Price drop hits the Mexican avocado supply chain

Mexico exported 1,047 shipments to the United States market in week 22. The market exacted a heavy price from many members of the industry's value chain due to speculation and the uncontrolled rise in Mexican avocado prices during weeks 20 and 21. Starting the weekend of May 8-9, the price per kilo offered to producers in Michoacán began to rise, and by Monday, May 11, it was already out of control. This increase reached its peak for the harvests of Tuesday, May 26, and Wednesday, May 27. Subsequently, prices adjusted downward, likely at a faster rate than the initial surge.

This situation caused exporters, importers, and distributors to suddenly find themselves with expensive inventories, which only increased in price with each passing day. Many importers stopped buying fruit at the source and instead purchased from companies located on the border, as prices were lower than those offered at the source. This is because the price of fruit rose so rapidly that by the beginning of week 22, the most expensive fruit was still unavailable for delivery. This situation sparked much speculation about Mexico's fruit supply. The truth is that Mexico still has fruit available and will continue to have enough to at least cover the overlap between the two types of fruit during the first few days of July.

As week 23 begins, a high level of uncertainty persists, along with confusing information. Exporters and importers are doing their best to protect the value of their fruit inventory, as the price drop for a 25-pound box has reached double digits, representing a significant financial loss. Meanwhile, market quotes are starting to appear at much lower prices, likely due to fruit that needs to be sold from the previous week's harvest or fresh fruit that is being or will be harvested during the week at lower farm prices.

Producers, on the other hand, are also making an effort to maintain a better price level and have toughened negotiations. Many have decided to wait for a rebound in the coming days, resulting in very low harvest volumes on Monday and Tuesday. This violent price movement will have to end in the next few days. Either demand picks up and the market pays the higher prices producers are expecting, or the market remains stable and producers will have to accept lower prices to restart harvests and stimulate demand.

One aspect that is already part of all this is the start of the new season's fruit harvest. APEAM published a statement notifying that the system is ready and orchards that meet the minimum parameters can begin harvesting. Some municipalities are expected to begin sampling during week 23 in order to start harvesting on Monday, June 8th or Monday, June 15th.

The end of the season continues to bring important experiences and challenges for the Mexican industry. The arrival of larger volumes from Peru and the increase in harvests in California will occupy a significant percentage of the market, and Mexico will have to adapt, compete, and participate much more actively, and above all, with a much better vision for the future.

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