Market Outlook

Fruit and Tree Nuts Market Outlook

ERS conducts market outlook activities on the U.S. fruit and tree nuts industry. Details on major changes and events in the various commodity markets comprising this industry are published monthly in the Fruit and Tree Nuts Outlook. ERS also provides over 20 years of time-series data for fresh and processed fruit and tree nuts through Fruit and Tree Nuts Yearbook published annually in October.

The following interactive content is based on:

Fruit and Tree Nuts Outlook: September 2017

Production is forecast to decline for several major fruit crops in 2017/18, which will likely support prices. Meanwhile, major tree nut crops—almonds and walnuts—are forecast to reach record- to near-record-high levels of production in 2017/18, potentially easing prices.

Production declines for several major fruit crops in 2017/18 but forecast crops is mixed for major tree nuts

The 2017/18 marketing year is already ongoing for most fruit and tree nut crops. Several of these crops are forecast to decline from last year’s production levels. While production is expected to increase in several apple-producing States, lower outputs in Western and Central States are driving the forecast for a smaller national apple crop this year. Forecast reduced U.S. apple production this fall will coincide with the anticipated smaller pear crop. U.S. grape production is forecast down slightly, with anticipated smaller crops in California—the dominant producer—and Washington and Michigan, also major producing States. The U.S. peach crop is forecast to be the smallest since the 1980s as low chill hours, an early bloom, and a late spring freeze sharply curtailed production in South Carolina and Georgia, the top two peach-producing States after California. Forecast reduced cranberry production in Wisconsin, Massachusetts, and New Jersey—the top three producing States—is driving down overall production.

As the 2016/17 season ended for most citrus fruits, final production estimates put the U.S. citrus crop down 11 percent from the previous season. Production declined for most citrus fruit except tangerines and mandarins. The smaller U.S. orange crop in 2016/17 reflects declines in the three producing States—California, Florida, and Texas. At the same time, increases in California’s grapefruit crop were not enough to offset another year of lower production in Florida. As the 2017/18 season begins, the initial California navel orange forecast has the crop down again from last season, with larger fruit size not expected to offset the lighter fruit set. Over the past 3 years, 80 percent of California’s orange crop was comprised of navel and miscellaneous varieties, with Valencia oranges accounting for the remaining proportion.  Recent weather events will also certainly impact citrus production in Florida. Hurricane Irma made landfall in Florida in early September, affecting most of the State with severe weather conditions. Early reports of storm-related damage mentioned knocked-down fruit, uprooted trees, and flooded orange groves. While the full impact of Hurricane Irma on Florida’s citrus industry is still being assessed, early indications suggest statewide production will slip again in 2017/18.

U.S. almond output—which accounts for nearly two-thirds of U.S. tree nut production—is forecast to increase to 2.25 billion pounds in 2017/18, surpassing the 2016/17 record crop of 2.14 billion pounds, if realized. At the same time, despite the forecast decline from last year’s record-large crop, walnut output is anticipated to be larger than average. As with almonds, bearing acreage and number of trees per acre for walnuts continues to increase. Meanwhile, hazelnut yields were hampered by rainy conditions this spring, excessive summer heat, and ongoing issues with the Eastern Filbert Blight disease, driving down production. Almonds and walnuts are produced almost totally in California while hazelnut production is centered in Oregon.  

 

Grower and retail prices likely to receive a boost this fall

At 127 (2011=100), the July 2017 grower price index for fruit and nuts fell from the July 2016 index of 132 but was slightly higher than average levels. Lower grower prices for fresh apples, pears, and grapefruit more than offset higher grower prices for grapes, peaches, strawberries, and most citrus fruit (except grapefruit), driving down the July index.

Large end-of-season storage supplies of apples from the near-record harvest last fall contributed to lower grower prices in July 2017 compared to prices in July 2016. While this year’s smaller apple crop forecast is expected to support prices in 2017/18 (August-July), the large storage supplies from last season should ease some of this upward pressure, especially early in the season. Peach and pear prices will likely be strengthened by the forecast lower production. However, rebounding pear supplies in California, greater than expected late-2016/17 (July-June) season pear supplies, and competing large storage apple supplies have driven down pear prices thus far. Pear harvest in the Pacific Northwest will be well underway in the fall, and prices will likely receive a boost from the forecasted smaller domestic crop (driven by lower output in Washington State) and the anticipated smaller apple crop, the bulk of which will be harvested this fall. Grape production is anticipated to fall in 2017/18, and lower shipments thus far have strengthened fresh-grape prices.

U.S. strawberry shipments have been higher than levels a year ago but have had little effect on July grower prices. Although supplies have remained robust through August, USDA, Agricultural Marketing Service shipments indicate a large drop in September movement, which may result in healthy strawberry prices for the remainder of summer. At the same time, fresh orange and lemon prices were driven up by smaller crops harvested in California last year. Harvest for the 2017/18 California navel crop is expected to begin in October. The crop is forecast to be down 10 percent, pointing to potential upward gains in prices relative to last season. Additionally, damage to the Florida citrus crop caused by Hurricane Irma may lead to tighter supplies and upward pressure on prices for the 2017/18 season.

The Consumer Price Index (CPI) for fresh fruit has remained strong in 2017. The CPI was up slightly in August 2017, compared with the same month in 2016. Higher retail prices for navel oranges, grapefruit, peaches, and Thompson seedless grapes boosted the CPI in August, according to data from the U.S. Bureau of Labor Statistics.