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Lettuce market strengthens, ending long market decline

Several different factors combined in late September to give the iceberg lettuce market an upward spike — a boost very much welcomed by grower-shippers who have been wallowing in low markets for months on end.

Mark McBride, a salesman for Coastline Family Farms in Salinas, CA, said some cultural issues have led to heads of lettuce coming in underweight, which means more acreage is needed to fill the orders of the fresh-cut salad processors. That in turn creates a demand-exceeds-supply situation for commodity shippers. “The market has been increasing the last few days,” he said Tuesday, Sept. 25. “Today wrapped lettuce is being quoted at $18.65.”

The Salinas veteran noted that growers are cutting ahead to fill orders so the strong market price should have legs. In fact, he predicted that the market would remain strong until iceberg lettuce production shifts to new growing areas.

This year, the Huron district on the Westside of the San Joaquin Valley is expected to begin cutting around Oct. 20. Barring unforeseen weather issues, many Salinas fields will last well into November, finishing within a week of Thanksgiving, on one side or the other. The beginning of the California and Arizona desert deals should occur about a week before Thanksgiving.

Concurring with McBride was a pair of veterans from The Nunes Co., who spoke to The Produce News on the same day from the same Salinas Valley. Senior Vice President of Sales and Marketing Mark Crossgrove and Sales Manager Johnny Amaral agreed that iceberg lettuce is the one bright spot in what has been a dismal summer. On that day Amaral said iceberg lettuce was trading in the $17-$19 range. He noted that colder-than-normal weather was impacting the growth of the heads, reducing yields on a per-acre basis. He said f.o.b. prices at well below cost have been the norm all summer.

Crossgrove said fields are being picked ahead of schedule, which means the Salinas deal could end sooner than anticipated. He predicted that the lettuce market will continue strong through the transition period to Huron and then the desert — and maybe beyond. He reasoned that many growers have been looking at red ink for most of the past 12 months. “We hear that many shippers have reduced their acreage in the desert,” he said.

The Nunes executive said the same oversupply situation has plagued organic vegetable producers this summer. “It’s been a big loser,” he quipped, blaming the oversupply on many new fields of organic crops. “Organics is a small market so it doesn’t take much to be oversupplied.”

Again Crossgrove predicted that the result may well be less production in the desert this winter as red ink usually produces less acreage during the next growing cycle.

Jason Lathos, manager of commodities for Salinas-based Church Bros. LLC, made it unanimous among this small sample size of interviewees stating that the poor markets of the past nine to 12 months are playing a role in the current lettuce supply situation. “Supplies are lighter; growers have adjusted their plantings,” he said, adding that processors are calling all over Salinas trying to buy up uncut fields. Doing the math, he said the purchase of one 50-acre field by a processor would take 50,000 cartons off the open market. It doesn’t take many of those purchases to create a very tight situation.

Lathos has heard the same rumors as everyone else that winter acreage is down in the desert. “Shippers are covering their contracts but I don’t think we are going to see any extra fields being planted.”

He also blamed the situation on cold weather. “We typically get an Indian Summer (a hot September) in Salinas but not this year. It’s been cold and I understand they are forecasting rain for two of the five harvest days next week. I think this market will stay active (higher priced than usual) for at least the next two to three weeks. I think it will take moving to a new district to change the situation.”

Lathos said the transitions are either seamless with overlap in production creating a smooth shift, or there is a gap transition. He believes this fall transition is pointing toward a gap and even higher prices. “It looks like Huron might be delayed a week,” he said, noting that will further reduce supplies in the late October time period.