In this installment of the ‘In Charts' series, Colin Fain of Agronometrics illustrates how the U.S. market is evolving. Each week the series looks at a different horticultural commodity, focusing on a specific origin or topic visualizing the market factors that are driving change.
Apple prices this time of year tend to be relatively stable. However, this year looks to deviate from the historical trend, knocking almost three dollars off last year’s shipping point prices to hit the lowest we have seen in four years.
Apples, Non-Organic, Historical Price (Cartons Tray Pack)
(Source: USDA Market News via Agronometrics. Agronometrics users can view this chart with live updates here)
When we look into the volumes we get a glimpse into what could be causing the dramatic changes in pricing. Since week 40, the industry has sent an average of 18% more volume every week - a massive uptick in volumes led by Washington. Week 47 was one of the biggest differences in volume, adding up to 19.6m kilograms more than what was reported the previous year.
Apples, Non-Organic, Historical Volumes (KG)
(Source: USDA Market News via Agronometrics. Agronometrics users can view this chart with live updates here)
If we add in the volumes from the previous four years, we can see that the volumes this year aren't too far off from what we had seen before. So there is an argument to be made that the cause and effect of volumes affecting prices aren’t as simple as just looking at volumes and may require a bit more interpretation.
Apples, Non-Organic, Historical Volumes (KG)
(Source: USDA Market News via Agronometrics. Agronometrics users can view this chart with live updates here)
Keep in mind that shipping point prices only reflect what is happening in the spot market. This market usually represents an important percentage of what is being sold, but to most producers, it is a second priority to pre-established programs with larger and more stable clients.
My bet is that the programs that were set up this year were designed based on last year’s volumes. Meaning that they would be much too small to handle the volume that has been produced, therefore sending more volume to be sold on the spot markets. This act, in turn, would push up inventories in the spot market, creating extra pressure and bringing down prices.
If expectations for programs were to be set up based on the volumes from 2017, this whole situation might have been avoided.
In our ‘In Charts’ series, we work to tell some of the stories that are moving the industry. Feel free to take a look at the other articles by clicking here.
You can keep track of the markets daily through Agronometrics, a data visualization tool built to help the industry make sense of the huge amounts of data that professionals need to access to make informed decisions. If you found the information and the charts from this article useful, feel free to visit us at www.agronometrics.com where you can easily access these same graphs, or explore the other 20 fruits we currently track.