Opinion: Explaining the highest table grape prices in four years
By Agronometrics analyst Roberto Lagos
It is hard not to recognize the good moment the Chilean agricultural industry is in at the moment, with the increased value of the dollar adding to a slower national economy due to the low value of copper. Now, the latter might sound like a bad thing but in fact it's very positive for growers - Chile is a very mining-focused country and in recent years the labor force has been attracted to the minerals sector away from agriculture because of relatively higher wages.
Now that the copper industry is not going so well, this is another plus for fruit producers.
However, despite good projections for agriculture, shipments of table grapes - the largest beneficiary in the agricultural sector - have been slow to the United States, and to week 3 the market had received 41,721 metric tons (MT), representing a 20.2% year-on-year drop.
But how can this harvesting delay be explained if so many conditions are in place to satisfy the U.S. market and generate high returns? This is where the weather factor comes in, with cold temperatures at the start of the season, affecting fruit development and delaying harvests. Also, warm temperatures came late to the central and northern zones, causing less availability of fruit of the sizing necessary for export; for growers, this small-sized fruit can be sold domestically or to the juice sector to try and recover some costs, but it's certainly not ideal.
Peru has also been impacted by weather effects, with El Niño's effects meaning shipments arrive late, leading to a gap in supply. To the same week mentioned earlier for Chilean fruit, the U.S. had received 99,201MT of Peruvian grapes, representing a 29.44% decline year-on-year.
At the start of the year, the U.S. showed greater demand for table grapes, which wasn't completely covered by Peruvian supply and even more so by Chile, whose products have moved quickly with customers who are still waiting for greater volumes to satisfy demand.
What this means is that prices have been much higher, but we're not just talking about any price. This is the highest price per kilogram seen in four years, where Thompson Seedless varieties have reported a price of US$36.17 per box, up 13.5%. Flame Seedless has also gone up a lot compared to 2015, with reported prices of US$40.43, up 52.2%.
Sugraone was selling for US$36.17 per box in week 3, which is very different to the US$31.87 that was paid during the same period last year.
Finally, and in contrast to the other varieties, Red Globe prices were down 13% year-on-year.
Overall though, the situation will without a doubt encourage Chilean growers and exporters to try and meet the demand for their main customer, United States. For now, the prices are high, but I expect the situation will normalize somewhat and we'll see a dip in these phenomenal prices.
Headline photo: Shutterstock