes of table grapes generally begin to arrive.
Red Globes
Peruvian Red Globes continue to dominate the market, complemented by a light
volume from Chile. Red Globes are selling at US$ 16-18 (mostly US$16) for XLarge
(700) and US$ 14-16 for Large (500). This price is as much a function of
total available volume in the market as it is a function of the prevailing red seedless
price.
The Dollar
When the imported grape season opened up in November, one glimmer of optimism
surrounded the US Dollar value against the Chilean Peso. For most of the 2011
table grape season, the USD floated in a depressingly low Chilean Peso exchange of
450-480 CLP. In October, the exchange shot up to 525 CLP and higher. Though
too late to help grape growers, it did benefit citrus producers who received their
market returns for fruit shipped in mid-summer and through the autumn while the
dollar was at its peak.
Since the start of the year, the Chilean Peso has regained much of its value and
today sits at 478 CLP to the USD. This is a value that is 10% greater than the
exchange prevailing in November. Ironically, it is precisely the exchange that
prevailed one year ago. It is also interesting to note that since November, 2011 the
Euro has also declined in value against the Chilean Peso by around 10%.
USD – CLP Exchange
Euro – CLP Exchange
It`s hard to know where the exchange rate will go in the coming months (and well
beyond the mandate of this report to try to predict it). But with grape net
proceeds for early sales being returned to Chile every day, we can only hope that
the Chilean grape growers soon get the benefit of a bump in the US Dollar and
Euro exchange rates. With lower than anticipated early season grape pricing, they
will want every benefit they can get.