( Del Rey Avocados )

Despite increased volume this year and lost foodservice business because of the COVID-19 crisis, avocado prices will remain steady through 2020 and into the first quarter of 2021, a new report from Rabobank predicts.

The report, called “A Look into the U.S. Avocado Market in a Volatile Environment,” was co-authored by Rabobank fruit and vegetable analysts Roland Fumasi and David Magana.

Supply and demand

U.S. per capita consumption of avocados has grown at an compound annual growth rate of 8% in the last decade and now tops eight pounds per person per year, according to the report. Rising supply has been met with ever-growing demand, according to the authors.

“Despite the continuous growth in avocado availability over the last decade, prices have also consistently increased or every week of the year, which suggests the existence of a strongly expanding year-round demand for avocados,” the report said.
Mexico accounted for 82% of U.S. avocado supply in 2019, with 9% of supply from California, 7% from Peru and the balance from Chile.

California’s avocado volume this season is projected to be up 70% compared with a year ago. Planted hass avocado acreage in Peru has climbed 8% and production there is expected to rise 31% in 2020, according to the report. Mexican volume in 2020 also is expected to increase because of a steady acreage expansion in Michoacan.

While Mexico will remain the largest supplier for the U.S., Magana said that avocado marketers will seek to diversify avocado sourcing in the next decade, pulling fruit from countries such as Colombia, Brazil and South Africa, in addition to Peru and Chile.

Available now

During the first quarter of 2020,  U.S. imports of avocados were up 13% and yet prices were 25% higher than the same period in 2019, according to the report.

Rabobank predicts total avocado shipments in the U.S. the week of June 22 will be 27% higher compared with the same week in 2019. The highest shipment level in the next year is projected for the end of January, when 68 million pounds of avocados are expected to be marketed in one week because of the Super Bowl.

The average predicted price for late June this year, the authors said, is $48 per carton, down 33% from prices topping $60 per carton in June last year.

“We’re not expecting prices to start to spike in the summer as they did in 2019,” Magana said May 6.

The report predicts an average avocado shipping point price of $31 per carton in late November. 

 

Post-pandemic outlook

The COVID-19 pandemic’s damage to the economy may result in lower avocado demand, but the report said that per capita avocado consumption in 2020 will still show modest growth. By 2021, the report said per capita consumption could reach 9 pounds per person per year.

The pullback in foodservice demand hasn’t stung avocado marketers, said Bob Lucy, partner with Del Rey Avocado Co. Inc., Fallbrook, Calif.

“Retail is probably 90% of the business right now and that is doing surprisingly well,” he said May 6. 

California’s large crop, estimated between 370 million and 400 million pounds, should be set up for good demand in the coming months, he said. 

He said Mexico’s volume will fade soon and Peru’s volume will increase in about three weeks.

“It should be a very busy summer marketing avocados,” Lucy said. “It is very challenging but so far we’ve done very well.”

Magana said the foodservice channel takes mainly second-grade fruit and typically accounts for close to 20% to 25% of total sales.

With some restaurants excelling with delivery and takeout business, Magana said foodservice demand for avocados is slowly recovering.

With 8% annual growth for the last decade, Magana said he believes there is still some room to grow avocado demand in the U.S.

 

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