ProduceIQ: Heat, oil keep produce markets tight

Last week, high oil prices and heat were giving produce markets the creeps. This week, they’re starring in a sequel.

U.S. diesel prices have climbed above $6.50 per gallon, adding pressure to legs of the supply chain reliant on tractors, trucks, and refrigerated transportation.

Meanwhile, heat and insect pressure continue to take their toll across the West, with recent triple-digit temperatures stressing crops in California’s major growing regions.

Limes are getting squeezed by rain, grape-type tomatoes are getting a little relief, and broccoli and iceberg are joining cauliflower on the ten-year-high list. Apparently, Mother Nature didn’t get the memo that summer was supposed to be winding down.

ProduceIQ Index:  $1.29/pound, up +2 percent over prior week

Week #38, ending Sep 18^th  

Blue Book has teamed with ProduceIQ BB #:368175 to bring the ProduceIQ Index to its readers. The index provides a produce industry price benchmark using 40 top commodities to provide data for decision making.

Limes take a hit from rain. Average prices are up +36 percent over the previous week, and supply is tight, particularly on larger-sized fruit. Fortunately for buyers, the supply situation is expected to be short-lived, with improvement forecast over the next two weeks. However, moisture and heat-related quality issues are likely to linger into October.

Rain Squeezes Lime Supply

Mild relief for grape-type tomato buyers. Average prices are down -6 percent over the previous week, but supply is still very tight for Week #38. A seasonal decline in production in the Southeastern United States, along with below-average volume out of Mexico, is driving the tight supply and elevated prices. Meager supply is expected to continue through Week #40.

A Little Relief for Grape-Type Tomatoes

Broccoli prices grasp a ten-year high. Average prices are up +18 percent week over week due to intense insect pressure, mainly Diamondback Moths, and the seasonal transition. Supply out of Salinas, CA, is well below average for Week #38, while growers in Santa Maria, CA and Mexico are working to compensate.

Bugs Push Broccoli Higher

Iceberg prices barely grasp a ten-year high. Average prices are up +29 percent over the previous week. Sizing is trending smaller and quality is below average. Smaller sizing and quality concerns are limiting usable supply and adding further pressure to the market. Prices are forecast to accelerate over the next few weeks as Salinas growers battle disease and insect pressure. For buyers hoping the lettuce market will cool down, the forecast isn’t particularly encouraging.

Iceberg Prices Head Higher

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ProduceIQ Index

The ProduceIQ Index is the fresh produce industry’s only shipping point price index. It represents the industry-wide price per pound at the location of packing for domestic produce and at the port of U.S. entry for imported produce. 

ProduceIQ uses 40 top commodities to represent the industry. The Index weights each commodity dynamically, by season, as a function of the weekly 5-year rolling average Sales. Sales are calculated using USDA Agricultural Marketing Service data on movement and prices. The Index serves as a fair benchmark for industry price performance.