Thompson
Update
Spring 2012
What’s the Crop Size
and What’s It Worth?
At Allied Grape Growers, we regularly report
on the grape and wine markets. Most of our
analysis is concentrated on the wine business, looking at sales and shipments, industry
inventory, exchange rates, crop sizes, global
supply, pullouts and plantings and other
related items that have a direct impact on the
winegrape market. But this special analysis
focuses on Thompson Seedless, a variety that
for years has not only been critical in balancing wineries’ demand for value-priced grape
supply, but has also been the backbone for a
very significant white grape juice concentrate
market, not to mention, a base
for brandy and sparkling wine
If we
production.
value of the grape each year. Each industry tries to guess what the others
need, and buyers within each of the industries try to guess what their
competition is doing. To complicate things, raisins, white grape juice
concentrate, value-priced wines and brandy are all produced globally,
sometimes by countries that have much less regulation and much lower
costs. Global supply and demand play a large role in the need for the
product, which means it is important to understand the exchange rate
(value of the dollar). In addition, production can vary significantly from
year to year, especially considering the large acreage base it is grown on.
There are more bearing acres of Thompson Seedless grapes in the state
than any other single grape variety, and twice as much as the next largest, Chardonnay. All of these factors have to be considered when evaluating the market.
look back at
25 years of data for
Thompson Seedless,
we see that never
in that time period
have we produced
over 10 tons per acre
two years in a row.
Never.
With the dwindling supply
of Thompson Seedless grapes
due to significant vineyard
removal over the last decade
(an estimated loss of over
85,000 acres since 1999),
the market for the grape has
become much more stable.
Considering that the raisin
industry utilizes the clear
majority of all Thompson
Seedless production, it is critical to note that the health of
that industry over the last few years has also
significantly contributed to market stabilization. In an average year, two-thirds to threequarters of all Thompson Seedless acreage is
utilized to make raisins, either naturally or
via dehydrator. The remainder is utilized by
the wineries (for concentrate, wine or brandy
production), the table grape industry, and
canneries, in that order.
Knowing that
there are many
potential uses
for Thompson
Seedless grapes
by various
buyers, it is a
challenge to
estimate the
This year there is a strong sense of optimism
by growers regarding the 2012 Thompson
Seedless market for the following reasons:
there exists a strong (and relatively undersupplied) white grape juice concentrate
market; a short inventory of value-priced
California wine; a California raisin industry that is on target to ship all of last year’s
production; an ongoing supply need via
the other aforementioned uses; and lastly, a
potentially supply-restricted crop. All of these
factors may come together to form a situation of high demand, and given no surprises,
very likely the highest value ever seen for the
grape.
Projecting the 2012 Crop Size
Since crop size plays an important role in determining grape value each
year, Allied Grape Growers performs annual bunch counts to get an
initial impression of crop size. This year, we have concluded that the
average Thompson Seedless vine is producing about 26 clusters. This
is significantly less than last year’s 38 count, and is also less than the
10-year average of 34 clusters. It is the lowest bunch count we have had
in the last decade, except when we counted 22 in 2006, the year the
industry experienced the lightest Thompson crop it had in 20 years. So
basically, we are saying the crop looks light.
Last year’s crop yielded a green weight average of almost 11 tons per
acre, which was one of the largest in the last two decades. If we look
back at 25 years of yield data for Thompson Seedless, we see that never
in that time period have we produced over 10 tons per acre two years
in a row. Never. It doesn’t mean it’s not possible, but it sure isn’t likely,
based on history. In addition, in the three instances in the last 25 years
where we experienced a large crop, above 10.5 tons per acre on average,
in each of the years following the large crops we had yields
between 7.5 and 8.7 tons per acre. With this historical
information, we can say that it is almost certain that this
year’s crop will yield below 10 tons per acre and it is highly
likely that it could be closer to 8 tons per acre, on average.
We have also looked extensively at relative bunch weight to
estimate crop sizes based on bunch counts. It seems logical that in years where there are higher bunch counts, the
bunches themselves weigh less. The data confirms this. In
the chart on this page, we have plotted a weight factor that
was derived by creating a relationship between the bunch
count and the resulting yield for each year. This weight
factor is an indicator of how heavy the bunches are. It is
not an actual weight; it is just a factor relative to counts
and yields. Note that the higher the bunch count, the lower
the weight factor. In addition to confirming that individual
bunches get lighter as bunch counts go up, we can use this
data from a series of years to find the lowest and highest factors. With the low and high factors at hand, we can
apply them to a given bunch count to define a range of
potential yield.
From our data, the lowest weight factor was a .2157 and
the highest was a .3159, with the average being .2712. If
we apply this factor range to a bunch count of 26 for 2012,
we get a potential yield of 5.61 to 8.21 tons per acre (see
the table for additional data based on bunch counts). But
keep in mind that bunch weights are the product of a lot
of things, such as weather and grower inputs. It is possible that we would see high bunch weights in a year such
as this due to increased grower inputs and/or a vinefavorable growing season. But at any rate, we still believe
it is highly unlikely that the crop will exceed 10 tons per
acre and would even place bets against it achieving average
yield, which is about 9.4 tons per acre.
Thompson Seedless Yield Ranges
Given Bunch Count
Low Yield
Avg. Yield
High Yield
Bunch
@ Factor:
@ Factor:
@ Factor:
Count0.2157 0.2712 0.3159
204.31 5.42
22
4.75
5.97
24
5.18
6.51
26
5.61
7.05
28
6.04
7.59
30
6.47
8.14
32
6.90
8.68
34
7.33
9.22
36
7.77
9.76
38
8.20
10.31
40
8.63
10.85
42
9.06
11.39
44
9.49
11.93
Quality
6.32
6.95
7.58
8.21
8.85
9.48
10.11
10.74
11.37
12.00
12.64
13.27
13.90
Valuing This Year’s Crop
Assuming that our bunch counts and resulting estimates
are correct, we are in for a relatively light Thompson Seedless crop in 2012, which should mean higher prices, all else
being equal. Other factors that play a role in determining
value are also in the favor of increasing prices.
The white grape juice concentrate market, which had in
many years been dragged down by excess apple concentrate, is once again healthy due to a balanced (or even
short) apple concentrate market. Global supplies of white
grape juice concentrate are tight with Argentina recently
experiencing a below-average crop and limited supplies.
The raisin industry is only anticipating a 100,000-ton
carryover into the upcoming marketing year, which creates
a strong need for the current year’s crop based on the fact
that they sell well over 300,000 tons annually.
Wineries are generally in short supply of product as well,
which presents an opportunity for Thompson Seedless to
be used in value-priced wine, brandy and sparkling wine
programs.
Any Thompson Seedless grower that intends to sell green
should keep these market factors in mind. These markets
should easily be able to support a $300-per-ton or better
green Thompson Seedless price in 2012. In fact, growers
should demand it, based on likely lower yields and the fact
that even at $300 per ton most growers could have less
total per-acre revenue than last year at $265 per ton.
No price has been set for this year’s crop. There has not
been a substantial amount of tonnage sold yet, but the
price should certainly start with a “3” when the time
comes to trade Thompson Seedless grapes.
Integrity
Stability