MARKET REPORTS

WEEK 3-4

Pricing is for the current sales period. Prices may not always accurately reflect your returns as stock may be held over pending sale or as the market dictates. Where no price is recorded, sales have not been made in the report period. Prices are subject to change based on daily market conditions. Packing/Packaging costs should be deducted from these prices.

Prior to Christmas, which now seems a long time ago, we published our thoughts on the potential values in the New Zealand market for the period mid to late January and beyond. This projection was based on the best market intelligence that we could obtain as well as export flow-plan data and general industry feedback that we had. In hindsight we were probably well shy of what potentially could be ahead of us.

We are all well aware of the significant quality issues within the Australian market. In this market there has been a loss of customer confidence and subsequently we understand that Australian retail intends to switch to locally produced Shepard variety in the near future. 

We are also noting that a number of late-seasoned focused exporters are carrying significant volumes of fruit, a percentage of which is high in maturity and short of shelf life. All of these facts were not able to be considered when we tabled price expectations prior to Christmas.

So if we look at the combining factors a picture is presenting itself that may have the potential to negatively impact late season local market values. Noteworthy points include:

  • Currently there is intense industry packing to meet the Australian retail supply time-limit which is creating significant local market volume much above forecasted figures.
  • Last week’s domestic volume of 111,000 trays established a record for the domestic market and exceeded the volume able to be absorbed at prevailing values.
  • The market (including our retail partners) is indicating that the incoming volume is exceeding consumption capacity with values declining and discounts being offered on a wide-spread basis. Values in some instances are now 30% less than those achieved across the Christmas and New Year period.
  • Within certain market segments fruit age is impacting stocks. It remains clear (refer our last Market Report) that a significant percentage of fruit entering the market has been stored for lengthy periods and is displaying limited shelf-life. Poor fruit quality will damage customer repeat purchase and confidence – refer the Australian example as proof of that.
  • As export market viability reduces, we face not only an increase in local market volumes but additional volumes that may be redirected from export packed stock. This will further challenge the local market’s capability to absorb additional volumes at sustainable values.  

Without wanting to be unduly negative toward local market prospects, at this point we need to face reality. An oversupply in October is not an issue; fruit during that period has good holding capability and volumes can be smoothed across an extended period. An oversupply at this point in the season however is very different. Advanced fruit maturity combined with aged stock requires careful management in order to protect both market reputation and grower return. Marketers need to be open and transparent about volumes and smart decisions need to be made in a responsible manner. We have tabled our concerns to Avocado New Zealand and would encourage them to communicate and facilitate on this situation. 

From Zeafruit’s standpoint we are not under date-age pressure and stock volumes are in line with our forecast. Our supplying pack-houses have kept us well informed of their positions and we can speak with certainty about our incoming volumes between now and week 11.  

Best regards,

Glen