April 21, 2006

Dear Tomato Grower: 

In this issue:

• Planting delayed 1 to 5 weeks depending on area
• Crop estimate revised downward to 10,000,000 tons
• Some processors increasing late season premiums in order to increase pack plan

Weather Impact: 

Warm, sunny weather finally arrived across the growing area. 

• Kern County – some fields are flowering and on schedule.
• Huron/Five Points – fields being cultivated and side dressed. Estimated to be a week to 10 days late. Many fields were planted wet which will impact yields
• Firebaugh – all growers in the field this week with planting 1 to 2 weeks late with concerns about compaction.
• Los Banos/Dos Palos – planting getting underway about 7 to 10 days late.
• Patterson/ Westley & Tracy looking to get started in the next week to 10 days with growers 1 to 2 weeks late.
• Delta growers should start next week although their faced with seepage problems due to high river levels so some fields may not get planted this season.
• Colusa / Yolo finally getting started with transplants with some growers as much as 5 weeks late. Some growers have dropped tonnage due to concern about poor yields. Roughly 40% of direct seeded fields need to be replanted. Re-seeding started Monday.

Crop Estimates: 

Several processors have revised their estimates for 2006 crop from 11 million plus to under 10 million tons. Is this reasonable? 

The CTGA estimates the acreage this year to be 280,000 vs. the 294,000 from the January estimate – a 5% reduction. Based on a 10 million ton crop – this equates to 35.7 ton average yield – 9.7% reduction from the 39.5 January estimate. 

Based on the wet planting conditions and the necessity to push the crop into late October, 10 million tons seems reasonable based on what we know April 21^st. Some would say, however, it’s overly optimistic. 

Impact of 10,000,000 Ton Crop: 

1. Grower Perspective:

The projected yield reduction from 39.5 to 35.7 will result a revenue loss of  $220/acre which when taken into consideration the higher energy, seed, labor and additional costs associated with working wet fields, dims profit prospects even more. 

2. Supply & Demand:

Lowest Carry-Out since June ’99 when inventories were 2,204,00

* Demand assumes Mar- May ’06 movement equals previous 5 yr average 

3. Processor Perspective:

   Processors have approached the shorter crop with different strategies:     

One increased late season premiums and extended early season premiums in order to maximize their throughput – late seasons of $10 and $15 for delivery Oct 8 and 15 respectively.  

Another rolled back the harvest, extended early season premiums and put no cap on late seasons plus trying to convince cotton growers to divert acreage to tomatoes. 

Other processors have offered $65 to $70 for October tomatoes if they’re close enough to the cannery. The October 20^th cut off on insurance increases the risk or late tomatoes.  

Processors are rumored to be looking for offshore supplies to backstop their production. Chilean processors must be feeling pretty good.

Bottom line – processors want tomatoes and some deals will be cut at higher levels. The challenge will be avoiding an oversupply situation LH August / FH September which could cause tomatoes to be discounted or disked.

Paste Market: 

A recent auction resulted in pricing at $0.385/lb for 31% binned paste. Processors are concerned about meeting commitments for existing contracts so prices are likely to go even higher. 

Tomato Guesstimator: 

Please see the attached form for your 2006 crop estimator. Pat Rooney and Glen Robertson walked away with a bottle each of 2001 Silver Oak for their winning 2005 estimates.

 Questions or comments? Please call (209) 478-1761. 

Ross Siragusa

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