Chile has just hit the peak harvest of their cherry season. The crop estimate has been adjusted downward to 124 million 5 kg. boxes, which is still an all-time high. While the U.S. market will receive about five million boxes, it's a very small portion of total shipments. "The U.S. represents less than five percent of Chilean exports with China receiving more than 90 percent of total volume," says Ira Greenstein with Direct Source Marketing. Chile has been sending significant volumes to China in the past few weeks with arrivals in time for Chinese New Year, which will be celebrated January 29.
Up until now, it has been smooth sailing for shipments. Through week 49, cherry shipments from Chile to markets worldwide are ahead of last year and ahead of the 2022-2023 season. More than 166 million kilograms have already been shipped this season, which is a 200 percent increase compared to week 49 last year.
Retail promotions for Christmas
Last year, the U.S. market received 2.7 million boxes of cherries from Chile and the year before, the number amounted to 3.5 million boxes. "With a projected five million boxes this year, we will see a big uptick in volume, but U.S. retailers have been well prepared," commented Greenstein. "We already started talking with our retail customers as soon as the first estimate was released." As a result of these conversations, aggressive promotional pricing is already in place and cherries are included in holiday retail ads. Last year, cherries from Chile were still flown in by air in the week leading up to Christmas and market pricing averaged $50/box. This year, cherries have been arriving by ocean since last week and prices are in the mid $30s, a level that is still profitable for growers. However, if prices drop below $24 on the spot market, growers will no longer be profitable. "As long as we can maintain pricing between $28 and $32, it's sustainable for growers and retailers should be able to move the volume we hope."
Retail ads vary between $4.99 and $5.99/lb., but after the New Year, promotional prices are expected to come down and range between $2.99 loss leaders and $3.99/lb. According to Greenstein, retailers are prepared to run ads all the way through January, which coincides with peak shipping time.
Timing of bulk vessels is perfect
The pending port strike that may start on January 15 could potentially interrupt some Chilean supply to the U.S. market. On a positive note, the timing of the strike coincides with the start of bulk vessel shipments. These vessels don't go to ILA managed ports. "For cherry shippers, the timing of bulk vessels is perfect as they should be able to enter the U.S. without much interruption." Container shipments are the only way to support demand during the first part of the season, but at the start of the peak season, the shift is usually made to bulk vessels. Right now, containers are still being loaded and they will arrive in the U.S. before January 15. However, exporters are pushing for space on bulk charters to prevent supply interruptions.
For more information:
Ira Greenstein
Direct Source Marketing
Tel: +1 (914) 241-4434
[email protected]
www.directsourcemktg.com