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The Source
The Source is published several times weekly by our national distribution partner, Pro*Act USA and features Weather Updates, Market Alerts, Trucking and Logistics information, Commodities at a Glance and more detailed Commodity Updates.
The Source+
Not enough time to absorb in-depth commodities information? Try this condensed version. Its focus is the most common commodities and the most critical information needed to run your operation.
Recent Product Alerts
Note: These links jump to Royal Food Service's main web site. You can also read the last ten product alerts below these links.
MAR 17 Transition Delays, Flooding, and Yuma Heat Push Leafy Produce Prices Much Higher
Read Recent Product Alerts
Potato Shortage and Storage Quality Issues
As we near the end of the stored potatoes, some quality issues may have become more apparent. These could include internal and external bruising, light heart hollow, external cuts, and, occasionally, soft rot. Expect these issues to continue until the stored crop is depleted, usually around the end of July. Our shippers have begun grading to a higher standard to reduce the number of defects from their packs.
Availability of 40-70 count Idaho potatoes is far below normal and orders with larger quantities of these sizes are requiring more time to pack. At this time, it looks like small Burbank potatoes will be the trend until stored potatoes are depleted. We expect a new crop of Idaho Norkotah potatoes to start the first week in August which should provide some relief on the 40-70 count potatoes. Washington and Nebraska should begin near the end of July followed by Colorado and Wisconsin in mid-August.
We recommend that you stay ahead on ordering 70 count and larger potatoes as orders could be pushed back and shipping times could be extended during this shortage.
We appreciate your patience as we work through these challenges. We will inform you of any new developments. If there are alternative products we can offer, please contact your Royal Sales or Customer Service representative at 404.366.4299.
Transition Delays, Flooding, and Yuma Heat Push Leafy Produce Prices Much Higher
Yuma, Arizona, a chief growing area for leafy greens this time of year, will be ending harvest ahead of schedule. Although excellent growing conditions existed during most of the winter season, it is now being hampered by high heat as they prepare to transition to Huron at the end of March and then to Salinas about 30 days later. Both Huron and Salinas have been dealing with their own challenges from recent heavy rain and flooding which is expected to delay transition and lower production estimates in those areas. Until then, leafy greens such as lettuce, green leaf, red leaf, romaine, romaine hearts, romaine filets, and green leaf filets will be in a very wide supply gap with further rising prices. When supplies are down, it's a good bet that quality is going to be poorer than usual.
Mexico's production has also been affected largely by extreme rain and heat which has lowered their supplies resulting in more pressure on Arizona and California. For a time, Florida and other East Coast growers were able to balance out the shortages out west. But with the recent cold weather blast in the east, many supplementary crops were destroyed. Shortages will be extreme on all leafy produce items for weeks to come.
Of particular concern is the romaine market which became extremely active this week, even though some increased activity was anticipated. Consequently, shippers are holding everyone to averages on those products. Iceberg lettuce is currently in good quality, but the heat and moisture is expected to lead to insects, discoloration, mildew and other defects. Lettuce leaf and similar items are already beginning to be plagued by blistering, epidermal peel, twisting, and fringe and tip burn.
Shippers will continue to harvest all the quality product they can from fields that normally produce several weeks longer before transitioning. This an industry-wide shortage and is expected to continue for at least the next five weeks or possibly until early June as some growers have speculated.
We appreciate your patience as we work through these challenges. We will inform you of any new developments. If there are alternative products we can offer, please contact your Royal Sales or Customer Service representative at 404.366.4299.
Continued Shortages and Very High Avocado Prices
For many months, we have been in a state of flux with avocados out of Mexico. Then quality, availability, border hindrances, and labor issues began to improve in January just in time for the Super Bowl demand. The challenges continue in Mexico where shippers have developed a renewed sense of power through price gouging and continued labor protests.
As of last Friday, Mexican growers returned to not harvesting from Friday to Sunday each week. The intent is to keep volume lower and prices higher. And they continue to push for higher field prices on all sizes and grades.
