US Lime Prices Start to Stabilize as Supply Increases

Published 2022년 5월 17일

After US lime wholesale prices have been severely affected since the beginning of the year, lime prices have started to stabilize due to higher supply volumes from Colombia and Guatemala. Mexican lime has also started to increase its volumes leaving behind the production shortage suffered at the end of last year. After more than two months of historic high prices for Mexican limes in the US, the price has started to fall steeply by 65.5% MoM in W2 of May-22. It seems that lime prices in the US have finally begun to draw near-normal levels.

Lime prices in Mexico were expected to decrease by the end of Feb-22 when harvest in the Colima region, which accounts for 10% of the total national production, would be in the market. However, lime prices in Mexico kept the upward trend and remained high until Apr-22, when a 17% WoW decrease was registered. Aggravated economic inflation caused by the COVID-19 pandemic, the skyrocketing cost of many agricultural inputs, and labor shortages due to workforce migration to other more profitable crops kept lime prices in Mexico at historic high values for longer than expected.

The surge in Mexican prices also affected US wholesale prices in the last weeks of 2021, when prices usually slightly increase due to the expected shortage in the market, as yearly lime production is scarce. According to the USDA Agricultural Marketing Service, in Week 52 (the last week of the year), the average price of conventional limes in the US was USD 4/kg, 51% higher than the same week in 2020. Since then, lime prices in the US have maintained an upward trend, reaching USD 4.80/kg by W1 of March-22, a new historic high.

However, in May-22, Mexican lime prices in the US finally started to decrease. According to Tridge’s Price Chart, the wholesale price of Mexican seedless lime in the Los Angeles wholesale market fell by 65.5% MoM in W2 of May-22. On the 9th of May-22, the price stood at USD 1.60/kg, while on the same day in the previous month, the price stood at USD 4.84/kg.

According to Kim Dong Hoon, Tridge’s Investment & Trading Manager, the decrease is due to increased supply volume from other suppliers. “At the beginning of the second week of May, the price we are seeing is at around USD 20-30/ 40 lbs carton, and this is expected to go down even more as the supply increases,” he explained.

The sudden fall in price is primarily attributed to the significant increase in supply from other origins in the US market, such as Colombian and Guatemalan limes. According to Fernando Rodriguez, Tridge’s Engagement Manager in Mexico, lime prices have dropped drastically because of the arrival of other countries, like Colombia and Guatemala. “The quality is not good as Mexican limes, but the volume gets the prices down due to the larger offer. The volume expected in Mexican fields is still not too high, but the prices are low now. Prices are expected to stabilize until the end of May”, he explained.

One of the reasons for Mexican lime prices maintaining a substantial increase until May-22 was that there weren’t other suppliers in the market, as shipping of lime volumes from different origins was also scarce. According to Mr. Rodriguez, lime exporters in Mexico have been taking advantage of the shortage situation to get the highest prices possible at the Mexican-US border. “US packers are offering USD 60-65/ 40 lbs carton at FOB McAllen Shipping point. One of the US packers commented that growers want to get the highest price in history. Therefore, the distributors at McAllen intend to change the countries of origin, such as Guatemala, Colombia, and other central or South American countries. This situation makes customers turn their interests to other varieties such as Eureka Lemons and Key Limes”, he explained.

It seems that the increase in the volume of more lime varieties other than the traditional seedless Persian Mexican lime has taken away the price advantage that Mexican limes have been enjoying since the final weeks of last year. Furthermore, the competitive price of these other varieties from Colombia, Peru, and Guatemala has finally forced Mexican lime exporters to decrease the FOB price at the border.