Thursday, March 18, 2010

Worst Tomato Shortage in Decades

The ride has been a bit bumpy in the land of tomatoes since January's freezing temperatures destroyed most of Florida's crop. Now, here we are at the end of February and the situation has not gotten any better. A few things to keep in mind as to why the negative trend continues:

• Florida encountered heavy crop loss and remains inactive with significant production not starting until late March/early April.
• This has put additional pressure/demand on Mexico's supplies leading to a demand-exceeds-supply situation.
• Mexico's local demand combined with the increased U.S. demand has Mexican growers struggling to keep up.
• Recent cooler than normal temperatures along with intermittent precipitation in Mexico has slowed growth maturations compounding the already short supply.
• Availability of large sizes is limited with small sized fruit being non-existent.

Here are some numbers that may help put things into perspective:

The first six weeks of 2009 there were a total of 19,716 loads between Florida and Mexico production. That's a weekly average of 3,286 loads.

• The first six weeks of 2010 there were a total of 15,780 loads between Florida and Mexico production. That's a weekly average of 2,630 loads; a 19.9% decrease

• The week of February 7th, 2010, there was a total of only 907 loads between Florida and Mexico production; a 72.3% decrease from 2009's weekly average.

What should we expect to see through the month of March and into April?

Current price points don't reflect the severity of the situation and what is yet to come. With just about all of the U.S. demand relying on Nogales, prices will climb; how high isn't known but they could reach levels that will slow down demand and lessen the pressure on supplies. If that happens, prices may decrease but will remain at elevated levels. The weather has warmed up in Mexico, which will cause the plants to generate multiple sets (a range of sizing and color). Mexican production will increase but will not be enough to dig us out of the hole quite yet. Supplies should be in much better shape come the second week of April as the Carolinas and Northern Florida ramp up production.

You may also be wondering about for the first six weeks of 2010 were up 8.8%; however, due to the severity of the round market many customers have tried to switch to Romas. This increased demand has caused the market to tighten up and prices increase.

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