We've learned that their volume estimate has fallen from 2.2 billion pounds to 1.6 billion pounds. With efforts to control their harvests, it's expected to lead to much less volume each week. The markets are reacting with extreme price increases that are expected to continue from now until May when avocados out of Peru will become available. This will help some, but another shortage of avocados in the U.S. is expected through spring and summer, much like last year at this time, but it will begin with very high price spikes in April.
To make matters worse, California's volume production is projected at about half that of last year. Unfortunately, the low production will not make significant improvement in the market. Expect these shortages and high prices to continue until the end of the season in August.
We will provide updates as new information becomes available. If there are alternative products you can use, please contact your Royal Sales or Customer Service rep at 404.366.4299.
Active Lime, Squash, Zucchini & Asparagus Markets
Several important commodities are experiencing very active markets due to severe shortages caused by extreme weather conditions, transition to new growing areas, delays caused by fuel deregulation and a blockade at the Mexican border. If there are alternative products you can use while this situation persists, please contact your Royal Food Service customer service or sales representative at 404.366.4299.
Limes
In Mexico, recent heavy rain and cold temperatures have been depleting supplies, increasing defects in quality, and causing prices to rise. In addition, Mexico's gasoline deregulation has caused blockades and protests at the border hindering the importation of limes into the U.S. and elevated pricing since Jan. 1.
Squash and Zucchini
The consistent pricing on squashes has ended. Prices are on the rise due to rain, overcasts skies, and colder temperatures in South Florida which have slowed growth and pollination in the fields. Farmers are reporting only 20-30% yields being picked at the present time. California production is down due to whitefly, disease, and extreme heat. These shortages caused many buyers to switch to Nogales, Mexico which is now drying up quickly as they try to meet market demand. This situation is expected to continue for at least another week.
Asparagus
Since the end of last week, the Asparagus Market has been very active. According to growers, summertime Peruvian Asparagus has begun winding down as they transition to Mexico. Mexico's recent heavy rains and cold temperatures have delayed harvests and the result is extremely light volume, making Asparagus very active on a daily basis. Prices are expected to continue rising over the next two weeks as Peru's production declines and Mexico's production increases. This situation is expected to continue for at least another two weeks.
On the brighter side….
Tomatoes: Running very inexpensive at the present time.
Corn: Florida market is flat with plenty available and in good quality.
Tipped Green Beans: Plenty in stock. May serve as a good substitute for some unavailable items.
Blueberries: Plenty in stock. Give us a call!
Celery: For the present time, there is good availability.
We will keep you informed as new information becomes available on these shortages. Again, please contact us regarding alternative products at 404.366.4299.
Extreme Volatility in the Asparagus Market
The Asparagus Market is becoming very active. Growers say that summertime Peruvian Asparagus has begun winding down as they transition to Mexico. Mexico's recent heavy rains and cold temperatures have resulted in extremely light volume making Asparagus very active on a daily basis. Prices are expected to remain very high over the next two weeks as Peru's production declines and Mexico's production increases.
We will keep you informed as new information becomes available. Please contact your Royal Customer Service or Sales Representatives regarding alternative products. 404.366.4299
Sharp Increase in Dairy Costs
The price of butter has steadily increased over the last couple of months as illustrated in the table below from the Chicago Mercantile Exchange. The increase in the price of butterfat always results in increases in the price of Class 2 products such as heavy cream, half & half, cottage cheese, and sour cream.
WEEKLY COST PER POUND INCREASES DATE COST 10/22/2016 $1.76 10/29/2016 $1.87 11/5/2016 $1.88 11/12/2016 $1.94 11/19/2016 $2.01 11/26/2016 $2.04 12/3/2016 $2.16 12/10/2016 $2.09 12/17/2016 $2.11 12/24/2016 $2.23 Source: Chicago Mercantile Exchange
Royal passed little to none of the increase to our customers in November but now finds it necessary due to the sharp increase in the cost of butterfat. Be assured that as soon as the butterfat price drops, our sell prices will follow.
