Apples in Charts: New varieties lead U.S. prices going into Washington season

August 28 , 2018

In this ‘In Charts‘ series of mini-articles, Colin Fain of data visualization tool Agronometrics illustrates how the U.S. market is evolving. In each series, he will look at a different fruit commodity, focusing on a different origin or topic in each installment to see what factors are driving change.

When you talk about apples in the U.S., the first thought that comes to mind should be Washington. Maybe right after it should be, ‘Wow, the U.S. consumes a lot of apples!’

I would consider the category a steady giant. Other than bananas, it is the largest commodity we track, delivering 20% growth from 2010 to 2017. That level of growth in eight years might not sound like much when you compare these movements to fruits like avocados, kiwifruit and mangoes, all of which grew by more than 40%.

But when you look at how many pounds each product moved, apples really begin to stand out. In 2017, apple producers shipped 1.1 billion pounds more than they did in 2010. By the same measure, avocados – their nearest competitor – only shipped 800 million pounds more.

Of all that volume, Washington is king and in 2017 accounted for 81% of total volume in the U.S. market.

US Apple Movements by Origin

(Source: USDA Market News via Agronometrics)

With a focus on Washington’s apple production, I thought I would use this week’s column to dive into how the varieties have evolved over the last eight years.

Giving a quick look at the data in the chart below, there are two things that stand out for me. The first is Honeycrisp, which only starts showing up on USDA reports from the origin in 2013. This star product is in a league of its own, fetching a heavy premium that no other variety can get close to.

The second is a bit more subtle, but has far-reaching consequences and is a general spreading out of the prices. If you allow me to be a bit nerdy, I have put some numbers behind this. Excluding Honeycrisp, I split up the data set into two groups and calculated the average standard distribution of monthly prices from 2010 through 2013 and 2014 through 2017.

The results were very interesting. For the first group, from 2010 to 2013, the standard distribution was 2.85, meaning that, 68.2% of the data points could be found +/- $2.85 from the monthly average. In the second group saw a dramatic increase with a standard distribution, indicating that 68.2% of the data was $4.71 from the monthly average.

The reasons behind the spreading can be various. However, I believe the chart below speaks particularly to how different varieties are being perceived by consumers. Digging a bit deeper I calculated the difference in average yearly pricing for each variety compared to the average for the market. The biggest loser was Braeburn at -$2.63 from average – the likes of which we haven’t seen since 2013. Next up is Red Delicious at -$2.31 from average. Red Delicious has been seeing some tough years, the worst of which seems to be 2017 when it fetched an average price of $15.09 – well below the industry average of $23.90.

On the other hand, Honeycrisp is seeing premiums of $36.87 above the market average and Pink Lady comes in at $14.93. Honorable mentions go to Fuji at $4.59 and Granny Smith at $3.20.

Apple Shipping Point Prices by Variety

(Source: USDA Market News via Agronometrics)

In our ‘In Charts’ series, we work to tell some of the stories that are moving the industry. Feel free to take a look at the other articles by clicking here.

Agronometrics is a data visualization tool built to help the industry make sense of the huge amounts of data that you depend on. We strive to help farmers, shippers, buyers, sellers, movers and shakers get an objective point of view on the markets to help them make informed strategic decisions. If you found the information and the charts from this article useful, feel free to visit us at www.agronometrics.com where you can easily recreate these same graphs, or explore the other 20 fruits we currently track, creating your own reports automatically updated with the latest data daily.

To welcome apple professionals to the service we want to offer a 5% discount off your first month or year with the following coupon code: APPLES-IC

The code will only be good until Sept. 12, so visit us today.

 

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  1. john says:

    There tends to be a weak correlation between FOB prices and retail prices. With few exception, there is low recognition of varieties by the public. I would be curious to know why the author thinks that FOBs are being driven by consumers varietal preference and not other factors? Why are any red delicious packed at all?

    1. Colin Fain says:

      Hi John,

      Thank you for writing. The relationships between different levels of commercialization are based on several assumptions and my experience working with other species. At its heart, the idea that retail pricing has something to do with FOB, is that all the money for FOB pricing comes from retail sales, without one you can’t have the other.

      That said, consumer pricing is definitely not the only factor that contributes to FOB pricing, the pricing reported by the USDA only captures spot markets, which in most commodities accounts from 20% of the volume sold. These transactions also happen about two weeks before the fruit being sold gets to market, so inventory pressures also have to be taken into account. In the end FOB pricing is like a pressure valve. It fluctuates above and below Retail pricing to compensate for variances in pre-negotiated sales and inventory levels. This means that the numbers are not perfectly representative of the market, but generally speaking they aren’t too far off. They also hold the value of being immediate. If we took into account program pricing, we would have to wait at least two weeks to begin reporting real numbers.

      The reason I believe Red delicious are still packed is because the cost of productions is sufficiently below the sales price that producers are still making a profit, even if not a very big one. Choosing the right variety is a delicate balancing act. I’m sure honey crisps are able to reach the high prices we are seeing because there is limited availability on the market. If everybody started producing that variety, the prices would crash. Red delicious is a staple and although I don’t have data on volumes by variety, I have no doubt that there are huge volumes commercialized. If you add or take away one million lbs, it would affect the markets very little, offering producers the additional value of stability. While, if the same happened in honey crisps, the price would fluctuate quite dramatically, making it a riskier investment for most producers to take.

      This answer is a bit long, but I hope it helps explain your question.

      Sincerely,

      Colin