Avocado size curve creates volatile market

From The Produce News | 17 July 2023

Overview of avocados in the U.S. market, complemented by charts from Agronometrics. Original published on July 13, 2023. 

Shipments of avocados from Mexico have declined significantly in the past month and are also skewing heavily toward small sizes creating a two-tiered market with small sizes declining in price and large fruit demand exceeding supply.

This disparity is clearly evident when looking at the U.S. Market News report for Monday, July 10. California fruit sized 48s and larger was commanding FOB prices in the $55 to $62 range, while avocados of 70 count and smaller had reported FOB prices in the mid- $20s to low $30s, with some shippers saying the prices were even lower than that. A very similar pricing disparity was reported by Market News Service for avocados crossing into the United States from Mexico at the Texas border.

Rob Ybarra, executive vice president for Villita Avocados in San Antonio, CA, told The Produce News on July 10 that the actual price that day for small fruit from Mexico was actually lower. “You can get great deals on 84-count bagged avocados today,” he said. “The price is dropping quickly. There are a lot of quotes in the $21 to $25 range.”

avocado prices by size a 1

Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)

Ybarra gave a full-throated pitch for the smaller fruit and admitted freely that “we are trying to convert our customers to 84-count bags. It’s a perfect meal size avocado, and the Flor Loca (summer) crop is of excellent quality with beautiful fruit.”

The avocado industry veteran said Villita is currently bringing in fruit from both Mexican producing states of Michoacan and Jalisco. “It’s lack of rain that is preventing the fruit from sizing,” he said, noting that the Jalisco fruit is actually skewing even smaller than the fruit from Michoacan. “We believe small sizes are going to be plentiful for the next six to eight weeks. We need Mother Nature to turn on the rain and give us some relief.”

Ybarra did add that there is also a very good supply of organic avocados from Jalisco in the 60 to 84-count range. “This is the perfect time to promote organic avocados in bags,” he said. “There are great deals on organics.”

Peter Shore, vice president of product management for Calavo Growers Inc., based in Santa Paula, CA, said the situation is working out very well for California growers that generally have a much more normal size curve this year. He acknowledged the two-tiered market and said it has been a pleasant surprise for many growers.

The avocado market was experiencing low FOB prices through much of the spring as Mexico had a very large 2022-23 crop. The United States typically saw more than 60 million pounds being marketed each week from March through mid-June. For the past four weeks, the average has been in the 50 million-pound range, with the aforementioned issue of small sizes dominating the collective manifest.

During that time period, California growers have increased their volume peaking at more than 15 million pounds the week ending July 2 with a full complement of sizes. That is a high number as it is generally conceded that California has the capacity to pack only about 13.5 million pounds per week.

Peru is also increasing its shipments to the U.S. market as it is projected that its first week of more than 10 million pounds is expected to occur this week. Peru’s shipments are expected to peak at about 16 million pounds in early August and stay above double digits into September.

While Peru’s fruit skews larger, Shore reminded that most of that fruit is pre-sold on programs, so it won’t have a huge impact on the spot market price on large fruit.

For several years, Peru’s strategy has been to have a home for its shipments before they leave port, with relatively few Peruvian avocados available on the open market.

However, the stronger-than-expected market price may change that dynamic. In fact, Ybarra noted that Villita Avocados does have Peruvian avocados in its arsenal that it typically sells exclusively into Europe. “We just decided to divert some of that fruit to the U.S. market,” he said. “We are going to bring some large fruit here.”

The News in Charts is a collection of stories from the industry complemented by charts from Agronometrics to help better tell their story.

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