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ProduceIQ: Lower demand, economic pessimism help to lower prices

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Global markets plummeted last week in response to August’s U.S. inflation report.

Consequently, many Americans may forgo purchasing their favorite pumpkin spice-scented candle this fall, among other optional fall purchases.

The inflation rate is still very high, 8.3 percent, despite lower gasoline prices. Because of July’s encouraging CPI report, many mistaken optimists assumed that U.S. inflation would ease quickly and that the Fed’s aggressive anti-inflation policies would loosen.

When CPI’s report painted a more dire picture than investors had hoped, it all but confirmed the Fed’s decision to hike interest rates exponentially in this week’s meeting on the 21st of September.

Continued rate hikes by the Fed undoubtedly increase the likelihood of recession and market volatility. As a result, the fresh produce industry will need to seek innovative solutions to compensate for shifts in consumer demand.

Inflation may not be falling, but overall fresh produce prices are. Strawberries, squash, and tomatoes lead the declines.

ProduceIQ Index: $0.92 /pound, -4.2 percent over prior week
Week #37, ending September 16th

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.

Lime prices, however, are up +8 percent over the previous week falling, just short of a ten-year high. Inclement weather such as rain, high humidity and heat are limiting supply. Due to reduced holiday labor in Mexico, prices are expected to climb further this week. The citrus industry in Mexico is plagued by the HLB virus (“greening”) and even cartel-related extortion and violence, which constrains supply.

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Lime prices (200 count crossing Texas) shot past $30

Baja California lost over half of its cucumber acreage due to inclement weather, tightening Western cucumber supply and spiking prices by +9 percent over the previous week. Fortunately, Eastern cucumber supply is fairly strong. Prices will likely remain elevated for a couple more weeks.

Heat in the West stimulated late summer strawberry growth over the past few weeks. As a result, the market is flush with product, and growers are eager to empty their coolers before the heat-damaged crop expires.

At $8, strawberry prices are very near to 2016’s ten-year low for week #37. Prices should rise again over the next two weeks as cooler fall weather helps to tighten supply.

Strawberry_graph_sept19_2022

Strawberries are priced to move in volume. Keep promoting!

High heat in California isn’t just affecting strawberry prices. Due to excessive heat and strong demand, cantaloupes are up +23 percent over the previous week. Prices will likely tighten, then come down over the next few weeks as the core growing regions shift to Arizona and Mexico.

Squash prices are trending lower thanks to increasing supply. Splintered local programs in the East are almost finished; however, growers in Georgia and North Carolina are ramping up production. In the West, supply is steady out of Santa-Maria and will begin its annual transition to Nogales as we move into October.

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Zucchini squash nears the floor price as Georgia production ramps up

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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 the USDA’s Agricultural Marketing Service for movement and price data. The Index serves as a fair benchmark for industry price performance.

Mark Campbell was introduced to the fresh produce industry as a lender for Farm Credit. After earning his MBA from Columbia Business School, he spent seven years as CFO for J&J Family of Farms and later served as CFO advisor to several produce growers, shippers and distributors. In this role, Mark saw the impediments that prevent produce growers and buyers to trade with greater access and efficiency. This led him to cofound ProduceIQ.