“It’s historic to be selling Chilean table grapes for $36/box in mid-March”

It has been a perfect storm in the table grape industry. Weather events in multiple growing regions have caused lower production levels, and historic pricing. All of this has been going on for six months and resulted in an unprecedented situation. "In my 35 years in the industry, I can't ever recall selling Chilean table grapes for $36/box in February or March," says Ira Greenstein with Direct Source Marketing. "I can't recall another season that was this extreme," he added.

The build-up already started back in April 2023 when heavy rains from El Niño impacted the northern grape growing region in Peru (Piura) during a very critical stage of development. "It resulted in a loss of an estimated 10 million cartons of table grapes for Piura," commented Greenstein. These grapes would have normally been harvested in October and November and available in the US market in November and December. "During this time, they can help fill the demand in the US market as California starts winding down."

However, even before Peru could even think of starting their 2023 grape harvest, California got hit by hurricane Hilary in August 2023, during their growing season. Hilary damaged a significant portion of the California table grape crop with a final loss of just over 18 million boxes. "Typically, there never is a gap between the end of California's season and the beginning of Peru's season," shared Greenstein. "However, these two weather events caused 28 million boxes to be completely taken out of the pipeline and left the US market considerably short supplied in November and especially December of 2023."

Ica came into empty pipeline
Peru's southern growing region Ica follows Piura's harvest. Growers in this region were also very concerned about how El Niño would impact their harvest in late February and March. They didn't want to take the risk of having fruit hanging with late rains expected. Therefore, they made the decision to prune early and advance their grape harvest. Ironically, the rains never came. "This growing region had the good fortune to come into a completely empty pipeline when their fruit arrived in the US market in late December, January, and early February." The Ica region was expected to harvest over 35 million boxes of table grapes but will ultimately be down about 10 percent. Because the region advanced their harvest, most growers in Peru were done harvesting by mid-February, which is a big contrast with last year when Peru was still exporting in March.

Chilean production down
Following Peru's table grape harvest is Chile, and growers came into an empty market as well. With a late start, lower production levels than normal, and no competition from other growing regions, table grape prices held at historic levels, exceeding $35.00 a box on the spot market. Both production levels and pricing of Chilean table grapes are in big contrast with last year. In 2023, Peru and Chile overlapped, resulting in depressed pricing ranging from $16.00 to $24.00 per box. On the production side, Chile harvested 64 million boxes of grapes last year while the number looks closer to 58 million boxes this year. "The country has been replacing older grape varieties with new varieties and the transition takes time," said Greenstein. Chile projected a crop of 65 million boxes but will likely finish under 60 million.

The graph below shows how challenging it has been to fill the pipeline. The US market can absorb about three million boxes of grapes weekly without impacting the spot market. "However, the US has continued to receive less than 2.5 million boxes from Chile. Without any additional fruit from Peru, the spot market has held at unprecedented levels."

Table grape shipments from Peru and Chile combined.

Will the situation turn around?
Week 9 seems to show a turning point, but the fruit that was shipped during that week won't arrive in the US market until after March 20, which is still 8 days away. "However, week 9 was the first week more fruit was shipped than last year, which is positive," Greenstein shared. "If this week's shipments will exceed 3 million boxes, we can expect to see both availability and pricing improve."

"At the end of the day, we have seen a perfect storm playout since September and we can expect to see the current supply situation remain somewhat unchanged through the balance of March," Greenstein concluded.

Sweet Celebrations grapes.

For more information:
Ira Greenstein
Direct Source Marketing
Tel: +1 (914) 241-4434
[email protected]
www.directsourcemktg.com