Week 30

This week I would like to endeavor to give my view of how the season is likely to evolve from a New Zealand market return perspective.

The first six weeks of the season saw some heavy packing. In volume to date we are 70% up on the last two seasons. The outcome for growers has been very good with strong coolstore-door returns for the first supply weeks; anywhere between $35.00 – $45.00 (weeks 20 and 21). For weeks 22 and 23 onward, packed volumes lifted and returns dropped back to current levels of about $22.00 to $28.00 per tray equivalent at coolstore-door. Our view is that this price level may hold for the next couple of weeks before lifting however any increase will largely depend on two factors:

• Export activity is starting in a moderate way; we expect to see a lift in volumes packed for Asia based off flow-plans that we have observed. This being the case we will see a shortening in supply of sizes 24 to 36 as they are preferred in these markets. It will however mean a significant volume of sizes 16 to 20 being directed to the New Zealand market which in my opinion will not be an issue, unless export packouts are lower than ideal, directing more small fruit to the New Zealand market.

• Export packout levels are key. If packouts are 80% or greater then we could see a shortening of domestic fruit volumes. If export packouts are 50% – 60% then we could see an impact in the opposite direction.

Here are my coolstore-door predictions:

August:

Sizes 16 to 20 – $22.00 to $24.00

Size 24 – $23.00 to $25.00

Size 30 – $23.00 to $25.00

September to December

This should be a period of stability. We expect to see some opportunity for growers to supply the New Zealand market. Our reasoning is that Australia will commence importation and that will consume the larger sizes that are not preferred by Asian markets. If export packouts are high (rejects minimal) then we believe the fruit volume for the New Zealand market will be somewhat restricted. This tends to be confirmed because the latest New Zealand market volume forecast from NZ Avocado shows only 1.7 million trays for the season; about the same forecasted volume as last season. Our prediction for pricing during this period is $24.00 to $26.00, however this could be higher if fruit volume is limited.

January to March

This is the most unpredictable period of the season and domestic returns will largely depend on demand from the Australian market. Returns will also depend on how the export companies manage crop flow. You may remember that January 2019 was a train-wreck because this period was poorly managed – it is our hope that there will be no repeat performance.

Another factor that will impact this period will include maturity and the ability of fruit to be retained without serious fruit-drop which has a significant financial impact. Whilst holding fruit on trees is enticing because of high late season returns, many orchardists are now commenting that the financial advantage does not compensate for the subsequent decline in production during the following seasons.

At this stage I would predict values between $28.00 and $35.00 coolstore-door increasing toward the end of March.

I need to emphasize that this is purely a snapshot prediction and values should not be taken as absolute. They are our best estimate. Our experience tells us this is what may occur but having seen some very reactive and poorly planned activity from some sectors of the industry over the last season or two it is hard to provide clarity in contexts about a product that far in advance.

Our personal view is that there is an overly dangerous focus on achieving ‘The best overall tray price’ regardless of what that does to tree and orchard health. We have seen the negative side in this approach with inconsistent production growth as an industry over the last five years in spite of new plantings.

Please note values tabled are at coolstore-door level so packing and packaging should be deducted.

Best regards,

Glen and team.