The Mintec price of US avocados increased by 34% to USD 3.68/kg in the nine weeks to 21st April. The price rise can be primarily attributed to an increase in the price of Mexican avocados, supply tightness in California, and an uptick in demand from the foodservice sector.
Mexico, a top avocado exporter to the US market, witnessed similar price movements and saw prices increase by 84% to USD 2.8/kg over the same period. The rise in Mexican avocado prices can be largely explained by firm European and US demand. The interrelated price nature between the US and Mexico avocado market is apparent, with Mintec pricing data showing a strong positive correlation (r=0.88) between the two countries over the last two years.
Meanwhile, the Californian avocado crop for the 2020/21 (Nov-Oct) marketing year (MY) is projected to be smaller than initially expected due to weather events, including extreme wind that impacted the very early season harvest. Earlier in the year, avocado production, was estimated at 317 million pounds for the 2020/21 MY and has recently been revised down to 292 million pounds, significantly lower than the 2019/20 MY total of 360 million pounds.
Furthermore, the gradual reopening of the economy and the foodservice sector has contributed to the bullish price impetus in the US avocado market over the last few months.
Considering these fundamentals, the Mintec price of US avocados is projected to remain firm over the next few months, with most of the fundamentals pointing towards supply tightness.