Weds, Jan 31st, 2024
Dear Ole Tyme Produce Customers:
There is an extreme shortage of Red and Green Table Grapes in the supply chain for the weeks ahead due to several factors contributing to unforeseeable and unprecedented market conditions still forming this import season. Worsening circumstances have made contracts impractical for growers and importers to operate and we in turn must begin pricing Monthly and requesting price relief.
To understand some of the current market scenario, we must review what the industry has already endured previously in Q4 of last year. In review, Hurricane Hillary effectively ended California’s grape season early in the southern part of the state last October. Realizing the gap in the market, Peru began shipping nearly 8 weeks ahead of season to the U.S. which helped supply stabilize in North America better than initially expected following the storm last August. The problem we now face is the gap that is occurring as a result of all the fruit imported from Peru prematurely.
Peru is struggling to harvest at yields far outpaced by demand. Northern regions are reporting shortages of 12 million boxes as a result of El Nino weather, while production in Ica is nearing the end of the season prematurely with yields down more than 3 million packages as a result of whether as well.
Additionally, fruit reserved in storage for this time of year is also very short. As of mid-December, 865,917 packages were held in California cold storage facilities to help sustain supply this January. According to the USDA, these numbers are about 75 percent less than the grapes in storage for this same time during the year prior and demand far exceeds supply.
Chilean production is not without dilemma either. Production in Chile is down nearly 30 million packages from this same time last year and the delayed start of the Chilean grape season previously projected to begin this week is yet to commence. Adding to the challenges, extreme ocean conditions are delaying sea vessels and imports to North America have not materialized as expected. Low water levels in the Panama Canal System are also slowing vessels and, in some cases, requiring carriers to lighten loads in order to make passage.
In summary, the industry is suffering losses of fruit near 100 million boxes due to El Nino, drought, and logistical factors, all together causing a catastrophic shortage and austere start to the Chilean season. The industry is almost three weeks late for new Chilean arrivals and we will not see any decent Chilean volume until late February at best.
If you have any additional questions, please reach out to your Sales Representative or our Customer Service team.
Ole Tyme Produce
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