U.S.: Avocado price spike ‘largely the result of undersupply’, suppliers say

April 05 , 2019

The recent avocado price spike seen in the U.S. market was more due to the current lack of competition between different supply origins rather than U.S. President Donald Trump’s threats to close the border with Mexico, suppliers have said.

The prices of Mexican avocados saw their biggest jump in a decade on Tuesday, rising by 34% and bringing the average per-box price to close to US$60, amid both concerns over both whether the border would be closed and a much lighter California crop.

“Effectively in the last couple of weeks there has been a really big increase in the price of avocados, but also in the last few days we can see that the prices reached their maximum, because the retailers will probably have to reduce those prices for the promotions coming up over the coming weeks [like Cinco de Mayo],” said Rodrigo Torres, director of sales and operations at Valvilla Produce.

He expects they will stabilize around the US$45-50 range and won’t rise again to the levels reached on Tuesday.

That price “will dominate for the following weeks, until the Peruvian fruit arrives in the North American market, at which time there could be a small drop”, he said.

For Jorge Mardones of OTC Produce, the price spike is more to do with undersupply than border closure threats.

“The increase is because there is somewhat of an undersupply because Mexico is transitioning from warm production areas to cold production areas. There are still three months of normal production in April, May and June,” he said.

“I would separate Trump’s threat because, firstly, it is a threat – nothing is certain and the consequences would be disastrous both for the Mexican economy and that of the U.S.,” he said on Thursday. Later that day Trump said he would delay closing the US-Mexico border for a year.

Torres added: “This rise was caused more by the dynamics of supply and demand, however, there is uncertainty that a political situation could have an impact on the border and an immediate effect on the market.”

Meanwhile, a Mexican avocado packer who preferred not to be named said that the price increase was because growers saw an opportunity as there were almost no other competitors in the market.

“I think that the Mexican producers took advantage of this delicate moment in which the U.S. importers were nervous because they didn’t know what was going to happen with Donald Trump’s threat,” the packer said.

 

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