A perfect storm led to near-record prices and perilously low volumes amid rising demand for Mexican avocados a year ago, according to growers, shippers and marketing agents of the product.
The market reached the $50-per-carton range and stayed there until late this summer, agents added.
Fortunately, they said, the situation is not likely to be repeated for the 2011-12 crop.
“The crop was down last year and it fueled a market that we’ve never seen before, where prices were in the $45-50 range for several months,” said Giovanni Cavaletto, vice president of operations for Index Fresh Inc., Bloomington, Calif.
“That was fueled by an increase in demand around the world and a year of small crops in California, Chile and Mexico.”
Markets outside the U.S. also have pinched supplies, Cavaletto added.
But the situation has eased as fall has progressed and Mexican shipments have increased, he said.
“Today, the market has declined by about $25 versus where it was six weeks ago,” he said in mid-October.
“Curiously enough, the volume is not any bigger. We’re moving the exact same number of cartons per weeks as an industry as we were six weeks ago.”
What has been the difference?
“Instead of the fruit being in the hands of nine different companies, now it’s in the hands of about 60 different companies, as the imports have increased again, and that’s what’s caused this market erosion.”
Mexico is forecasting to ship about 700 million pounds this year to the U.S., compared to less than 600 million the previous year, Cavaletto said.
“Until about six weeks ago, a Mexican grower could get $3.50 per kilo at the farm gate for the Mexican domestic market. Today, it’s about 70 cents per kilo,” he said.
“That reflects the fact that the Mexican market is much larger this year than last year.”
This year, a bigger Mexican crop, along with larger supplies from Chile, will steady the market, said Emiliano Escobedo, marketing director for APEAM, the organization representing avocado exporters from Michoacan, Mexico.
“Mexico is once again taking the leadership role in the U.S. market, sending more and more fruit to the U.S.,” he said.
Giovanni Cavaletto, vice president of operations for Index Fresh Inc., Bloomington, Calif. “There’s also more fruit available to the domestic market, which is creating pressure on prices, as well. What we see is solid volume out of Mexico.”