Crop Updates – Tomato - Q4 2022

The industrial tomato harvest in California is estimated at 10.48 million (short) MT which is close to August’s USDA forecast of 10.5 million MT, according to the latest figures released by the Processing Tomato Advisory Board (PTAB).

The volume is 2.5% down compared with the previous year and -5% against the 2019-2021 average. The crop is 14% lower than the USDA January’s forecast of 12.2 million MT which mirrored processors’ production intentions ahead of the start of the season. The season started a bit later than in 2021 with lower volumes until September when deliveries to factories started to pick-up to then fall sharply ahead of October as heavy rains slowed down harvesting.

The reduced production has caused prices to increase due to higher raw material costs (+25% y/y) and a consistent contraction in stocks. Total inventories of processed tomatoes in the US were in the range of 3.3 million MT in June 2022, down 4% y/y and -29% compared with June 2020. Processors estimate that stocks will remain on the low side well into 2023 as production was below expectations.

During the Tomato Conference held in October in Parma, Mark Delamater from processor Morning Start explained that bulk paste consumption has been stable at 6.4 million MT, but it dipped to 5.1 million MT in 2021. For the current year, consumption is expected to recover to 5.9 million MT and to grow to 6.4 million MT in 2023 and 2024. The expected increase in demand, reduced production and low stocks will further lift tomato paste’s prices that today average $1,700 per MT – FOB for the 28/30, 65% up y/y.

For the 2023 season, production might remain on the low side as California is expected to go through another dry season. The water availability has improved compared to 2021, for example the Shasta reservoir in the north part of the state is at 58% of its historical average versus 42% of last year, while the San Luis reservoir in the central part of the state is at 52% versus 37% in 2021. However, state water officials reported that reservoirs are still noticeably low at 69% of historical average. This means that processors might have to further increase prices paid to growers to secure the desired planted area. Some sources suggested that to guarantee a profit to growers (and ensure that they will continue to plant tomatoes) raw material prices should be north of $140 per MT against $105 per MT paid in 2022.