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Yesterday organic avocados, size 48, were selling for about $48 per carton on New York’s wholesale market and were fetching $55 in San Francisco. Both of those prices are expected to pop within a few days as the supply of organic avocados dry up.
Mexican avocado growers, who are the source of the vast majority of avocado supplies at this time, went on strike Monday, Oct. 29 and had not yet returned to picking as of yesterday. Reports were that for more than a week a small group of dissident growers were leading the strike and blocking the highways not allowing workers in to pick the groves nor truck out with already-harvested fruit.
Earlier this week, there were some signs that the tense situation was easing as some fruit picked before the strike was allowed to head for the U.S. border. OPN talked to several different U.S. importers with ties to Mexican production who requested anonymity because the situation in Mexico included threats against growers and packing sheds to make sure they honored the strike.
According to these informed sources, the strike, which was fueled by declining prices since early September, was the work of a powerful few and did not represent the desires of the majority of growers. Reportedly, there were discussions taking place on Wednesday among various grower groups and the packing sheds to find a solution. While U.S. distributors expressed optimism that some compromise would eventually be found, one observer also noted that the demands from some of the more radical growers, such as payment for the idle picking period, were proverbial roadblocks to any agreement.
Mexico is into its “regular” season crop and supplies on the tree, including organic avocados, have been estimated to be larger than last year, which led to the declining f.o.b. price in September and October. U.S. distributors contacted this week said that the results of the picking holidays are just beginning to be felt. Distributors typically work from an inventory of as much as two weeks of supplies, so only now are the effects being felt. By this coming weekend, supplies will be limited and importers are saying it will take at least two weeks for the pipeline to be filled again, even if the harvest begins again this week.
Organic supplies of avocados tend to react even more acutely to these dips in supply, especially in California, as demand is very strong. In early October, organic avocados in the most desirable sizes were trading in the $80-$88 range as California-grown supplies were exhausted. An increase in organic avocado shipments from Mexico in October did see the wholesale price drop late in the month to the mid-$50s range, but then the picking was halted.
A distributor told OPN that conventional avocado prices should start to climb this weekend with a fluctuating situation expected through Thanksgiving. On the conventional side, volume could ramp up quickly once picking resumes bringing the f.o.b. price down in short order within a couple of weeks. The drop in price on conventional avocados could well be fueled by both the need and the desire of Mexican growers to make up for his lost time with increased shipments.
That is not expected on the organic side of the equation where promotional pricing does not play as big a role in the supply/demand curve. One distributor of organic avocados said past experience leads him to believe that the market price for organic avocados will begin to rise this week and could very well remain very high throughout the entire month of November and even into December.
