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Hurricane Beryl could cause a short-term gap in banana shipments to U.S.

The supply of bananas in the U.S. from across Latin America is low right now. "In both Mexico and Guatemala, there have been some storms that have damaged a lot of surface area. The temperatures have also been higher, the rain has been higher, and there is a lack of sunshine, which causes the plants to grow slower," says Andy Thomas-Stivalet of Kadivac Produce. "This lowers the weight of all the stems that are growing."

At this point in the season, the supply of bananas in the U.S. is generally higher. "It looks like that supply will be pushed out," says Thomas-Stivalet, adding that banana supply will come on more in the next three to four weeks.

Watching the ports
In the meantime, Hurricane Beryl will also likely affect supply this week and cause a gap in the Gulf given it may have impacted the port of Houston and the ports in Louisiana. "Everything coming into the gulf this week is going to be late. It will get there but there will be a gap," says Thomas-Stivalet, noting that Kadivac Produce had been working ahead to ship fruit in anticipation of Beryl affecting supply. If the ports are damaged, that could impact shipping further.

As for demand for bananas, it's one of the softer demand times of the year and this period is generally coupled with greater supply which often leads to a drop in pricing. "We've seen fairly stable pricing for the past weeks. Even now, pricing is around $12.50-$13.50 in the Gulf Region which seems to be a dollar higher on average compared to last year," says Thomas-Stivalet. This week's anticipated gap in supply will likely strengthen spot market pricing.

While more banana supply will come on in the next few weeks, overall, the supply of bananas in the U.S. is anticipated to continue to drop. "The production costs are still increasing. We also still have a really weak dollar relative to the currencies in Latin America," says Thomas-Stivalet, adding that events such as the U.S. presidential election in November could affect the strength of that dollar. "If the dollar strengthens then, it will be better for banana producers because right now they're not getting paid in dollars enough when they convert it to their local currencies to be profitable."

A shift in banana shipments
Meanwhile, local markets are becoming more attractive to ship bananas to. "These markets aren't enough to absorb all the fruit that big countries such as Guatemala, Colombia, and Ecuador produce. However the surrounding countries are big untapped markets that are starting to make a lot of sense," he says, adding that Mexico for example is selling greater volumes of fruit within Mexico.

Additionally, the industry also continues to see producers being driven out of the market thanks to inflation, increased growing costs, and more. "Producers are getting hammered with storms, with climate issues, and then with low pricing and they're selling their farms. In the past two to three months, I have seen about 600 hectares of land in one of the producing areas we're in change hands because people can't do it anymore," says Thomas-Stivalet. "It's still a dire situation."

For more information:
Andy Thomas-Stivalet
Kadivac Produce
Tel: (+52) 962-625-3303
[email protected]