MARKET REPORT – January 6th, 2017 – What a dramatic difference!
We normally expect some issues this time of year with trucking, either avalanches in the Rockies, or road closures in Oregon. The route from L.A. to here crosses a 1,700 meter high pass at the Oregon/California border and that’s always interesting – we just went through a 6 hour delay on Thursday on that one. The big issue at this time is totally different. As part of this weird winter, at least here on the coast, California is expecting two major weather systems this weekend and Tuesday that could play havoc.
They already had a generous dose of rain and snow on Thursday, with 150mm or more of rain around San Francisco and 1.5 meters of snow in the Sierras, but the storm coming this weekend could see from 100-200mm of rain for all of Central California, with some forecasts showing up to 3 meters of snow in the Sierra, and a lot more after you add in the 2nd storm on Tuesday. So it isn’t going to be snow that slows trucks, it is the expectations of “massive” “historical” “biblical” rain and snow amounts, and flooding throughout the State. Here’s the headline from the L.A. Times today.
“‘State of panic’ grips Northern California as atmospheric river approaches the Sierra Nevada”
On the second front, the Mexican government, which controls gas and diesel prices through it’s government controlled Pemex outlets, decided to drop price fixing and let fuel prices find their own natural level. Prices have skyrocketed, of course, and as you know, Mexicans are really good at protesting.
“Mexican Drug Cartels Threaten To Blow Up Gas Stations Over Massive Price Hike”
“4 dead, hundreds arrested amid gas price protests in Mexico”
“Chihuahua ‘chaotic’ as gas stations close”
Bottom line – our avocado load due in this weekend won’t arrive until mid-week, hence the subs with other varieties and brands. It was just difficult finding a truck driver willing to gamble on whether or not he’d be able to fill up with diesel on the way north. But we did, and it’s at the border at this point in time. We have trucks on their way from Agrofresco and Santa Amelia that look like they are currently on schedule– one has now crossed the frontier into Texas. Most of our tomatoes and cukes originate within hours of the border, so we aren’t expecting any major delays on those, but at least some minor ones.
How were sales in December? Are you looking at your produce sales, comparing them to Dec 2015 and scratching your head? If you are, quit looking at the dollars and look at the volume instead and turn that frown upside down. In the last half of December, our selling price per box, averaged across all commodities, was down 30.1% from the year before. What a dramatic difference! An ongoing over-supply on virtually every vegetable we sell was in play all month, and there were no weather dramas like Dec 2015, when a freeze helped push celery and cauliflower (amongst others) to unheard of price levels, both factors leaving market prices at very comfortable if not sloppy levels.
Only major item to report is that while little of our veg comes from central California, and these huge weather systems are not going to impact the desert growing areas to the south, citrus is going to take a big hit. Not that it doesn’t like water, but it needs to be bone dry to harvest, and nearly every packer we work with is not planning on harvesting until this parade of storms is done, so we expect some delays and some potential price hikes next week. We do have good inventory at this point, but can’t project forwards how this will really impact us.