By Katherine Hamilton

Shares of avocado companies recovered after Mexican President Claudia Sheinbaum said U.S. tariffs on Mexican goods would be delayed for at least another month.

Mission Produce, Limoneira and Calavo Growers bounced back after declining around 3% Monday morning. In recent trading, shares of Mission fell 0.9%, to $11.79, while shares of Limoneira fell 0.5%, to $22.95. Calavo Growers shares were down fractionally.

Analysts said tariffs would drive up consumer prices for avocados, as about 80% of those sold in the U.S. are sourced from Mexico, according to the Agriculture Department.

Consumers would likely see a price increase almost immediately after tariffs were implemented, which could dampen demand, said Sturdivant & Co. analyst Mitchell Pinheiro. An average avocado sells for $1.15 in U.S. supermarkets, so a 25% tariff would up it to around $1.45.

Prolonged tariffs could also prompt restaurants to add surcharges on guacamole or increase menu prices, said Ben Klieve, an analyst at Lake Street Capital Markets.

One option for retailers and restaurants is to source avocado from somewhere other than Mexico, but tariffs may push up prices on the fruit from all locales. Similarly, Mexico could shift shipments to other countries if U.S. demand crumbles.

"There could be a shift in the global supply chain in the event that this is a prolonged dynamic," Klieve said.

For now, companies sourcing from Mexico are seeing some costs offset by the weakening peso. Labor costs for growers and packers based in Mexico, who are paid with pesos, should go down as the currency weakens, Pinheiro said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

February 03, 2025 11:22 ET (16:22 GMT)

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