Rising demand for hass avocados, weather-related sizing issues in California and a dip in Mexican production kept shipping prices around $30 per two-layer carton in mid-March.
That’s up about $10 on size 48s and 60s from what Mexican fruit commanded through much of February.
“Mexican growers felt they were under-pricing the market,” said Bob Lucy, partner in Fallbrook, Calif.-based Del Rey Avocado Co. Inc.
“They could still harvest about 30 million pounds a week and they were just leaving money on the table. I didn’t think it was undervalued by $10. But in November to January, maybe it should have been $3 or $4 higher.”
Harvesting came to a temporary halt March 18 for Benito Juarez Day in Mexico. Partial data for the previous week confirms that 30 million-pound pace, said Rob Wedin, vice president of sales and marketing for Santa Paula, Calif.-based Calavo Growers.
It’s a lot of fruit, but less than winter production.
“It’s maybe 10% over forecast instead of 30% like they were shipping,” Wedin said.
“Demand is continuing, inventories have gone down and prices up.”
Shipping prices on Mexican hass avocados ran mostly $30.25 for size 48s and $29.25 for size 60s on March 18, according to the U.S. Department of Agriculture. Year-ago prices were nearly identical for the 48s, but $25-26 for the 60s.
Mexican production will go to June. California is starting to see significant increases in harvested volume but remains far from the peak amounts predicted from a deal expected to stretch into October.
The California Avocado Commission estimates a 515 million pound crop for the state in 2013.
Harvests there spiked to 9.4 million pounds in the second full week of March, up from 4.6 million the week before. That was good news, Wedin said, but growers still aren’t seeing the sizing they like.
“We envisioned better spread sizing, but the fruit is pretty small,” he said.
“Some of the growers who contributed to that 9.4 are backing away because they’re just not getting the pack-outs they want.”
There’s a good set on the trees, but, so far, insufficient time, temperatures and rainfall to size up, Wedin said. Even so, he added, it’s common for a big crop to fall behind and come on strong mid-season.
“(California) is developing an inventory of size 70s,” he said. “The pricing of 70s is not conducive to significant increases.”
“It’s really just getting started,” Lucy said.
“As we get more into summer we’ll have to have weeks when we’re up to 15 million or 20 million pounds.”
Winter prices were lower than the industry anticipated, Wedin said, but that fed demand.
“Demand has really come forward,” he said. “That’s increased the need for product and when growers pick slightly less in both California and Mexico, it drives prices up quickly.”
Two-layer cartons of hass avocados from California shipped for $31.25-32.25 on size 48s and $30.25 on 60s March 18, according to the USDA. Year-ago prices were about $32 and $30, respectively.
Quality is good on Mexico and California fruit, Lucy said.
“California will dominate the West and Mexico the rest of the country for the next two and a half months,” he said March 18.
“The big problem has been lack of rain in California,” he said. “Rain really helps it size up. We’re hoping for a few more storms in April and May.”
Easter added to demand for avocados, Lucy said, but the fruit doesn’t get quite the same bump from that holiday as strawberries. The next big one will be Cinco de Mayo.
Unlike last year, Chilean imports ended well before mid-March. Chile sharply cut exports to the U.S. after the Association of Michoacan State Avocado Producers and Packers (APEAM) estimated the 2012-2013 crop at 986 million pounds, up from 782 million the year before.