2024-08-06 05:13:43
The supply of bananas to the U.S. from all over Latin America is currently tight. “In both Mexico and Guatemala there have been some storms that have damaged a lot of land.
“Temperatures have also been higher, there has been more rain and there is a lack of sun, which means the plants are growing more slowly,” explains Andy Thomas-Stivalet of Kadivac Produce. “This reduces the weight of all the stems that are growing.”
At this point in the season, banana supplies in the U.S. are typically higher, Thomas-Stivalet said, adding that they will increase over the next three to four weeks.
Watch out for the ports
Meanwhile, Hurricane Beryl is also likely to impact supply this week and cause shortages in the Gulf, as it may have affected the Port of Houston and ports in Louisiana. “Anything that comes into the Gulf this week will be late. It will come, but there will be a shortage of supply,” Thomas-Stivalet said, adding that Kadivac Produce had brought forward shipments of fruit in anticipation of Beryl affecting supply. “If ports are damaged, transportation could be further affected.”
As for banana demand, this is one of the slowest periods of the year and this period is usually accompanied by a higher supply, which often leads to a drop in prices. “We have seen fairly stable prices in recent weeks. Even now, prices are between $12.50 and $13.50 in the Gulf region, which is apparently one dollar higher on average than last year,” says Thomas-Stivalet. The expected difference in supply this week will probably strengthen prices on the spot market.
Although there will be more banana supplies in the coming weeks, overall the US supply is expected to remain lower. “Production costs continue to rise. We also still have a very weak dollar relative to Latin American currencies,” notes Thomas-Stivalet, adding that events such as the US presidential election in November could affect the strength of the dollar. “If the dollar strengthens then, it will benefit banana producers, because right now they are not being paid enough in dollars to make it profitable to convert to their local currencies.”
A change in banana shipments
Meanwhile, local markets are becoming increasingly attractive for banana shipments. “These markets are not sufficient to absorb all the fruit produced by large countries such as Guatemala, Colombia and Ecuador. However, the surrounding countries are large untapped markets that are starting to make a lot of sense,” he says, adding that Mexico, for example, is selling larger volumes of fruit within its territory.
In addition, the sector continues to see producers pushed out of the market by inflation, rising cultivation costs and other factors. “Producers are being affected by storms, weather problems and low prices, and are selling off their farms. In the last two or three months, I have seen about 600 hectares of land change hands in one of the production areas where we are, because people can no longer afford it,” Thomas-Stivalet laments. “The situation is still dire.”