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2016/17 U.S. Fruit and Tree Nuts Outlook Summary

Core Content Overview

This report provides an outlook for U.S. fruit and tree nut production and prices for the 2016/17 marketing season, based on data and forecasts from the USDA's Economic Research Service (ERS) and National Agricultural Statistics Service (NASS). It highlights trends in production, price movements, and trade dynamics for key commodities including apples, pears, grapes, peaches, cranberries, and tree nuts such as almonds and walnuts.

Main Points and Key Information

Production Trends

• Apples:

  • The 2016 U.S. apple crop is forecast at 10.4 billion pounds, up 4% from 2015 and the fourth largest since 2000.
  • Production increases are expected in western states, particularly Washington, which is projected at 6.4 billion pounds (up 8% from 2015), driven by favorable weather and alternate-bearing cycles.
  • Eastern states like New York, Pennsylvania, and Virginia are expected to see declines due to frost and drought issues.
  • Overall, the U.S. apple crop is forecast to increase by 4% from the previous year.

• Pears:

  • U.S. pear production is forecast to decline by 5% to 1.56 billion pounds, the lowest in over two decades.
  • Declines are expected in the top three states: Washington, Oregon, and California, with a 2–4% drop in production due to fewer bearing acres.
  • Michigan, New York, and Pennsylvania were removed from the estimation program in 2016.

• Grapes:

  • U.S. grape production is forecast at 15.6 billion pounds, up 2% from 2015.
  • California's production is expected to remain flat due to a smaller raisin-type crop offsetting increases in wine and table grapes.
  • Other states are projected to increase production by 11%.

• Cranberries:

  • Forecast at 859 million pounds, up less than 1% from 2015 but 3% above the previous 5-year average.
  • Supplies are expected to remain high, but demand is likely to prevent significant inventory buildup.

• Tree Nuts:

  • Almond and walnut production are forecast to reach record highs for the 2016/17 season.
  • However, grower prices for these nuts fell sharply in 2015/16 due to near-record-high production.

Price Outlook

• Grower Prices:

  • The July 2016 fruit and nut grower price index rose to 125 (2011=100), up from 122 in July 2015.
  • Fresh apple, grape, peach, and pear prices were higher in July 2016 compared to the same time in 2015.
  • Strawberry and citrus prices (except grapefruit) declined due to increased supply.
  • Prices for fresh pears are expected to remain strong due to reduced supply and good fruit quality.

• Retail Prices:

  • The Consumer Price Index (CPI) for fresh fruit rose to 354.6 in August 2016, up from 348.7 in August 2015.
  • Retail prices for grapefruit, lemons, and Red Delicious apples increased, while navel oranges and strawberries decreased.
  • Red Delicious apple prices rose 5% from the previous year, and the CPI for apples hit 373.9, up from 338.9 in August 2015.

• Factors Influencing Prices:

  • Apples: Tight supplies in 2016/17, along with the rebound in production, are expected to impact prices. Early prices are likely to be strong, but increased harvests in the fall may lead to downward pressure.
  • Pears: A smaller crop and tight supplies are expected to support higher grower prices, especially in the fall.
  • Grapes: A larger table grape crop may lead to softer prices later in the season.
  • Strawberries: Increased supply has led to price declines, particularly in August.
  • Bananas: Reduced import volumes and lower demand contributed to a 3% decline in retail prices in August.

Trade Summary

• Apple Exports:

  • Exports to Mexico declined significantly in 2015/16 due to reduced supply and antidumping duties.
  • The revocation of provisional duties in June 2016 may improve export prospects to Mexico in 2016/17.
  • China, despite expanded access, saw a slowdown in U.S. apple exports due to increased domestic production.

• Pear Exports:

  • Early 2016/17 export volumes are down due to a smaller U.S. crop.
  • Lower imports from the Southern Hemisphere also contributed to higher pear prices.

Consumer Price Index (CPI)

• The CPI for fresh fruit increased in August 2016, with strong price gains for grapefruit, lemons, and apples, offsetting declines in navel oranges and strawberries.

Conclusion

The 2016/17 season is expected to see increased apple production and a smaller pear crop, which will likely impact market dynamics and prices. While higher production in apples may lead to downward pressure on prices later in the season, the reduced supply in pears and tight market conditions are expected to support higher grower prices. Overall, the outlook suggests a mixed picture with some commodities seeing price increases due to supply constraints, while others may face downward pressure as supplies increase.