Mexican avocado: the price difference based on size is becoming more pronounced

Mexico exported 986 shipments of fruit to the United States in week 30. Demand for Mexican fruit is concentrated on sizes 48s and larger, and is very weak for smaller fruit. The difference in demand between these sizes has generated a very large price difference of up to twenty-two dollars per box for 48s and 60s. This difference is completely unusual and has surprised more than one expert in the avocado market.

As previously mentioned, and as is well known in the industry, the start of the season in Mexico is characterized by an abundance of small fruit, sizes 60 and smaller, an average quantity of 48s, and virtually no 40s and larger. The price increase for 48s has been accompanied by a substantial decrease in the prices of 60s and smaller. It seems that the Mexican fruit market lacks a clear trend, and each exporter, importer, or marketer quotes sizes according to their individual inventory situation. Currently, 60s are being quoted with differences of up to four dollars per box between the lowest and highest sizes, which wouldn't be so significant under high price conditions, but at current levels, it can represent between 20% and 25% of the box's value. 48s are being quoted with differences of up to six dollars per box, at much higher price levels.

In the fields, buying fruit is just as complicated. In Mexico, a high percentage of negotiations between producers and exporters are at a fixed price for the harvest. Currently, these negotiations are very high-risk for exporters because a miscalculation of the expected yields of a fruit lot of +/- 3% between 48 and 60 days represents a large sum of money that can generate significant losses. Obviously, if the error is the opposite, it could generate a substantial profit. Anyone buying in this way is taking a high risk. On the other hand, because prices for smaller sizes are very low and they are the most abundant, producers are more reluctant to sell by size or within a range.

The Mexican industry will gradually gain market share in the coming weeks; for now, California seems to be reducing its volume, and in a few more weeks Peru will do the same.

Sergio Paz Vega
General Manager Coliman Avocados
sergio.paz@coliman.com
Mexico