Eco Farms Avocado Market Update- May 15 2019
The Avocado market has seen significant price increases in the last week as field prices in Mexico and California are rising very quickly. Volume last week into the US was 45.2 million lbs. - an increase of 16.5% v. the prior week. As the industry has seen before, more volume does not necessarily translate into lower prices. In this case, inventory levels are below normal and supplies are not currently meeting the US demand (weekly demand is approx. 52-54 million lbs.) Mexican Avocado imports were 36.8 million lbs., California Avocados growers harvested about 6.7 million lbs. and Peruvian Avocado arrivals were 1.7 million lbs.* Very few stores were on Ad last week, not a surprise since Cinco De Mayo was the prior week. Promotions should be up this week and next week as well with Memorial Day weekend right around the corner, though the higher market pricing will once again be a challenge for retailers large and small.
California Avocado growers harvested 8% less last week v. the prior week. It has become apparent that California has already reached its peak harvesting levels for the season. Harvesting will likely stay in the 7 to 9 million lbs. range for the coming weeks but with higher FOB pricing, harvesting levels will likely increase this week and next and that will be much needed. Quality is great and sizing is balanced.
Mexican Avocado imports were up 21% last week v. the prior week and Mexico has an 81% market share. The field price increases in Mexico in the last 7 to 10 days are not sustainable and is catching the industry off-guard. The response by the industry will most certainly be increased supplies from other sources, both California and Peru. Mexico is clearly finishing up their late-season crop with quite a bang and the strong demand for fruit is one major factor contributing to higher prices- late season fruit ripens well and tastes very good. The flora loca crop will begin sometime in June- a little earlier than normal but no finalized date yet. As soon as dry weight matters are adequate for US standards, Mexico will start shipping. The flora loca crop (June to August) looks to be fairly large- above average based on crop estimates. The market will certainly need a summer boost from Mexico and ideally at stable and steady pricing.
Peruvian Avocado imports were up just slightly last week, with most arrivals on the East coast. Volume should increase this week and next week as many major retailers will begin fixed price programs on Peruvian Avocados. There should be around 3 to 4 million lbs. this week and 4 to 5 million lbs. next week- but much of that is pre-committed and only limited volumes are available for spot business. Peruvian Avocado exporters are carefully studying the US market and with prices rising they will react as quick as they can to help support the category with good quality Peruvian Avocados in June and throughout the summer.
Organic Avocados continue to be in extremely short supply. Pricing is up from last week and may continue to increase until supplies catch up with demand. Peru will help fill some of the shortages in the coming weeks, but it likely will not be enough in the short-term and pricing will stay high well into June.
FOB pricing is rising very quickly right now in the US market and the need for stability is essential. Mexico may be frustrating with the unpredictability of prices but they still are supplying 80% of the market and pricing would be even higher with less Mexican Avocados around. The bottom line is that a light crop out of California and a lighter than normal late-season crop for Mexico are causing the current situation the industry finds itself in. Increased supplies of California and Peruvian Avocados in the coming weeks and flora loca Mexican Avocados in June will help calm the situation but it may be a little challenging until then.
Have a great rest of the week!
*Source: Hass Avocado Board