So the Ocean Spray concentrate auction was today and the results were flat, the average price per gallon only up $.10. I don’t know how many buyers participated in the auction, but clearly the buyers participating don’t feel the need to bid up the price, so they must like the supply out there. Hmm. Wonder how that will hold up in August. The next auction is in July.
All everyone can talk about is the weather here in Wisconsin. Early, early spring, now really cold nights. Many, if not most growers have the beds under water, changing water, talking about water, running sprinklers. And it is April 11th! Yikes. Big crop? small crop? Drowned crop? Who knows.
The other big topics of discussion are the Cott letter and the OS B pool. I’ve got a couple of thoughts on both:
The Cott letter to its growers was mailed out on April 3 and amongst other things lists a floor price for the upcoming 2012 crop at $30/barrel. Wow. That is definitely up from 2011 from $25, but I thought it would be higher. The letter also, reserves the right to lower the price if the US crop surpasses 8,000,000 barrels (last year it was about 7,500,000 barrels) and, on the other hand, Cott also claims that the price could go up if market conditions improve. Over all the letter talks about wanting to support the grower and get them to profitability, and on that note, they are establishing a Pollination Support program where they will support 1 hive per acre. (Details to follow, they said) My take on the whole letter is, they say they want to pay us more, but gee whiz, if they can’t, they won’t.
The whole Ocean Spray B pool letter is interesting too. OS established new rules for the B pool waiting list. This is after moving 850 OS member acres off the waiting list and into the B pool for the 2012 crop and another 283 to be planted acres as well. So, they moved their members first. If I was an owner of the co-op (a member) I would certainly support that. They can do what they want, it is their co-op! I wonder if that means that (850 acres x 200 bbls acre) 170,000 barrels or so that just moved off the wait list came from the independent handlers? I mean, was that fruit sold to independents last year? Or maybe it is just coming online this year, but it is fruit that won’t be independently handled, even though it will find its way into the independent market, or ingredients market by way of OS’s auction and ingredients division. So, these B pool growers are giving OS their fruit, which will be auctioned and keep the price down…but hey, they might get into the A pool some day. The price you pay for getting into the A pool.
As always, I wonder what all of this means for the independent grower. Handlers are not going to pay us more than they have to. Just like we growers don’t pay the fertilized guy more than WE have to. If we can get the stuff cheaper, we will. So, I can’t blame them. As far as Ocean Spray? They are doing what they have to do to get their owners the best return they can, can’t blame them for that. Not their job to take care of the rest of us. Oh, but their auction is messing with our prices and we are going to have to figure something out there. If they can always keep the B pool full with fruit to auction, then they will. Simple as that. I don’t see them auctioning their A pool fruit.
The United cranberry board has been discussing all of this and more since our inception. Our members have told us that they don’t feel they have options. They don’t want to pay $350 an acre to wait on the B pool for Ocean Spray with the hopes of someday getting into the A pool, and they feel that the independent handlers don’t care if they even break even. So, back in January 2012, we asked our members if they had un contracted fruit for sale with this 2012 crop. The response was overwhelming! Many growers anticipate many barrels of fruit to be made available to United Cranberry. So, there you have it! United Cranberry is becoming a handler! We’ve put in an order for bins, and are drawing up a marketing agreement. There may still be room for more fruit this fall, so call if you are interested. This first year will be crazy busy but we are committed to making it work and getting the highest return we can for our growers.
Did it ever occur to you that if growers didn’t join the Ocean Spray B pool and /or didn’t sell them independent fruit, that OS wouldn’t have any fruit/concentrate for the auction? You don’t see them selling their A pool fruit for that low a price! Something to think about as everyone on the B pool waiting list just got their notification of the new rules for the waiting list, which include a $350/acre fee. As United Cranberry is taking the steps to become a handler, maybe growers should consider all their options. Call us!
http://www.oceansprayitg.com/Blog/ So here is Ocean Spray ingredients blog, which is a pretty good info place for all things Ocean Spray and their cranberry measurement post details their efforts to commericalize the cranberry content test that Complete Phytochemical Solutions developed with United Cranberry support. So, industry people working together, all good!
Ocean Spray has also announced the date of the next concentrate auction, April 25, 2012.
So those of you that know me, know that I am new to this blogging thing. A few weeks ago, I figured out that if you tag and categorize your posts, they get into the Google search engine. In order to get news articles for the blog, I have a few google alerts set up, like Ocean Spray, Cott, Decas Cranberries, etc, etc. So imagine my surprise this morning, when google sends me an alert on a news story…on my very own blog posts! Yes, we have arrived! Today I received an alert on my post on the Ocean Spray auction. Will wonders never cease.
Just received a copy of the quarter ended 12/31/2011 on the cranberry crop from the CMC. This is the first quarter in the crop year, and shows the delivery of the crop.
What I find interesting, if I am looking at this correctly is that the increase in sales in the first quarter of the year is about 5.8% over the same quarter last year! Great news!
***edit*** ok, so this number was “total sales and shrinkage” , not total sales. A good portion of this is shrinkage…what is that? I heard that the crop had some rot and low color. Does that affect shrinkage? So, yes, our overall sales, without shrink, were up, but only about 2%. Apparently the crop “shrunk” about 3%. So maybe the rest of this original post isn’t as great as I thought. ****
This follows a 7.93% increase in sales in 2010 and a 4.33% increase in sales in 2009. Look at the last page of the report for these numbers and do your own calculations. If these are indeed the correct numbers, we are seeing more sales and usage of our cranberries. We are “absorbing” in the increasing crop we are delivering. Indeed the 2011 crop just delivered was the second largest US crop in history, behind 2008, and only smaller by 131,654 barrels. Our overall inventory remains high, but can I say…manageable? with our increased sales.
I’m certainly not the CMC numbers expert. Call your CMC representative or Michelle Hogan at the CMC if you have any specfic questions.
Overall though, I think these numbers are good. They show that our sales and usage is increasing. Certainly, this is due to the low prices of cranberries and processors are finding new ways to use cranberries. This is better than the alternative (meaning the prices are low and processors can’t figure out how to use them) So, I call this a win. Now I’m off to find out how all of the above figures into the auction prices. The OS concentrate auction is today. Stay tuned.
Prices are going up! Yay!