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Market Data 20.10.2016

Brazil: Rains spur development of the 2017/18 crop

Rains in early October in many regions in S‹o Paulo State heartened citrus growers. At the current developmental stage of the plant, rains recover at least part of soil moisture, favoring the 2017/18 crop development.

Rains in early October in many regions in São Paulo State heartened citrus growers. At the current developmental stage of the plant, rains recover at least part of soil moisture, favoring the 2017/18 crop development.

In the international market, expectations of agents from the citrus sector that the 2016/17 crop from Florida will be even smaller than the previous season was confirmed by the USDA (United States Department of Agriculture) in their first report for this season, released on October 12. According to the USDA, harvesting in Florida may total only 70 million 40.8-kilo boxes, 14 % down compared to the previous crop.

The reduction in Florida crop may worsen the scenario of global supply of orange juice. In Brazil, orange supply is very low and, consequently, the 2016/17 season is expected to end (in June 2017) with empty stocks, according to CitrusBR (Brazilian Association of Citrus Exporters).

In Brazil, the effects of the American crop reduction may be less evident this season. Even if the United States need to increase exports to compensate low production, Brazilian processors may not have enough orange juice to meet the demand increase. Thus, the main consequence to Brazil of the smaller crop in Florida may come from the possible citrus valuation in the international market.

Orange juice price rises in the international market, in turn, may favor growers who have contracts linked to the sales value of citrus in the international market. On the other hand, high prices of orange juice may lead consumption to retract.

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