Skip to main content

Grapes in Charts: How California's low storage volumes could impact prices


With California’s grape season reaching its peak in October and winding down shortly after that, we begin to welcome the southern hemisphere to the U.S. market. The southern hemisphere will slowly increase its volume before taking over as the main supplier in January.

On the news of lower cold storage volumes recently reported on by the USDA, I wanted to look at the impact of this information on the rest of the California season and the upcoming Peruvian and Chilean seasons.

Non-Organic Grape Volumes by Origin


Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)

To better assess how the lower inventories came about and what they could mean for the months to come, we begin by looking at California, which is just coming off a bumper crop last year.

So far California’s season has been 6% lower than last year - not too far off from the predictions of 3% reduction on last year made at the beginning of the season (we spoke about in our last Grapes in Charts article).

Week 37 and 38, however - which last year marked the point in the season where volumes rose considerably over the previous years - have come in at 10% to 12% lower than last year, respectively.

Should this trend continue, the U.S. season will be far from the forecasted drop of 3% and be closer to the 2016 or 2017 season.

Historical Non-Organic Grape Volumes from California


Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)

From the USDA pricing data, we can start to see some of the effects of low storage volumes. Despite showing lower volumes than last year, the 2019 prices have been consistently lower than the previous four years, where the law of supply and demand would dictate that they should have been higher.

Part of this can be explained by a particularly large Mexican season which spilled over into the first part of California's production.

As the Mexican volumes have cleared out of inventories, it looks like they have been holding down prices. But as storage volumes have dried up, the market has regained the relationship between volume and pricing - the latter of which has been above last year's numbers and closer to the average for the last four years.

Historical Non-Organic Grape Prices from California


Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)

Since inventories are in their most basic form an insurance that you set aside - just in case your production doesn’t meet expectations - in a “well managed” business they should be a gauge of the confidence that industries have in the future.

Really low volumes could mean that some companies in the industry are expecting a glut of production that they will need the capacity to absorb.

If this capacity would have been available last year, it would have made the pricing situation smoother, with the ability to hold inventory more fruit from going to market and keeping the price up so that it didn’t drop below production cost.

On the other hand, maybe the low inventories are a knee jerk reaction to last year’s particularly difficult market situation, and - as John Pandol mentions in the cold storage article - there are a lot of reasons and big changes that help explain lower volumes.

This will mean that any unexpected drop of shipments without cold storage to soften the blow could see sharp and sudden rises in pricing, be it from the later producing regions of California, or the early season Peruvian and Chilean fruit.

Written by: Colin Fain
Original published in FreshFruitPortal.com on October 02, 2019 (Link)

Comments

Popular posts from this blog

Blueberry boom: Worldwide growth creates challenges for NW producers

Overview of the northwest blueberry season by Doug Krahmer of Berries Northwest, Cort Brazelton of Fall Creek Farm and Nursery, Kasey Cronquist of the U.S. Highbush Blueberry Council and Mark Hurst of Hurst's Berry Farm, complemented by charts from Agronometrics. Original published in www.capitalpress.com  on July 30, 2020 ALBANY, Ore. — On a seasonably warm July afternoon in the fertile Willamette Valley, Doug Krahmer stood between rows of organic blueberries and watched as a large mechanical harvester rolled slowly through the field, rattling bushes heavy with ripe fruit. Measuring a little more than 15 feet tall, 11 feet wide and weighing 7 tons, the harvester seemingly floated in the distance over neat rows while fiberglass rods, or “fingers,” shook the berries onto a conveyor belt that swooped them to the upper deck and into plastic crates. From there, the crates were loaded into refrigerated trucks and driven from the farm north of Albany, Ore., to a packing shed ea

Agronometrics in Charts: Demand for berries skyrockets in 2021

This time for the ‘In Charts’ series we will give an update as to how the average prices of berries have been behaving. Specifically, we will look at the prices of blueberries, raspberries, strawberries, and blackberries in the United States market and compare them with previous seasons. An increase in demand, brought on by the tendency to consume “superfoods” such as berries during the Covid-19 pandemic, seem to have pushed prices up despite the fact that volumes imported by the United States have been similar or higher than those of previous years. Let's look at each particular case: Blueberries Blueberry prices experienced a significant increase from week 3 of 2021, showing the highest prices of the last 5 seasons for the same date. If we observe the following chart, we can see that, for week 7 of 2021, the average price of conventional blueberries was $7.60 per kilo. This is 24 percent higher than in 2020 when the average price was $6.14 per kilo. Volumes for blueberr

Peru's blueberry oversupply takes its toll on export price

Overview of the Peruvian blueberry season, complemented by charts from Agronometrics.   Original published in FreshPlaza.com   on November 25, 2020  This year's Peruvian blueberry season began in June with the export of 1,010 tons worth 5 million dollars. These figures represented a 25% increase in volume and a 77% increase in value over the same month of 2019. The lower production in the northern hemisphere due to weather problems allowed producers to achieve attractive prices of $ 5.15 per kilogram in June. Volume (in Kg) of blueberry from Perú in the US market Source: USDA Market News via Agronometrics . (Agronometrics users can view this chart with live updates here ) The good reception of Peruvian blueberries and the increase in prices encouraged exports during July, a month in which the country shipped 4,808 tons (+ 108%) for 26 million dollars (+ 102%). In this month, the increase in the Peruvian supply generated a slight 3% fall in the typical prices of the month,