In a surprising turn of events, the US has recently suspended avocado imports from Mexico, disrupting the supply chain and creating significant market uncertainty. This suspension, effective two days ago, stems from safety concerns involving on-the-ground inspectors after an incident in early June. With no clear timeline for lifting the ban, the ripple effects are already being felt across the avocado market.

The US's Dependence on Mexican Avocados

The United States relies heavily on Mexico for its avocado supply. Between 2020 and 2023, the US imported approximately $2.65 billion worth of avocados from Mexico, accounting for a staggering 91% of its total avocado imports, according to the USDA. The region of Michoacán alone, one of only two regions in Mexico authorized to export avocados to the US, is responsible for 80% of these imports. The sudden halt in exports from this key region has raised concerns about potential shortages and price hikes.

Golden Opportunities for Peru and Colombia

In light of the suspension, Tridge's in-house trading experts and the Fulfillment Fruits & Vegetable Team have weighed in on the potential repercussions. They suggest that the US avocado supply could be exhausted within a week and a half if the ban persists. While it is too early to predict the exact price increases, a sharp spike in avocado prices is anticipated in the US, Peru, and Colombia.

This disruption presents a unique opportunity for Peru and Colombia, the second and fourth largest avocado exporters, respectively. Historically, these countries have focused on exporting to the European Union due to Mexico's dominance in the US market. However, the temporary ban provides them a chance to redirect their exports to the US, potentially at higher prices to capitalize on the urgent demand.

Strategic Moves and Market Shifts

Tridge's Fulfillment Team predicts a flurry of activity in the coming days as US buyers scramble to secure supplies from Peru and Colombia. To maximize profits, these countries might resort to expensive air transport to expedite deliveries to the US. This shift in focus is likely to reduce the avocado supply in the EU, where Peru and Colombian avocados are typically exported.

Potential Worst-Case Scenario

The worst-case scenario, according to Tridge's experts, would be if the suspension remains unresolved until the US exhausts its avocado inventory. However, there is optimism that this outcome can be avoided. In a similar incident in 2022, the US authorities lifted a suspension on Mexican avocados within a week. A comparable resolution timeline is hoped for in the current situation.

Looking Ahead

Both the US and Mexico have a vested interest in resolving this issue promptly. As the world watches for developments, Tridge's Fulfillment Team remains in close contact with partners to monitor dynamic price changes and explore market opportunities. The team is actively engaging with growers and suppliers in Peru and Colombia to navigate this evolving landscape.

Stay tuned for further updates as we track the impact of this suspension on avocado prices and market dynamics. This unfolding situation promises to be a pivotal moment for the avocado trade, with potential long-term implications for global supply chains.

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