The Avocado market has experienced both high and relatively steady pricing for the last few weeks. Mexico is shipping a modest volume- just 29.7 million lbs. last week- while California added 9.1 million lbs. and Peru arrivals were right at 10 million lbs. Between the 3 sources, the total volume last week was about 48.8 million lbs.*- this was the lowest volume in 3 weeks a drop of 10% compared to the prior week. While higher prices are effecting demand, Peru is providing some relief with fixed price programs to large chains and flexible spot market pricing compared to Mexico and California. Overall, demand is very good on Avocados despite high pricing. Despite relatively high FOB pricing, the retail trade remains committed to promoting Avocados. This can be seen with last week’s numbers- almost 9,800 stores had Avocados on Ad for the week ending May 31 at average price of $1.20. Memorial Day weekend is the unofficial start of summer and entertaining for Americans everywhere and Avocados weather in Guacamole or in burgers and salads are a staple in many households nationwide. It is unclear how promotions will be in June, but certainly Peruvian Avocado pricing is and will be promotable for the coming weeks and beyond.
California Avocado growers have likely passed their peak harvesting pace. With a 19% market share and much of that fruit staying in the West Coast, California has done a great job getting support of many regional and local chains and has played a key role in keeping markets supplied. Volumes will likely stay in the 8-10 million lbs. range for a couple more weeks with Southern growers with larger sized fruit in full harvest mode. The overcast weather along with some light drizzle is keeping some growers harvest lower than they would like. Overall, quality is very good and June should see good supplies of California Avocados in the market. However, as stated before, the season could finish up by mid or late July - 6 to 8 weeks earlier than normal.
Mexican Avocado imports were down last week and in fact were the lowest since early May - and down 21% v. the prior week. There are a lot fewer regions with available fruit right now and field pricing is very high. Many US importers and retailers are looking to other sources, though Mexico remains the largest supplier with a 61% market share. The fact that demand remains so good for Avocados in a testament to the industry and the promotion boards who have focused on quality and value to consumers rather than just “a low price.” This week pricing is up once again in the field and FOBs are up slightly. Overall sizing is mostly 60s and larger with quality very good- smaller fruit is limited. There are about 4 to 5 more weeks left of the old-crop late-season Avocado and the flora loca harvest will likely start in early July.
Peruvian Avocado imports were up significantly last week- 10 million lbs. total which was good for a 20% market share. There are both East and West coast arrivals and quality on initial arrivals has been very good- fruit is ripening uniformly and flavor is very good. Volumes should stay in the 10-15 million lbs. range for each week in June as the lower California crop is opening up a window for more Peruvian in the market. Also high FOB pricing is being relieved a little with Peruvian pricing, which is still relatively high and a good return to growers in Peru but lower than Mexican or California as those other 2 countries are in peak flavor and have a much more established marketing history in the US.
Organic Avocados continue to be in short supply. Pricing is stable and with Mexico somewhat limited still, Peru and California are picking up the pace and sending more fruit to the market. Demand remains very good despite high pricing. TariffsWhile every day is a new day with politics and this administration, it appears Tariffs on imports from Mexico could begin as early as next week. The Republican and the Democrat parties in general are not fans of tariffs and certainly most citizens and elected leaders are not in favor of the tariffs (free-trade is good), but the POTUS has made his views clear. If they do start, pricing will be passed on to consumers and in our view it will not help the category and could hurt demand. Let’s hope a solution is made before the tariffs begin otherwise it will be a tough situation and the industry will have to adjust.
Pricing is strong with Mexico and California getting a slight premium over Peru as expected. Overall supplies are a little below the normal demand and movement at shipping points is good. While many wholesalers and retailers have already incorporated Peru into their programs, certainly more will consider it in the coming weeks. The next few weeks will see a balanced supply of Peru, California and Mexico and having a choice of which country of origin is a good thing for the industry and the category.