Crush Report Price Tables FAQ

February 2, 2016

Every now and then I end up in discussions about the different price tables in the Crush Report.  Sometimes a grower is trying to figure out which table would result in more fair (i.e. advantageous to the grower) price indexes.  Sometimes it’s a discussion about which table pricing is easiest to forecast.  One thing I have learned is that many people in our business do not have a clear understanding of the way the tables differ and relate.  I haven’t posted for a while and the new Crush Report is yet to arrive, so I figured I would post a simple FAQ to help people navigate the data available to them, in the hopes of increasing awareness and use of data in our industry.

 

What Pricing Information is Available and How Do the Tables Differ?

The USDA’s National Agricultural Statistical Service includes three important and useful pricing tables in the Crush Report: Tables 6, 8 and 10. 

 

Table 6 includes the average price for all grape transactions by combination of variety and pricing district.  Table 6 also includes average statewide prices for each variety and average prices for all grapes in each district.  Varieties here also includes the categories Other White, Other Red, Total White, Total Red, Total Wine and Total Grapes. 

 

 

 

Table 10 looks almost exactly like Table 6.  The only important difference is that Table 10 does not include sales between related parties.  If a single company or individual owns 5% or more of both the entities in a grape transaction, that transaction is not included in Table 10.

 

Table 8 shows information by price level and contractual Brix requirements.  The Brix requirement information is of dubious accuracy.  On the other hand, data that shows how many tons were sold at each price level can be really useful.  For instance, I might segment District 3 (Sonomarin) Pinot Noir prices into 99th, 80th and 50th percentile to see how prices move for the different segments (spoiler alert: each segment displays a significantly different dynamic).  Table 8 reconciles to Table 6.

 

Is There a Big Difference between Tables 6 and 10?

 

Usually not.  For the statewide average price of all wine grapes the difference is usually around 1%.  Some variety and district combinations, however, have greater differences than this.  For instance, for Other Whites in District 11, the Table 6 price was less than 1/3 of the Table 10 price in 2014!  Major varieties tend to have smaller discrepancies, although Pinot Noir’s Table 6 price has been almost 10% lower than Table 10 lately.  The Central Valley seems to tend toward larger discrepancies, especially District 14 (Southern San Joaquin Valley.) 

 

Which Table Do People Usually Use?  Is There an Industry Standard?

 

As far as I can tell, there is no industry standard.  If someone disagrees, I’d love to hear from you.  The best table to use depends on your use.  If you are indexing prices to a percentile, then you have to use Table 8.  If you are indexing to average prices or a formula that uses average prices, then the preferable table depends on variety, district, contract terms and whether or not you are the buyer of seller.

 

For forecasting purposes, all else being equal, I prefer to use Table 6.  My reasoning is that it includes the whole of the market.  In actuality, though, this is a pretty arbitrary decision that is more a function of a need for methodological consistency than anything else.  I have been unable to find strong evidence that one table’s prices are less volatile or to tease out any other clear advantage.  If someone else has an opinion on this, please do e-mail me.

 

The important thing is to check both tables.  If you are a Pinot Noir grower who wants negotiating ammunition and are currently indexed to Table 6, you may want to point out to your buyer that sales between related parties pull average prices down and don’t represent the open market.  Or not.  It depends on the context of your negotiations.

 

How Do I Calculate Percentiles from Table 8?

 

This is really a frequently asked question.  There are a million easy ways to do this in Excel, but I’ll share the simplest one with you.  One day I hope to put out a percentile lookup tool with stable macros.  Until then, if you have trouble calculating percentile prices, follow the instructions below.

 

Step 1:  Download Table 8.  For some reason, the NASS often uses non-numerical cell formatting for their numbers, which is problematic.  If this is the case, highlight the data and change the formatting.

 

Step 2:  Locate the pricing district and variety you want to look up.  The easiest way to do this is to press Ctrl+F then search for the district, using a wild card character in case the report contains multiple spaces in the district name.  That is, search for District*4 not District 4.  Once you find the district search for the variety.  Now, identify the column that contains tonnage for each pricing level (usually E).  Find the total tonnage for the variety-district combo at the bottom of the tonnage numbers by price level (don’t use Ctrl or End to do this, as the NASS often formats their reports in a way that plays very poorly with these shortcuts.)

 

Step 3:  Now multiply the total tonnage by the percentile desired.  For instance, for the 60th percentile price multiply the total cell by .6.  Note this total.

 

Step 4:  Scroll back up to the lowest price tier for this variety and district and make the tonnage numbers for this tier the active cell.  Press F8 to toggle selection mode and start extending your selection downward.  At the same time, keep an eye on the status bar at the bottom of the spreadsheet.  In the right-hand corner you should find a running tally of the sum of the highlighted cells.  For some period of time, this number will be lower than the total you calculated in Step 4 then, at some point, it will be equal to or higher than that total.  Stop as soon as you have selected a number of tons that is equal to or greater than the total in Step 4.  The bottom selected cell should be the one that put you over the top.  Now look two cells to the left of that cell and you will see the price for that percentile.  There you go.  Now pour yourself a glass of wine.  Cheers!

 

 

Listened to while writing this post: Nahko and Medicine for the People

 

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