U.S. grape market remains tight ahead of peak Chilean volume

From Fresh Fruit Portal | 29 February 2024

Overview of table grapes from Chile in the U.S. market, complemented by charts from Agronometrics. Original published on February 29, 2024.

Table grape inventory remains low in the United States, as a delayed grape harvest in Chile’s Central Valley contributes to an already strained market.

Supply issues began in August when Hurricane Hilary struck California, explained Carlos Bon, vice president of sales of Divine Flavor. From there, the industry witnessed what he described as a domino effect of adverse conditions.

“It’s two weather events, actually, that are the precursors of what’s going on currently,” Bon told FreshFruitPortal.com. “It’s the El Niño effect in South America and the hurricane in California.”

That meant a smaller California crop followed by a smaller Peruvian crop.

grape volumes by history 2

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

grape volumes by history 1

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

“With the amount of rains [Peru] had and the flooding, I think the numbers ended up close to being 30% down for the whole industry,” he said.  “With California having issues, they were actually able to have a pretty good market for that 70% that they were actually able to harvest.”

In northern Chile, he added, concerns over El Niño prompted an earlier harvest in Copiapo. The earlier harvest meant smaller grapes and fewer boxes. It also created a gap between northern and central Chilean producers.

“Right now, the biggest effect is the delay of the central region of Chile,” he said. “It’s mind boggling to me because the weather has been ideal for maturity.”

As of Wednesday, the USDA reported light import volumes from Chile and Peru, and demand that continued to outpace supply. Despite the tight market, market reports note that precommitments were established at lower prices. 

Bon expects the tight market to continue for another 15 to 20 days, until the Central Valley comes into play.

Despite the supply gap, the delays are not necessarily a bad thing for Chile, Bon said. A later crop gives Chile space from the end of Peru’s campaign. In a normal year, for example, he said Ica, Peru would still be on the market.

“If God were to come and say, hey [Chile], this is gonna be your timing every year, but I’ll give you an out right now. I’ll give you back all your money you invested. Do you want to stay in? I would stay in because I think this is the right time for central Chile to go,” Bon said.

A rising star in Mexico

In Chile’s late season, Mexico comes into play with supply primarily arriving from Sonora.

“That is your classic Mexican season,” he said in reference to Sonora. “When people say Mexican grapes, that’s what Mexican grapes are.”

Now, Bon said, another Mexican state, Jalisco, is stepping up to fill a specific market window, when quality fruit in the U.S. market has tended to lack. 

He described Jalisco’s grape production as a game-changer. The Jalisco harvest season is short, about 6 weeks from late March to early May, but it fills a market need.

“Jalisco is a brand new growing area. We are the largest growers there, the pioneers in that area. And it’s an area where we did a project to hit a particular window,” Bon said.

“Now after a couple of years, we’ve realized that we’re not growing grapes just to have green grapes in a particular window. We’re growing grapes because we feel we can have the best grapes available in the market at that time of the year.”

Jalisco’s production consists mostly of green grapes with a small percentage of reds.

“That is by design because red seedless are actually a grape that Chile does very well towards the end,” Bon said.

“But on the greens, it’s like day and night. You have fresh greens grown 28 hours away from the border on a truck instead of a 14 day transit. Not fumigated. No Panama Canal.”

Divine Flavor’s grape operations in Jalisco sit in an ideal microclimate, Bon said, describing the zone as similar to growing fruit in a greenhouse.

“We do believe that the best grape currently on the market is the Autumncrisp and we grow a lot of that in Jalisco to provide an exceptional grape at a time of the year when usually the worst quality grapes were offered to the consumer.”

He forecasts the company’s Jalisco production to increase 50% to 1,500 hectares in the next two years. Sonora will remain Mexico’s grape hub, however. In five years, he estimates a quarter of Mexico’s production will come from Jalisco and three-quarters from Sonora.

Chile, Mexico and Peru are the top three suppliers of fresh grapes to the U.S. market. Each supplied about a third of total U.S. fresh grape imports in 2023. Smaller supplies arrived from Brazil and South Africa.

To remain competitive in the market, he says suppliers, regardless of origin, will need to focus on providing good quality, customer service and effective marketing.

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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