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Market Data 02.06.2017

Juice inventories should recover in 17/18, but with no supply excess

The larger crop forecast for the Brazilian citrus belt (São Paulo and Triângulo Mineiro), at 364.47 million boxes of 40.8-­kilos in 2017/18, should lead to the recovery of inventories at processors from São Paulo State. The scenario, however, should not result in a surplus of juice supply.

Juice inventories should recover in 17/18, but with no supply excess

The larger crop forecast for the Brazilian citrus belt (São Paulo and Triângulo Mineiro), at 364.47 million boxes of 40.8-kilos in 2017/18, should lead to the recovery of inventories at processors from São Paulo State. The scenario, however, should not result in a surplus of juice supply. The fruit availability in this new season will be enough only to partly replenish the inventories forecast for the end of the 2016/17 season, on June 30, 2017.

Data released by CitrusBR (Brazilian Association of Citrus Exporters) on May 18 point to ending stocks between 200 and 300 thousand tons of Frozen Concentrated Orange Juice (FCOJ) Equivalent in the 2017/18 season. However, Cepea figures show that a volume near 200 thousand tons is more likely to be achieved.

For these figures, Cepea took into account the crushing of around 300 million boxes, the average yield in the last 10 years (263 boxes to produce one million tons of FCOJ) and juice sales around one million tons. If these figures are confirmed, Brazilian inventories, on June 30, 2018, may be slightly over 200 thousand tons. This level is much higher than the forecast for the end of the 2016/17 season, but it is still concerning regarding supply, if the next orange crop (2018/19) has a limited output.

Industrial yield may limit the volume of juice in stock at the end of the 2017/18 season as well. Although it is still early for any estimates (CitrusBR should release its first forecasts only in July/August), so far, agents from the sector indicate that the orange yield in the 2017/18 crop may be higher than that in the two last seasons, based on the total amount already crushed.

Besides, as the volume of rains were larger in May in São Paulo, agents believe yield will be higher. This recovery, however, could not be enough to increase yield to the average level of the last 10 years, at 263 boxes to produce one ton of FCOJ. However, the volume of ending stocks in the 2017/18 season will depend on industrial yield and capacity of processors to crush around 300 million boxes.

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