(UPDATED COVERAGE, Sept. 15) Avocado markets were roiling in the first half of September, as product from Mexico, Chile and the new kid on the block, Peru, competed for shelf space. By later in the month, shippers predicted, order would likely begin to be reestablished.

Mid-September prices, however, were still up significantly from last year at the same time.

Mexican avocado growers expect to ship about 680 million pounds of avocados to the U.S. this season, 8% more than in 2010-11, said Emiliano Escobedo, marketing director for Mexican avocado export group APEAM.

In mid-July about 200 containers per week of Mexican avocados were being shipped to the U.S., a number that’s sure to rise later in the month as Peru’s deal winds down, Escobedo said.

Quality on early-season fruit is outstanding, Escobedo said, the product of higher quality assurance standards instituted by Mexican growers this season.

Things in the first half of September couldn’t be much different than in the previous four months, when demand exceeded supply and different growing regions weren’t fighting for shelf space, said Bob Lucy, co-owner of Del Rey Avocado Inc., Fallbrook, Calif.

“The shoe’s on the other foot now, and we’re really dancing,” he said. “I wish (market stabilization) would happen tomorrow, but it will probably be a few more weeks.”

On Sept. 13, the U.S. Department of Agriculture reported prices of $49.25-50.25 for two-layer cartons of avocados 48s from Mexico. Last year at the same time, 48s from California were $33.25-34.25.

The combination of Chile and Mexico ramping up volumes and Peru squeezing shipments its first year in the U.S. import deal into a small window because of a late start has meant an abundance of product, and markets in steep decline, Lucy said. Prices in some cases dropped $15 to $20 in the two or three weeks leading up to the week of Sept. 12.

“It’s not a demand problem, just supply,” he said.

Lucy predicted that Mexico and Chile would likely scale back shipments in response to the falling prices, a move that should hasten a more balanced market.

Lubbock, Texas-based retailer United Supermarkets LLC finally had enough avocados from Chile and Mexico to begin running ads the week of Aug. 29, said Tommy Wilkins, director of produce procurement.

“We really missed a 3-month period where we had to pull in our horns on promoting,” Wilkins said.

Fruit was still on the small side the week of Sept. 12, Wilkins said, with United pushing hard on size-84 promotions. By about Sept. 29, the retailer should be able to promote a full range of sizes, he said. 

The market will likely level off fairly soon, said Rob Wedin, vice president of sales and marketing for Calavo Growers Inc., Santa Paula, Calif. The good news about lower prices and higher inventories, he said, is that retailers can finally promote after three or four months of limited promotions, due to the light California crop.

Ample volumes will be available for football season, Halloween and other fall promotions, Escobedo said.

Mexico accounted for about 50% of the market, Chile 35% and Peru 15% the week of Sept. 12, Wedin said. Mexico’s share should increase to about 65% beginning in late September when Peru’s volumes begin to decline, Wedin said.

Mexico’s 2011-12 crop should be about 15% larger than last year’s crop, Wedin said.