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Morning Star Tomato Bites, 6 June 2024

07/06/2024 - Madeleine Royère-Koonings - 2024 Season
Morning Star colleague Aaron Giampietro is back with another TOMATO BITES by Morning Star update.
Hello Everyone, this is Aaron Giampietro with your June 6, 2024 Tomato Bite update. The USDA National Agriculture Statistic Services reported revised processing tomato contract intentions in the latest report released May 31.
In late January, California tomato processors indicated an expected 11.6 million paid short tons from 232,000 acres, for an average yield of 50 paid short tons per acre. The latest report shows a 4,000 acre decrease with a higher field yield estimate of 50.4 paid short tons per acre creating an 11.5 million paid short tons forecast. At the 5 year average yield, the crop would be just over 11 million paid short tons assuming acres planted will equal acres harvested.

USDA NASS Paid Short Tons Acres Paid Short    Tons per Acre Yield Paid Metric   Ton Hectares   Paid MT per  Hectare   Yield
January 11,600,000    232,000    50.00    10,523,346    93,887 112
May 11,500,000 228,000 50.40 10,432,627 92,268 113
2019-23 Average    11,124,120 228,000 48.79 10,091,635 92,268 109
California's farmers have made significant strides in groundwater replenishment, contributing an estimated 4.1 million acre-feet through managed efforts in 2023. This amount of recharged water nearly matches the full storage capacity of Lake Shasta, California’s largest above ground reservoir, and is equivalent to the water demand for growing California processing tomatoes for over 6 years. This substantial recharge helps offset both short- and long-term risks, ensuring a more stable water supply as below ground water contains California’s largest storage capacity at one billion acre-feet and is not subject to evaporative losses.

 Water  Acre Feet  Cubic Kilometers
Managed Recharge 24           4,100,000 5.06
Total Groundwater 1,000,000,000 1,233.48

California processors have settled with the CTGA for conventional tomatoes at $112.50 and organic tomatoes at $145 dollars per short ton. A lower farm gate tomato price for 2024, along with healthier California inventories of approximately 4 months of stock on hand by July 1, has led to lower contract pricing for annual tomato supply agreements. Domestically, the 2024 contract negotiations are progressing at their usual pace while managing through overbooked supplies.
CTGA Farmgate (USD) per Short Ton per Metric Ton
Conventional  $         112.50  $         124.00
Organic  $         145.00  $         159.80
Internationally, the market is more varied as buyers consider not only the 2023 volumes that built stocks by about one month but also the 2024 forecasts showing an additional planned buildup of two and a half months of stock. With ample global tomato paste supply, buyers can now consider the complete equation. California remains a strong contender, offering a robust package of value, high quality, consistency, supply chain transparency, and excellent freight logistics. California’s 2024 crop farmgate price, competitively valued against other international origins and coupled with tariff exemption for bulk tomato paste into the United Kingdom, contributes to excellent export volume potential.
Shifting over to energy, both the natural gas commodity and California City Gate prices have fallen recently. This decrease is driven by milder weather, increased natural gas storage, and a significant boost in hydroelectric power. Additionally, California is experiencing a transformative shift in its energy dynamics with the increased deployment of battery storage, discharging over 5 gigawatt hours at peak times. This has reduced reliance on natural gas during peak demand and is flattening the duck-bill demand curve.

Transplanting is just about all wrapped up at this point, ending about 7 days behind schedule due to a typical mix of spring rain, wind, and both hot and cold weather. You can find much more in depth information on the transplanting and growing season in our latest Spring Newsletter on our website.
Stay tuned for further updates as we approach the start of harvest, and as always check our website for the latest news on ingredient pricing and information relative to the industry and market. Thank you!

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