Skip to main content

Avocados in Charts: An empty promise for California exporters in China


The newest trade agreement with China signed on the 15th of January offers California Avocado producers a window of opportunity into the Chinese markets. Specifically the text in annex 11 of the agreement reads:

“8. Within three months of the date of entry into force of this Agreement, USDA/APHIS and the GACC shall sign and implement a phytosanitary protocol to allow the importation of California Hass avocados into China.”

In light of this piece of news we take a look at the market data to see if we can estimate what the impact of this new agreement could be on the industry.

The production of avocados in California has remained relatively stable for the last 20 years with an average floating somewhere around 160 M Kilos.

The prices on the other hand have generally been increasing steadily. The highest prices are usually the result of a shortfall in production in California, which in 2019 coincided with a year of low production in Mexico, offering the highest prices California producers had ever seen. For the sake of our analysis 2018 we will focus on with price of $3.11 per Kilo and a volume of 164 M Kilos, which was very close to the 20 year average previously identified.

Non-Organic Avocado Prices (USD per Kilo)


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

In all fairness, it’s hard to compare the Shipping Point prices directly to trade value, however, we can't transform the USDA prices to be on par with the UN COMTRADE bringing us closer to comparing the preverbial apples to apples. Through this methodology the market price of California Avocados gets adjusted down to $2.57 per kilo at 164 M Kilos, a good baseline to compare the US market data to UN COMTRADE data available for China, which was last reported by the Chinese government also in 2018. This year China imported 68 M Kilos split between Peru, Mexico and Chile at an average price of $2.81 per Kilo.

The question then is whether a $0.24 cent per Kilo premium is worth while for California producers to ship their produce across the world, at the same time competing directly with Peru who’s entire supply chain has been setup to export their fruit overseas. What’s more, in 2018 Peru only shipped 17 M Kilos to China. If California were to share a part of this volume, it would only account for a tiny portion of their production, arguably not enough to make a significant difference for producers.

The silver lining is that China is a market that is growing very quickly. Imports of avocados into China totaled 8m kilos in 2014, after which they grew by 54m kilos in four years. If this rate continues and if prices remain attractive, there could be an opportunity for California producers to take part in the Chinese market in a couple of years. From the available trade data, however, it seems like these are still early days for avocados in China.

Written by: Colin Fain
Original published in FreshFruitPortal.com on January 17, 2020 (Link)

Comments

Popular posts from this blog

Avocados In Charts - Prices are falling and why are they likely to settle below 2018

Agronometrics has often spoken about what is to come and how the market could be affected. We hold a strong belief in being able to look at objective data can help navigate complicated scenarios. The recent spike in prices that avocados have seen is an example of one of these scenarios, catching many by surprise at a time of the year where we had never seen movements like this before. This can be seen in the chart below where the 2019 line has towered above all other prices since Sept. 2017 and every price recorded for June in the last five years.

Historic Hass Avocado Prices


Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)
Comparing the volumes of this year to the last can offer some insight as to how these prices have come about. Considering the prices were almost flat last year, the volume data serves as a great benchmark to understand where customers expectations lie.

In this year’s data, an important oversupply can be …

Apples in Charts: Honeycrisp, the queen of the U.S. market

Apples are a high-volume fruit commodity which growers need to produce very efficiently in order to be profitable, and the U.S. is no exception to this rule.

Apples from numerous origins are sold in the U.S. market, which is supplied principally by fruit from Washington State, as can be seen in the chart below.

Average historic arrival volumes of apples in the U.S. market, by origin


Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)
Average historic apple prices in the U.S. market have oscillated between around US$1.00 and US$1.75 per kilo over the last decade.

Historic weekly prices (USD/KG) of apples in the U.S. market


(Source: USDA Market News via Agronometrics. (Agronometrics users can
view this chart with live updates here)
But in the panorama of apples in the U.S., there is one variety that has stood out from the others – Honeycrisp. This queen of the U.S. apple market has great growth potential and excellent prospects…

Price Alerts! are here for all

As we bring price alerts to Agronometrics we thought we would pen a piece on our thinking behind the service as well as the methodology for it.

The idea for the Alerts arose from our conversations with the industry, where several people expressed high interest in knowing when there are important changes in the market prices that could affect their business.

This impetus created the Price Alerts! service, whereby we monitor daily average prices of every commodity on our platform, so that you don’t have to. As soon as the difference in price reaches a certain threshold you get an email alerting you of said price change. You can take a look at our sample report through this link (US Avocado Price Alert!)

In order not overflow our users with these email alerts, we have used some fancy statistical analysis and determined the required values so as to send some 12 alerts per year for each commodity. In the table below you will find the list of commodities along with their estimated limits t…