Fresh Directions

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Fresh Directions

May 31, 2012

Salinas, CA, lettuce shippers are seeing strong processor demand, while California and New Mexico onion shippers are seeing improving demand on lighter supplies. Idaho russet shippers are experiencing continued modest carton demand.

ICEBERG LETTUCE

A few key events are occurring simultaneously and quickly pushing lettuce prices higher.

From late March through mid-April, the Salinas Valley experienced rain followed by cold weather, more rain, warm weather and then more rain. The weather pattern in the Salinas Valley since mid- May has been unusually cold and windy with lots of patchy fog. Such inconsistent growing conditions tend to result in quality issues. Lettuce quality since late April in the Salinas Valley has been a mixed bag. Some shippers have been fortunate while others have not fared so well.

The recent stretch of cold and windy weather began to curb production the week of May 21. At the same time, several shippers anticipated good supplies in late May and locked in retail ads. The combination of heavy ad commitments and surprisingly lighter production has caught the processor community by surprise and forced some of them to buy extra raw product on the open market. The scenario of light volume, heavy ads and hungry processors has catapulted lettuce prices noticeably higher since May 21.

Shippers sense the spike in the market has topped near current levels. A salesman for a large Salinas lettuce shipper recently said, “As expected, we’re losing some demand to new-crop melons, grapes and stone fruit. We expect demand to ease a bit further when our Canadian customers begin

1 / 4 buying their local crops the week of June 11.”

LEAF LETTUCE

The compounding effects of inconsistent weather from late March into mid-April took a toll on leaf quality. In particular, Romaine harvested late April to mid-May showed signs of tip burn, russet spotting and reduced shelf life. Recent quality has greatly improved. The cold weather has not accelerated the leaf markets because ample acreage is under production. Field crews can selectively harvest the best leaf lettuce and still meet demand. The overall leaf market should stay very reasonable heading into the week of June 4.

STRAWBERRIES

The Oxnard season is over for all intents and purposes, which leaves the Salinas Valley and Santa Maria as California’s two primary shipping districts from now through September.

Production in the Salinas Valley will ease modestly into early June then peak in mid- to late June. Production will then slowly taper off into the late summer. Current quality from Salinas, Watsonville and Santa Maria is excellent with good sizing, color and shelf life after arrival.

Buyers must choose carefully because not all fruit is equal. The markets range between districts and among labels within the same district. Truck rates are expensive and climbing, so Santa Maria shippers must be creative to lure orders and trucks away from the Salinas Valley.

BROCCOLI

Broccoli production from the Salinas Valley is as much as 25 percent below estimates and is expected to remain low through at least June 8. Not only is the total volume down, the percentage of crown material is noticeably below normal. The market has reacted higher since the week of May 21 and has room to run higher into early June. Asian-cut crown buyers will be challenged in the near term and should plan ahead.

CELERY

Shippers believed an unusually heavy seeder problem in April and May would have spurred the celery market to lofty levels during the first half of the spring season. In hindsight, expensive freight rates and light demand overshadowed the production concerns and the market did not reach the anticipated heights.

The seeder problems continue to exist in Oxnard and Santa Maria, and it won’t take too much additional demand to propel the market higher.

The Salinas celery season is slated to begin between June 11 and June 18, and initial sizes are expected to be large. Until then, Salinas shippers will consolidate celery from the southern districts for mixer business. Buyers willing and able to load celery directly in Oxnard and Santa Maria will find discounts into early June.

ORANGES

The switch from Navels to Valencias has been difficult since late April. Even the more optimistic

2 / 4 shippers are discouraged by the continuing delays in Valencia production. Early Valencia sizing is uncharacteristically slanted to 88s and larger.

The early-season Valencia market oddly remains a seller’s market on 113s and 138s. Central Valley shippers hope to have better Valencia supplies in early June.

On a brighter note, the size profile will switch to 113s and smaller when the Oxnard and Riverside Valencia crop starts in mid-June. For now, buyers of 113s and 138s should plan well ahead.

LEMONS

There has been little change in the lemon market. Oxnard growers have harvested nearly 40 percent of their crop and overall quality is excellent. The larger sizes are abundant while 165s and smaller are fairly limited. Seasonal lemon demand is rising and pushing prices higher on 165s and smaller. Buyers can expect lemon prices to steadily climb well into June.

ONIONS

The onion industry is in the midst of a noticeable transition gap. The Imperial Valley is winding down while both New Mexico and California’s Central Valley were not expected to have any appreciable volume until the week of June 4. Collective supplies are down considerably from the past few weeks, and the current yellow and red onion markets are trading noticeably higher than they were in mid- May.

When volume hits next week, New Mexico shippers expect to have good quality but a mixed bag of sizes. The hailstorm from a few weeks ago wiped out 7 percent of the total New Mexico acreage and partially damaged an untold number of fields. The reason for the mixed bag of sizing is no one knows how well the damaged fields will recover. Odds are New Mexico shippers will be heavier than normal to medium yellow and red onions until mid- to late June.

California quality will be strong beginning the week of June 4, but shippers expect the front end of their deal to have a higher-than-usual percentage of medium yellow and red onions. They, too, expect fewer-than-normal supplies of jumbos into late June.

In summary, undersized yellow and red onions will influence the June onion market is both California and New Mexico. Buyers can expect a wider-than-usual spread between medium and jumbo prices. As well, there may be a split jumbo yellow market based on the percentage over 3.5 inches in diameter. Odds are pricing will hold into the week of June 4, then the large onion prices will rise June 11.

RUSSETS

The 2012-13 crop was planted two weeks early in the Northwest and shippers anticipate the harvest will start two weeks ahead of schedule. Armed with this knowledge, process buyers are sitting on their hands. They can slow down their purchases of the old crop and access new-crop russets two weeks ahead of schedule this summer.

In other words, shippers are losing two weeks of processor sales, and that extra volume is essentially flooding the fresh market with excess supply.

3 / 4

The overall russet market is weak. Carton prices are low and show no sign of increasing anytime soon. Today’s buyer’s market is expected to continue through much of the summer.

Bill Armstrong is a self-employed produce broker who operates Armstrong Marketing in Salinas, CA. He can be reached by phone at 888/484-0800 or by e-mail at [email protected].