November 2, 2024

Severe Weather Dampens California Produce Outlook, Arizona Emerges as Bright Spot

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Recent weeks in California have seen an onslaught of relentless rain and powerful winds, wreaking havoc across the state. From mudslides to widespread flooding and debilitating power outages, the situation has prompted a state of emergency declaration across eight Southern California counties. Amid this chaos, farmers are bracing themselves to assess the aftermath, contingent upon the ground drying out sufficiently to allow access to their fields.

The agricultural sector, a cornerstone of California’s economy, is feeling the brunt of the impact. Key crops such as citrus, almonds, avocados, and strawberries are expected to bear the weight of the weather onslaught. According to the USDA, the repercussions are already stark, with 84% fewer truckloads of produce compared to the same period last year.

 

 

Despite the challenges, hope remains for a turnaround in the 2024 produce season. However, the recovery largely hinges on California’s ability to bounce back. National produce volumes are already down by 17% compared to last year, underscoring the significance of California’s resurgence for the overall market stability.

While California grapples with its woes, other regions are experiencing contrasting fortunes. Washington state boasts healthy produce volumes, with a notable 19% increase in truckloads compared to the previous year. Similarly, Yuma, AZ, known as the Winter Salad Bowl, reports a 6% surge in lettuce volumes compared to 2023.

Market observers are closely monitoring the truckload produce market, with data from DAT iQ providing valuable insights. California traditionally sets the tone for the national market, and recent trends show outbound reefer rates dipping to $2.08/mile, a $0.04/mile decrease compared to 2019. Despite a slight uptick in truckload volumes in Fresno, outbound rates declined by 4% last week, reflecting the market’s sensitivity to supply chain disruptions.

However, amid the gloom, Yuma, AZ emerges as a beacon of optimism. The region’s robust lettuce production, accounting for 90% of leafy greens grown over winter, has led to a 6% increase in overall produce volumes compared to last year. Carriers ferrying loads westward to Los Angeles commanded higher rates, reaching $2.87/mile, a welcome relief amidst broader market challenges.

 

 

The Load to Truck Ratio (LTR) paints a sobering picture of the national spot market, with load post volumes hitting an eight-year low. Produce movement nationally is at its lowest in a decade, contributing to dwindling spot market volumes. Reefer spot rates reflect this trend, dropping to $1.94/mile, the first time below $2.00/mile since mid-December and down $0.10/mile from last year.

Despite the storm clouds gathering over California’s produce industry, the resilience of agricultural communities and the emergence of bright spots like Yuma, AZ, offer glimmers of hope for a rebound in the broader market. As stakeholders navigate these turbulent times, staying informed with data-driven insights becomes increasingly critical for making informed decisions.

Source: DAT

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