Fresh produce prices are elevated (SFM)
The ProduceIQ Index for the 41st week of the year was $.83 per pound, the highest price for the same week over the past 15 years. The ProduceIQ Index uses 40 high volume fresh produce commodities to represent shipping point prices. The index eased slightly from the prior week level of $.85 per pound, which was also a 15 year high for week 40, as seen in the following chart. Historically prices decline through October until Thanksgiving demand drives them higher in November. Weekly sales are up 10.8% YOY despite volumes being down 4.9%. While demand appears to be steady, the higher prices reflect the supply situation.
Strawberry prices are elevated (STKL)
Strawberry prices, as measured by ProduceIQ, have reached a 15 year high for this time of the year, as seen in the chart below. According to the US Foods Farmer’s report, supplies are limited with good demand. The fires in California have hurt supply with ash falling on some acres ahead of the harvest. Through August 20th, nearly 75% of the strawberry volume in the U.S. Frozen strawberries represent more than two-thirds of SunOpta’s Fruit-Based Foods & Beverage division. The shortage of the strawberry harvest in 2019 has depressed margins in 2020. The greater demand for fresh strawberries driven by increased retail demand was expected to reduce the frozen supply by 15-20%. We believe SunOpta could seek strategic alternatives for the division when the harvest has returned to historical norms, but this year’s harvest looks to be another unfavorable one.
Reefer rates at all-time highs (KR)
According to DAT Freight & Analytics, spot rates for refrigerated (reefer) truckload rates hit an all-time high in September. Spot volumes declined for the third month in a row, with September down 1.3% compared to August. The national average spot reefer rate was $2.57 per mile, up to $.13 compared to August and $.41 higher than a year ago. DAT said the national average reefer load to truck ratio was 9.7 in September compared to 1.7 in April. Grocery chains have been building their inventory levels earlier this year to get ahead of a possible surge in demand from another spike in COVID-19 cases. The amount of freight moving on the spot market in August increased by 80% YOY. Grocery stores have contracted freight rates with the trucking companies, but an increase in shipments is not always covered. Spot rates for van are also at all-time highs, as seen in the chart below. Flatbed, the third mode of trucking, was up from August, but well short of all-time highs.