Increasing Imports of Mexican Broccoli leads to Lower US Prices

Published 2022년 4월 29일

The broccoli production in California, where 90% of the domestic output is produced, faces significant challenges due to water shortages, which, combined with rising temperatures, has caused broccoli supply to decrease significantly. Lower domestic supply has had prices increase since the beginning of the year and was initially expected to maintain an upward trend for the rest of the season. However, by March-22, the upward trend of the price of broccoli took a sudden 40% WoW decrease and has remained on a downward trend since. The price dive is mainly due to the increase in Mexican broccoli imports to the US market to cover the drop in domestic production.

According to the USDA, US imports of fresh-headed broccoli have gone from 192K mt to 251K mt between 2018 and 2021, a significant increase of 30.6% over three years. The increasing import trend has benefited farmers from other exporting markets, who have seen growth in the US market.

Difficult Market for Domestic Production

Due to its seasonality, imports of fresh-headed broccoli compete directly with domestic production throughout the year, which implies that US prices are very dependent on export market prices. Therefore, the substantial decrease in prices when US production is available directly affects US producers since their input costs are higher than those in traditional export markets. The primary broccoli supplier that dominates the US market in Mexico, accounting for 94% of the import share with a volume of 238K mt in 2021, complemented by Canada with 4% and Guatemala with 2%.

Broccoli production in Mexico has two marked seasons, the first from March to May and the second from August to October. Therefore, the peak season for Mexican broccoli exports is in the months of November and December. In 2021, however, the high export season was affected by adverse climate conditions that caused a decrease in production toward the end of 2021, which immediately affected export volumes.

Increase in Prices Followed by a Sudden Dive

According to the USDA, in early Oct-21, the demand for broccoli in the US was higher than the supply from California and Mexico together, so an increase in prices was witnessed. The upward price trend at the end of 2021 remained all towards Q1-22, reaching its peak in Jan-22. According to Tridge’s Price Chart, US fresh broccoli wholesale prices in W2 of Jan-22 stood at USD 5.0/kg, a 44% YoY increase, the highest price recorded over the last season.

The substantial increase was mainly due to the shortage of supply of both Mexican and US broccoli in the market. However, production from March to May-22 of the Mexican harvest has come in large volumes, and shipments to the US have increased. According to Tridge’s Price Chart, in W3 of March-22, prices recorded a remarkable 40% WoW decrease as the price went from USD 4.34/kg in W2 of March-22 to 2.62/kg in W3.

By April, prices remained on a downward trend until reaching USD 2.33/kg in W3 of April-22, which was the lowest price recorded this year and in all of 2021. From last year, this price represented a 40% YoY decrease. It was expected that prices would recover to their average season price and increase towards mid-April. However, Mexican supply has also come in large volumes since the beginning of April and has made the price of US broccoli remain low.