Continental Postal Services of Hebland

Temporary price spike for limes expected post Colombian earthquake


While the supply of limes is good at the moment, quality and labor is changing in the different growing regions.

Mexico: “Mexico is changing over to a new crop and the quantity of fruit is still available. However during the transition, there’s normally a fall off in the quality,” said Dax Cooke, founder and CEO of Farm Direct Partners. “That will probably last for two to three weeks.”

He adds though that the growing conditions have been fairly stable for the last four to five months. “There haven’t been any major droughts or heavy rains or major storms in the major producing areas so Mexico should be in good shape in a few weeks,” he says.

© Farm Direct Partners

Peru: “Peru is still partially productive but quality is not holding up well for the U.S. market right now,” says Cooke, noting that while the country is still shipping fruit, it is off-season for Peru.

Colombia: Colombia has seen good weather in the last two to three months following months of heavy rains. “We’re coming out of this La Nina year so it has been drier, which is a good thing for production in Colombia” he says.

In turn, lime quality has been good in the past few months, as is availability. “Though there has been more competition nowadays for Colombian fruit than in past years,” adds Cooke.

What is on the minds of Colombian growers and shippers though is of course the effects of the largest earthquake the country has seen in years that happened earlier this month. “There has not been any major infrastructure damage to roads, ports or bridges that have disrupted the flow of the supply chain,” says Cooke.

He does note though that in regions such as Pereira, Valle de Cauca, labor availability was disrupted for about three or four days with workers helping affected areas deal with damage from the earthquake. “We sent our farms’ teams home to go help their people if they needed to. I think everybody did the same and they’re recovering,” Cooke says, adding that the company is encouraging the industry to donate to the United Nations’ World Food Programme to support Colombians affected by the event.

In turn, those labor delays are expected to create some upcoming temporary price spikes to the system where lime pricing could pick up for a week or two late August into early September

© Farm Direct Partners

Demand to pick up
As for demand, summer demand was stronger than usual, particularly in June and July which is presumed to be World Cup-related given Mexico, the U.S. and Canada cohosted the tournament. “Then we saw a normal softening in the market up until about a week and 1/2 ago. Demand had been relaxed towards the end of July and first two weeks in August and things are picking up again. We’re starting to see orders increase to normal rates,” says Cooke.

On pricing, right now shipping point FOB pricing is $28-$32/case and that’s the pricing that will show up over next week and the following week. “Then that first and second week of September will be when we’ll see some of those price shocks from what happened in Colombia,” says Cooke. “What was being harvested last week and this week will show up in two weeks.”

Pricing on Mexican fruit
In addition, with the crop transitioning in Mexico, those first two weeks is when supply is anticipated to start coming back and pricing is expected to top out at around the mid $30s, depending on quality with fruit with better appearance commanding more of a premium.

© Farm Direct Partners

There are two other key factors working their way into pricing. “Freights are elevated this year over last year due to higher oil prices which has affected pricing. Exchange rates are also a factor that I think elevated pricing this summer over previous summers,” says Cooke, noting that both the Colombian and Mexican Pesos are stronger than last year at this time. Following Colombia’s election in May, monetary policy is anticipated to shift and provide greater stabilization as well.

For more information:
Dax Cooke
Farm Direct Partners
[email protected]
https://www.farmdirectfruit.com/



Source link

Leave A Reply

Your email address will not be published.