If there is anything we can do to reduce the impact of this temporary challenge, please contact your Royal Sales or Customer Service representative at 404.366.4299.
Act of God on Strawberries due to Heavy Rain and Heat
Recent weather in the Strawberry growing regions of Salinas and Watsonville, California, has threatened Strawberry production leading to an industry-wide shortage. Also affected by the weather are Santa Maria and Oxnard. With these areas being shut down, those that are still producing are unable to compensate for the loss, resulting in a significant demand-exceeds-supply situation.
One contracted grower has invoked the Act of God (force majeure) clause on all Strawberry contracts and will work with us to determine how to best meet commitments to the best of their ability.
It looks like it will be 2-3 weeks before we will see any significant production from any of the southern California growers, Mexico, and eventually Florida toward the end of November. It appears that the weather will be generally cooperative over the next 1-2 weeks, which will help, but production is not likely to recover as sharply as it declined. Limited volume is expected through the Thanksgiving holiday.
With the shortage, Strawberry prices will be on the rise. If there is anything we can do to assist you during this challenge, we will certainly do it. Please contact your Royal Sales or Customer Service representative at 404.366.4299.
Avocados Are Back in Business!
We're pleased to report that after weeks of labor disputes and protests, growers and workers have reached an agreement and avocadoes are once again starting to fill the pipelines. Nearly 1,000 picking crews returned to the fields last Saturday, October 15th, followed by even more workers in the fields on the following Monday.
One grower is reporting plenty of fruit on the trees in Mexico and they are expecting to deliver about 40 million pounds to the U.S. this week to get back on track.
For over 19 years, Mexican avocado growers and shippers have provided a consistent flow of avocados to the U.S. with few interruptions. Quality has nearly always been excellent and the fruit, delivered on time. A spokesperson for an avocado marketing group indicated that the disputes that led to the shut-down have made all of us more aware of the challenges and needs of the more than 20,000 avocado growers. Many of these groups are small, family farms simply working to make an honest living.
It is generally believed that supplies will soon be back to seasonal levels and prices will return to somewhat normal levels. We think it's safe to say that pricing will soon be much lower than the $90+ per carton price we recently witnessed! During the initial pipeline refilling period, expect to see harder avocados than we normally ship, so be sure to allow 2-3 days to ripen before use.
Matthew Swamps Southern States Tipped Bean Market
Due to heavy rain from Hurricane Matthew, Tipped Beans from Florida and South Georgia are in very low supply. Pricing has begun to rise sharply and shippers are prorating orders. We expect to be able to supply all orders, but pricing will be in the high $20s to low $30s. We will provide updates as new information becomes available.
If you are looking for alternatives, we offer a variety of products such as Asparagus, Broccolini, and French Beans. Please contact your Royal Sales or Customer Service representative at 404.366.4299.
2016: Worst Year Ever for Avocados?
Will 2016 go down as the worst year ever for avocados? With current Mexican labor disputes and resulting supply shortages, and past weather issues, we've struggled this year to keep avocados stocked at reasonable prices. The challenges continue.
For the past two weeks, there have been virtually no harvests in the fields in Mexico where disputes are taking place over unfair terms and declining field level prices. Meetings have been held almost daily, but no resolution has been reached up to the time of this writing.
The avocado supply has been reduced to less than 40% of normal industry volume. With a near empty supply pipeline and no resolution of disputes, zero avocados on the market is a possibility, perhaps as soon as next week. It is believed that once the labor differences are resolved, normal production can eventually recover. Growers, packers and laborers are continuing to work toward resolution of their differences.
Shippers are now having to look at all orders and cancel or prorate them for the week to make what inventory they have last through the week. One supplier is now working on a 25% fill rate for all orders for the remainder of this week.
To minimize the effects of this situation to our customers, we will continue to try to buy from multiple sources. Thank you for your patience as we wait for a resolution to the disputes. We will keep you informed of any new developments. And, as always, we stand ready to assist you with alternative products. Please contact your Royal Sales or Customer Service representative at 404.366.4299.
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