Avocados in Charts: Will lower volumes from Peru fuel higher prices?

Peru has the golden opportunity to produce avocados right when the market most needs it. Coming in on the heels of California’s supply and right before Chile’s, Peru’s season happens to be countercyclical to Mexico’s with its volumes arriving in the market right when Mexico has the hardest time producing.

Because of its fortunate positioning, Peru’s presence in the U.S. Market has been growing impressively, rushing to keep up with demand right in the middle of the U.S.’s summer. In 2010, the USDA reported 300,000 lbs of imports from Peru, while in 2018 we saw Peru send an impressive 88 million lbs.

In fresh produce, timing is everything. Fortunately for Peru, timing works in its favor. June, July, and August have seen some of the highest prices to date. This also happens to be when Peru’s supply is most prominent, creating the driving engine behind the origin’s meteoric rise.

These high prices are not only created by high demand from consumers – they are also a sign that producers are having a hard time keeping up with the market.

To satisfy the markets there are three major origins trying to meet the U.S.’s avocado needs during this time. This in turn creates a complex symphony between all origins striving to maintain balance. If any one of these origins lets up, big spikes in prices follow, such as those in 2016 and 2017.

A shining example of this imbalance is the delay that the market saw from California’s season, which pushed prices to over US$50 a box at the beginning of April.

This year looks like it is going to be an interesting season for the origin. With California experiencing important delays in production, Peru is coming online to a rosy commercial picture with high prices for the category.

According to Pro Hass, there will be decreases in Peru’s expected production, a more spread out commercial window, and ever-increasing diversification of the nation’s customers (Peruvian avocados: Greater early-season volumes mark “new trend” for industry).

The combination of these factors means that receivers may have a hard time finding fruit from Peru that isn’t pre-committed. As a result, Peru’s volumes may not serve to completely dampen the high prices the market is experiencing.

Written by: Colin Fain
Original published in FreshFruitPortal.com on June 11, 2019 (Link)