Low prices plague California lettuce deal

10/01/2002 12:00:00 AM
Tom Lister

(Oct. 1) SALINAS, Calif. — Shippers say there’s little hope for higher markets in the California lettuce deal, which has seen low prices for most of the summer.

On Sept. 30, Frank Pinney, owner of Diamond Produce, Huron, said he expected f.o.b.s for 24-count cartons of iceberg to stay at $5-6 for the next few weeks ahead.

“Right now, I don’t have any information that would show me that would change,” he said.

The U.S. Department of Agriculture, which reported f.o.b.s mainly in the $4.60-5.60 range, noted that some shippers were curtailing harvest because of market conditions.

Jim Manassero, vice president of D'Arrigo Bros. Co. of California, Salinas, citing an area newspaper report of f.o.b.s at $5.50, said, “That’s certainly not break-even.”

Prices the same time last year were slightly lower, according to the USDA. Salinas prices for 24-count cartons then were around $4.60-5.10, it reported. Two weeks later, on Oct. 15, 2001, prices were in the same range.

Despite grim reports from some shippers, there’s still the potential for change, said Ken Adams, lettuce manager for Growers Express, Salinas.

The company plans to make its transition to the Huron growing region sometime around the week of Oct. 21, he said. The stands looked good there, but a lot could change by harvest time. Mid-October rains in California wouldn’t be unusual, he said.

“Huron can change in a day sometimes,” Adams said. “You can’t count anything out.”

Pinney said he expects Diamond Produce’s iceberg lettuce production to continue in Salinas through October, with the bulk of production shifting to Huron in November, then to the Yuma, Ariz., area after Thanksgiving.

Manassero said he hadn’t heard anything about acreage in the Huron area, adding that the most the industry might hear is speculation from seed sources.

“It’s just too quick a deal,” he said. His said his guess was that acreage there is largely consistent.

Romaine usually stays in Salinas longer, bypassing Huron on its way to the desert deal, Manassero said. Romaine handles the rain better, but it’s hurt more by the drifting cotton defoliant used in the San Joaquin Valley.

Despite the largely low markets this summer and early fall, the California lettuce deal did hit a high note Sept. 23. The USDA reported 24-count cartons of iceberg from Salinas at $9.15-9.25 and film-wrapped 24s at $9.75-10.75.

Adams attributed the spike to “ideas of grandeur” among shippers that week. Short-term promotions may have helped create the stronger market, he said, “but it was not long-lived, obviously.”

During last season’s desert deal, iceberg prices skyrocketed, sometimes surpassing the $50 mark. Manassero said odds were that won’t happen again this year.

By the end of the winter deal, shippers got all the cartons they expected out of their fields, he said. The problem was that weather fluctuations caused the industry to be severely short for four to five weeks.

Also contributing was a trend toward contract buying and a more limited pool of open market supplies, which now represent only 25% to 30% of total product. So if overall supplies in the industry drop by 10%, open market supplies go down 30%, which magnifies market fluctuations, Manassero said.

Last season, processed salad producers drove much of the heightened market, he said. Processors sometmes paid much as 10 times their usual costs for lettuce on the open market.

“They’re not going to underplant this year,” Manassero said. It’s cheaper for processors to disc under a few unneeded acres than buy open-market supplies, he said.

As early October approached, Manassero said demand seemed limited. A West Coast dock strike wasn’t helping movement, either, he said, but the strike’s effects would hurt broccoli more than lettuce, he said.



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