The apple cart is upset, but apple growers with fruit are pleased.
The August crop production report is found here, with the first USDA apple forecast of the year. The USDA's take on apple production is a forecast of 8.06 billion pounds (192 million bushels), down 14% from the 9.42 billion pound (224 million bushel) crop of a year ago.
From the summary, a quick look at the jaw-dropping production shortfall in the East and Midwest:
Production in the Eastern States (Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia) is forecast at 1.60 billion pounds, down 31 percent from last year.
Production in the Central States (Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, Tennessee, and Wisconsin) is forecast at 252 million pounds, a decrease of 79 percent from last year.
Down 79%? Ouch.
To me, it doesn't seem the full impact of the hail storm has been factored into the agency's estimate on Washington. For example, the text of the report doesn't even mention hail. From the USDA:
Production in the Western States (Arizona, California, Colorado, Idaho, Oregon, Utah, and Washington) is forecast at 6.21 billion pounds, up 6 percent from last year. Washington growers experienced a relatively normal growing season, without losses from freezes or frost, and with good pollination weather. Production in Oregon is up from last year, contrary to the typical alternate bearing pattern.
Put in context, the government estimates Washington's 2012 crop at 5.7 billion pounds (136 million 42-pound cartons), a whopping 70% of U.S. production.
At 5.7 billion pounds, Washington state production would be up better than 5% from last year's output of 5.4 billion pounds (129 million bushels) last year. Last year, Washington state accounted for "just" 57% of U.S. apple output.
With 70% of U.S. apple output in one state this year, what happens in Washington state from now until harvest ends will be of interest to all apple buyers sellers in the world.
Has apple production become too Washington-centric? If so, is there anything to do about it?
Those are questions for another day.
The apple cart upset 2012 season also is highlighted by the introduction of a futures market contract for apple juice concentrate at the Minneapolis Grain Exchange. What an exciting time for a futures contract to be launched - a day after the USDA crop report and days before the U.S. Apple Association estimate. Hold on to your seats; it may be a bumpy ride.
In the fresh market, current pricing on Washington fruit is $40 per carton on granny smith, close to $50 per carton on prime sized fujis. The lowest price on reds is near $26 and the lowest price on goldens is $36 per carton, one shipper told me.
Going into the fall, those prices will need to come down to maintain adequate momentum at retail, the marketer said. Reasonalbe pricing could ensure s "demand exceeds supply" scenario for all year long, he said, but top heavy prices could produce a "race to the bottom" if the market falters.
High processing prices will put the floor on fresh market fruit at $16-18 per carton he said.
The market will sort itself out, but he said a Washington f.ob. market in the mid-$30s could be the sweet spot for some varieties this year, he speculated.
Hail grade bagged fruit could be priced $3 lower than normal fruit, the marketer said. It is unknown how much hail grade fruit will be packed.
The pricier apples will open the door for retailers to give more space to pears, the Washington marketer said. At $1.99 per pound retail, pears will look like a bargain.
One thing is sure: I will have to quit looking for the $1 per pound apple deal at retail this year.