Celery Shortage Drives Up Price

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The celery market has seen a huge upswing in prices in the US and Canada on a combination of short supply and robust demand. This marks a major turnaround from last year when excess supply resulted in prices low enough to cause farmers to reduce acreage. Poor weather in California, the primary producing state, compounded last season’s smaller area, leading to the current shortage. Meanwhile, demand is robust, which many are attributing to the growing popularity of healthy juices. Celery is a key ingredient and has been touted by several authors recently. This combination has led to very high prices for an extended period. New supplies are on the way in a few weeks, but demand may not allow prices to drop much.

Celery free-on-board (FOB) prices at the terminal market in Los Angeles fell below $10 a carton at one point in 2018 and stayed low throughout planting, growing and harvesting, according to the USDA’s Agricultural Marketing Service. This led to a cut in acreage from farmers who could barely cover harvesting costs. Excessive rains in February made planting the current crop difficult, which caused FOB prices to almost reach $80 a carton. Export shipments from the US to Canada are well below previous seasons so far this year. Canada imports a significant portion of their celery supply from the US. Production from California will increase in the coming weeks with a presumably larger area to harvest given the high prices. Michigan will also contribute some supplies in July.

The eye popping price tag has not deterred demand. The juicing craze is firmly entrenched and health benefits of celery are widely known. There are entire movements dedicated to celery juice. While it is more likely that short supply is the main driver of record prices, demand is clearly resilient. Farms recently sold loads directly to a juicer, which is unusual and sales managers continue to book orders at the $70 price. New supplies should cool off the market a bit, but given the unprecedented run of high prices recently, it is anyone's guess where the market will be in a few months.

The chart on the left shows the historic rise in FOB terminal prices out of the main growing area near Los Angeles. The market sustained $70 a carton since late March, demonstrating the severity of the supply shortfall. The chart on the right shows the slow pace of exports to Canada due to the tight supply.

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