Mexican Avocado Price Jumps to Highest Since August 2017

(Bloomberg) -- President Donald Trump’s threats to slap tariffs on Mexican goods may already be having an impact on avocado prices.

One gauge of the Hass variety from Michoacan, the heartland of Mexican avocado production, gained 3.7% on Monday to the highest since August 2017. Unchanged last week, the benchmark has surged 65% this year. Other prices tracked by AvoPrice were little changed Monday.

Coming at a time of a smaller Californian crop, Trump’s threat to tax Mexican imports by as much as 25% has the potential to further tighten supplies. The last time he threatened Mexico on immigration -- with a border-closing warning in April -- the Michoacan avocado gauge surged.

Avocados don’t trade on exchanges like soybean futures in Chicago or copper in New York, and like other relatively opaque fruit and vegetable markets, prices start with producers. A tough season has squeezed supply and pushed up prices, according to a survey Friday of half a dozen sellers in Mexico City’s busy wholesale market.

Michoacan producers aren’t expected to lower their prices to offset tariffs, signaling the taxes would be passed on to U.S. consumers. Chipotle Mexican Grill Inc., whose shares sank as much as 2.8% Monday, may raise prices to offset the impact of tariffs against Mexico, according to Loop Capital Markets.

Of course, a weaker Mexican peso would help offset any price hikes for American buyers.

--With assistance from Patrick McKiernan.

To contact the reporters on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net;Michael Hirtzer in Chicago at mhirtzer@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Reg Gale

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