Unprecedented territory on lettuce markets

Markets on iceberg, romaine, and leafy green lettuce remain extremely strong. “I don’t think I’ve seen deals at this level and in this era before. Did he get over $50-$60 before? Yes. But usually, that’s a week or ten days. We are in our fifth through sixth week of markets over $50, and today the market is on an iceberg above $70. it’s unprecedented territory on the supply side,” says Fresh Avenue’s Mark Vaughan

There are several factors contributing to tight supplies, starting with the Impatiens Necrotic Spot Virus (INSV) in large swaths of the Salinas Valley for more than three months. “In general, you don’t lose an entire area to the virus. But the yield goes from an expectation of 35,000-42,000 lb./acre and drops to 20,000 lb./acre,” says Vaughan.

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At the same time, growers are not speculating as much as they used to, and instead, most are planting what they want or just shy of what they want. This is due to increased farming and input costs and macroeconomic factors such as inflation and the economy in general mean that growers cannot afford to harvest produce and spend it as they may have historically.

Demand remains consistent
And then there is strong demand. “With the economy slowing down, the industry thought that demand would step down a lot. However, demand has remained relatively steady,” says Vaughan. “It’s the perfect storm of a supply shortage and a market boom. I’ve never seen anything like it.”

That has turned the eyes to other growing regions, starting with Huron, California, almost an intermediary stop for shippers between Salinas and the desert region, which traditionally starts in mid-November. “However, many shippers gave up on that Huron and went from Salinas right to Yuma because of the cost and complexity of an intermediary stop. Those are even worse things,” says Vaughan.

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The desert region is also off to a strong start, as some of the crops have recently been affected by storms and hurricanes. “So some growers who don’t have product left in Salinas are already in the desert, cutting a week or ten days ahead of schedule. That will create a gap, which will add to the impact of this,” he says.

Typical December slowdown
Looking ahead, markets could remain this way until mid-December – demand for leafy greens tends to decrease after the start of December. “Markets going as they are must start to stifle demand. Consumers don’t necessarily want to buy a $5.50 head of lettuce,” says Vaughan.

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Together that could slow down the markets next month. “With further tightening of the market and people moving away from buying these expensive items because they cannot afford them, the drop in demand could be quite significant. This damage to the consumer may have a long tail in that the consumer has never seen prices like this before,” says Vaughan. “I think it will be good into December until we see something approaching normal. By then, it could be in the $20s.”

For more information:
Mark Vaughan
New Avenue
Tel: +1-888-FRESH40
[email protected]
www.freshavenue.com

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