CHICAGO: The Mexican apple crop is bigger and the Mexican peso is trending lower against the dollar, and that may combine to make a challenging year for U.S. apple exporters in 2015-16.
Speaking at the U.S. Apple Association’s Outlook and Marketing Conference, Leighton Romney, chief executive officer of apple marketer and importer the Paquime Group, Chihuahua, Mexico, said U.S. apple exports should find stiff competition at least through December. The prospect of antidumping tariffs against U.S. apples is also real, he said.
U.S. Department of Agriculture statistics show that Mexico accounted for nearly 30% of the value of all U.S. apple exports from January through June this year, making it the biggest export destination. In 2014, Mexico imported about 13 million cartons of U.S. apples.
Mexico’s 2015 crop — almost all red and golden delicious variety apples — is expected to total about 24.2 million cartons of fresh fruit, up 45% from the 16.5 million carton output of last year. It’s also up 26% from the five-year average of 19.1 million cartons.
‘Mexico’s large crop will put pressure on prices now through December,” he said. After December, Mexican apple supplies will dwindle since most marketers don’t have long term apple storage facilities.
The U.S. dollar is 15% higher against the peso than a year ago, and Romney said that will make imports of U.S. apples more expensive in Mexico. What’s more, he said recent weakness in the oil prices may continue to cause the Mexican peso to lose value, because oil production is a big part of Mexico’s economy. Now at 16 pesos to one U.S. dollar, the peso may fall to 17 or 18 to one dollar if oil prices continue to sag, he said.
Fueled by political pressure from Mexican growers, the dumping case against U.S. apple imports may result in antidumping tariffs, Romney said. However, the reasons for low imported apple prices in Mexico may go beyond the selling price in Washington, he said.
“What seems to be happening in Mexico is that there is a middle man between the exporter and importer in Mexico, and I think there is probably some money laundering that goes on,” he said. Romney said prices tend to be lower in Mexico than they are in the U.S.
“That’s voodoo economics I guess, but some of the importers are selling cheaper in the Mexico City market than you can buy apples for in Washington, so there’s something wrong when that happens,” he said.
Romney said when Mexico needs a political football to toss back at the U.S. because of other trade issues, apples are often used.
“I have no idea how that will turn out, but hopefully it will iron itself out and we will be able to import plenty of U.S. apples,” he said.
