Grapes in Charts: How will Peru’s sharp volume increase affect the U.S. market?

Nestled right between California and Chile, Peru occupies a strategic spot in the U.S. market, coming in right as prices begin to rise.

US 2017-18 Grape Volumes by Origin

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

From July to November – when California’s fruit dominates – the market is characterized by high volumes and stable pricing. Over the last four years, the spread between the highest and the lowest price recorded has floated right around US$2 per box. However, as soon as Latin America shows up on the scene, things start getting much more interesting, with the spread increasing to US$4.50 in December and US$12.60 in January.

US Monthly Grape Shipping Point Historical Prices

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

The reasons for this can be various, but one of the biggest things to keep in mind is that California mostly focuses on satisfying domestic demand, while Peru and Chile are constantly weighing their options between different markets to see where they can get the best returns. They are therefore much more susceptible to changes in global demand and variances in production from other origins.

This means that if prices are high in Europe or China, volumes will most likely be taken from the U.S., raising the prices there and adding to the variability in the market. The U.S. is still expected to be the most important destination for Peru, but even so it is only set to receive around a third of its exports.

Weather can also not be ignored. Last year was characterized by a very wet season brought on by El Niño, which affected both the quantity and the quality of the production.

US Volumes and Prices of Peruvian Grapes (July 2016 – Present)

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

Comparing the 2016-17 season to the previous one, volumes from all origins from December and January saw a drop of 27% and 39%, respectively. The effect of this drop was a price hike for Peru, giving them a 9% gain in December, when they share the market with California, and a 19% gain in January, reflecting Peru’s own lower volumes and a shift in Chile’s season, which was pushed back by a month.

With a 36% rise in Peruvian exports expected (see article here), and hopefully good fruit, I would look for an increase in volume arriving to the U.S., and maybe even a season that is reminiscent of 2016-17.

U.S. Historic Grape Prices per box from Peru

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

Written by: Colin Fain
Original published in FreshFruitPortal.com on November 06, 2018 (Link)

*To view historics click on this icon in the table. In the historics report you can change viewing to reflect seasons that cross New Years.