US avocado prices recorded an 80% YoY increase by the end of Week 6, reaching a historic high of USD 5.20/kg or USD 61/carton. Unlike previous years, when the rise in avocado prices was driven by supply shortages, there are no signs of shortfalls in Mexican avocado production this year. Instead, this year’s increase is mainly attributed to a combination of soaring production costs, labor shortages, and supply chain backlogs that have triggered a considerable price increase all through the different wholesale channels in the US.
US avocado prices regularly increase during January and February as consumption of the fruit is driven by the Super Bowl while the domestically grown avocados are off-season. Mexican avocados are popularly consumed as they are in full swing by that time of the year. 2022 saw an increase that surpassed all previous ones as demand for avocado in the US reached higher levels than before. At the same time, production costs in Mexico have also risen.
According to Tridge’s Price Chart, the price for big size avocado (60s) in W6 was reported at USD 5.20/kg or USD 61/carton in the San Francisco Wholesale market. The price recorded indicates a whopping 80.95% YoY increase compared to the same week last year when the price was recorded at USD 2.87/kg.
YoY Price Trend of US Avocado (2021-2022)
Source: Tridge Price Data
Besides the increases in production costs that Mexican producers are experiencing, there is also the fact that US consumption for the fruit remains increasing every year at an accelerated rate. According to a USDA report, the per capita consumption for avocados in the US has doubled in the past decade, reaching 3.7 kgs in 2020. Furthermore, US avocado production in California and Florida barely reached 190K mt in 2020, far from satisfying the national demand. Thus, more than 90% of its avocados from Mexico are dependent on Mexican avocado production and imports.
Mexican producers are expected to continue to face elevated production costs and logistics challenges throughout the rest of the year despite the suspension, which will keep prices above previous years. With the US market showing strong demand despite higher prices, it is also a good opportunity for Mexican avocado exporters to keep prices high and get profitable returns on exports when the production cost remains high.
We will need to see how long the temporary suspension will last, and depending on that, it will affect the market differently. If the suspension doesn’t last for more than two weeks, avocado prices in the US are forecast to stabilize in March-22 after the major sales period ends and there is better availability in the market. However, if the suspension lasts longer, it can potentially create a dry-up of supply, and prices in the US can even triple from the already higher levels.