Prices are falling: Mexico starts with its lowest opening in 6 years

In week 28, Mexico exported 875 shipments to the United States market. In the first two weeks of the new season, 33,543 tons have been exported, slightly higher than the previous season, although these are very preliminary statistics and not enough to establish any trends.

Demand for Mexican fruit has been relatively low due to sufficient volumes from both California and Peru. Reported inventories for Category One fruit are very similar for the three countries, with Peru lagging behind Mexico and California in Category Two. As expected, the availability of large sizes in the new season's fruit is very limited. Prices for sizes 40s and larger have increased significantly, while 48s began to rise over the weekend. For large sizes, the issue isn't simply higher prices, but rather very limited availability, a situation expected to change as harvests shift to orchards located at higher altitudes.

The situation for sizes 60 and smaller is very different. These sizes are readily available, and therefore market prices have practically plummeted. Size 70, which was in highest demand during the first week of the new season, has seen the greatest price drop and is now trading at prices similar to 60 and 84 sizes, two to three dollars lower. Given this situation, exporters face two problems: the demand for 48 sizes from their clients, which could lead them to increase their harvests and thus have a larger volume of smaller sizes to push into the market; and the fact that a lot of fruit is still being purchased from producers at fixed prices, which creates a significant risk due to the price difference between 60 and 48 sizes, the most abundant sizes. Therefore, exporters will have to incentivize producers to sell by size, or above the price range, which is the fairest way to buy and the only way to reward producers with higher quality and larger fruit.

Average prices offered to producers are the lowest recorded for the start of the season in at least the last six years. Current prices were last seen in week 34 of the previous season, when a sustained price decline was already underway, although prices were still higher for that same week. The Mexican industry is hoping that the California harvest will decrease in the coming weeks and that some stores will resume demanding larger volumes. This is expected to occur in the second half of August, at which point producers can expect some improvement in prices.

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