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Fresh vegetable prices trending up

During the first five months of 2006, f.o.b. shipping-point prices for fresh-market vegetables have averaged 3 percent above a year earlier, according to the USDA's latest Vegetables and Melons Outlook.

Higher average prices were received for tomatoes, cucumbers and sweet corn, outweighing lower average prices for celery, snap beans and broccoli.

This spring, producer prices averaged near year-earlier levels, with higher prices for potatoes, leafy greens, asparagus and beets, offsetting lower prices for most other crops. This summer, fresh vegetable prices are expected to average above a year ago as low crop prices last summer and higher input costs this year restrain acreage and supply.

With improved supplies this spring compared with a year ago, producer prices for melons have averaged 21 percent lower than in 2005. In May, shipments of watermelon and cantaloupes were each above a year earlier, with the volume of seedless watermelons up by more than one-third.

Also during the first five months of 2006, f.o.b. shipping-point prices for commercial vegetables averaged 4 percent above the relatively high levels of a year earlier. Much of this price strength was derived from Florida tomatoes (up 16 percent from a year earlier) and California lettuce (up 7 percent) this spring. With market volume reduced and delayed by the February Florida freeze, shipping-point prices also averaged much higher for sweet corn (up 29 percent) and cucumbers (up 19 percent) over the first five months of the year. However, sweet corn prices collapsed in May as product from fields replanted following the freeze surged onto the market, pushing shipment volume 50 percent higher than a year earlier.

On the other side of the coin, January-May shipping-point prices averaged lower for several crops, including snap beans and celery (each down 35 percent), broccoli (down 13 percent), and cauliflower (down 12 percent). Asparagus prices also averaged well above the extreme lows of a year earlier, but prices began to weaken in May as shipments rose above those of a year ago.

The unusually long period of cool, wet weather that began with the spring season in California prevented planting, slowed growth, and disrupted harvest schedules, leading to sporadic weekly supply situations for some vegetables. The impact of the disrupted planting schedules persisted through early June as crops earmarked for particular market windows were not ready for harvest.

This affected such crops as head lettuce, tomatoes, melons, broccoli and cauliflower. Some offset to delayed California production likely came from Georgia, New Jersey, Arkansas and the Carolinas, where growing conditions were favorable and yields strong.

Demand for fresh-market tomatoes appears to have bounced back following a period of high prices earlier this year associated with low market volume resulting from hurricane damage in southwest Florida last fall, according to the USDA report. The evidence for rebounding demand lies with higher average shipping-point prices, despite increased shipments.

During January to May, domestic and import shipments averaged more than 2 percent above the same period a year earlier. At the same time, the volume weighted f.o.b. shipping price for field-grown fresh-market tomatoes averaged $11.59 per 25-pound carton — 11 percent above a year earlier. A combination of strong economic growth and industry promotion efforts this spring likely helped support fresh-market tomato demand. As a result, domestic use of fresh-market tomatoes is expected to remain near or exceed the 2005 record-high of 20.5 pounds per person this year.

Assuming average weather and little change in acreage, the outlook for the summer season (July through September) for fresh-market vegetables appears to favor adequate supplies but generally higher prices compared with a year ago.

With conditions in California returning to normal and a strong start for most Eastern and some Midwestern vegetable growers, market volume should remain steady. However, summer-season shipping-point and retail prices are expected to average somewhat above the low levels of a year ago, partly reflecting increased costs for energy, transportation and packaging materials.

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