California grapes to clash with imports?

12/06/2013 11:43:00 AM
Tom Karst

Tom KarstProduce industry veteran Rick Eastes continues to have great insight on the evolving grape market. Heavier late-season grapes availability from California this year could set up some marketing tension between domestic and imported grape supplies in January, Eastes believes.

 This week, Eastes, of Visalia, Calif.-based Rixx Intl. Marketing Co. Inc., checked in with a report about the current supply situation in California. In his comments, he references the USDA’s grape storage report, which revealed Nov. 30 holdings of 11.39 million packages, up from 6.3 million packages in 2012 and 7.6 million packages in 2011. The popular Autumn King  green seedless, was reported at 1.98 million packages on Nov. 30, up from 973,000 packages last year and only 268,000 packages two years ago.

From Rick:

As you can read, there are more than 5 million more boxes as of December 1st this year compared to last, and 3.7 million more than 2011 on the same date.

The varietal makeup of the extra amount in storage is not surprising — new varieties of red seedless and more Autumn King. However, it is just the first time we have seen how new acres of table grapes are beginning to come into production from the new plantings over the last 5 to 7 years.

I am a little surprised at the number of Autumn Royals and Red Globes remaining, but the open weather virtually through November did allow for more of these varieties to be harvested, especially the Autumn Royal which historically ‘cannot take any rain’.

If the industry can equal last week’s average shipments of 2.3 million boxes per week, that would predict about 5 weeks of supply in an ideal scenario. However, with only 3 weeks left until the Christmas-New Year holiday period, the historical data suggests that an average of perhaps 1.5 million boxes per week of movement over the next 3 weeks leading up to the Christmas holiday is more likely.

If the historical shipments pre-Christmas prevail, it could take an additional 7 to 8 weeks to effectively clear the bulk of the remaining storage volumes, so there will likely be some significant Californian supplies well into the New Year, especially of red seedless.

 The other unknown factor is the ‘storageablity’ of the supplies in storage. Many of the late season red seedless are strong and were unaffected by any rain or inclement weather.

 It is fair to say that there will likely be some ‘conversation’ about supplies, even at the retail level well into the beginning of February. What decisions retailers choose to make about ‘domestic vs. import’ will be a weekly discussion as Southern Hemisphere supplies begin to ramp up. I cannot imagine that it will have a positive affect on pricing decisions for California shippers or marketers of Southern Hemisphere new crop supplies.

 The industry is in “new territory”. It will be interesting to see how it plays out.

 

Thanks to Rick for keeping us abreast of, as he says, a compelling scenario for grape marketers.

A quick check of the USDA’s Custom Average Tool reveals that average California grape prices from early September through late November was an average of $16.70 per carton, down from $19.57 per carton last year for the same time.



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