- by Tim Linden | July 19, 2013
Warm weather in California’s Salinas Valley, as well as throughout the nation, has led to a demand-exceeds-supply situation with iceberg lettuce driving that market to $20 f.o.b., and bringing other items along with it.
Mark McBride, who sits on the sales desk at Coastline in Salinas, told The Produce Newson Friday, July 19 that the “recent ‘hot’ (by Salinas standards) spell we experienced two weeks ago did a number on product growing in many of the microclimates in the greater Salinas area. Here in town we got into the mid- to high 80s, but areas several miles inland were in the 90s to 100 degrees.”
He added that the various lettuce types and varieties react differently to the stress caused by the heat, but most of the reactions tend to reduce supplies in one way or another. “Some varieties grow faster, causing a light spot in subsequent weeks (where we are now); others develop condition issues that reduce yields,” he said.
In addition, fields that are in the early stages and weeks away from production can often see smaller heads produced, which again limits yields moving forward.
Ryan Zaragoza, who is lettuce category manager for Fresh Kist Produce LLC, Salinas, CA, said the short supply situation in Salinas comes at the same time that a heat wave has swept through the East Coast, burning up some local deals, which has added to the demand-exceeds-supply situation.
The hot market started in early July and it appears as if it will survive the month. “We are at least a couple of weeks away from having volume again,” said Zaragoza.
He would not predict whether typical volume will return in August as that was too far out on July 19 to make an accurate prediction. “But [the strong market] is definitely going to last all of next week and into the following week.”
He said that there also appears to be less acreage in the ground as some growers have just naturally cut back over the last few years because of less-than-stellar markets during the summer months.
Mike Antle, executive vice president at Tanimura & Antle Inc., Salinas, said a combination of reduced acreage, reduced yields in California because of weather, and supply issues with some of the local deals around the country have led to this strong market. He said many retailers across the country have looked for a local solution in recent years, which has adversely affected the California lettuce deal and led to less summer acreage. He said a lot of rain in Canada and across the northern part of the United States has hampered many local deals. Add that to the heat in the East and the Southeast, and Antle said this year the local deals aren’t doing their part to fill the pipelines.
While many retailers are looking westward for supplies, the supplies aren’t there. For its part, T&A is holding customers to order volumes no greater than their daily average over the previous six weeks. The firm’s weekly supply outlook newsletter doesn’t see a quick end to the problem. It noted that one bagged lettuce processor expects light supplies for the next five weeks “adding fuel to the fire.”
McBride said the hot lettuce market has boosted demand for the other leaf items with both Romaine and green leaf markets showing very strong demand. Zaragoza said that, in fact, most of the vegetables, including broccoli, cauliflower and all the leafy items are stronger today than they were just a few days ago. “Celery is about the only thing that isn’t,” he said.
Of course, sales of all these vegetable items are interrelated as consumers change their purchasing habits of many different vegetables depending upon price, quality and retail promotions.
The USDA’s Market News Service reported iceberg lettuce sales mostly in the $16 to $19 range with the other items trading for a couple of dollars less but still strong demand in the mid to upper teens dollar range.
Red, green and yellow Bell peppers were also experiencing very strong markets ranging from $17 to $25, depending upon the size and color, according to The Market News Service. Extra-large reds were trading at the top end of that spectrum.