The Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent have been increasing for three months. Between July and September/19 (2019/20 crop), Brazil shipped 299.7 thousand tons of the product, 27 % more than that exported in the same period last year, according to Secex. Revenue, in turn, rose 17 %, in the same comparison, totaling 520.58 million USD.

The good exports performance is largely linked to the replenishing of European inventories (the European Union is the number one destination for the Brazilian orange juice) – last season, exports to the EU had decreased. Thus, this season, juice shipments to the EU have already reached 230.4 thousand tons, 47 % up compared to the volume exported between July and September last year.

To the United States, however, the Brazilian exports of FCOJ Equivalent have been decreasing (17% between July and September), totaling only 37.1 thousand tons since the beginning of the season, in July/19. This scenario reflects the supply offset in Florida in the 2018/19 crop as well as estimates for a positive scenario in 2019/20.

For the coming months, Brazilian juice exports are expected to keep on the rise, due to the higher orange production in the citrus belt (São Paulo and Triângulo Mineiro) and the needs of European bottling plants to replenish inventories. To the USA, in turn, the increase in the demand for the Brazilian orange juice will depend on the orange production in Florida (although greening has been controlled in the American state, local groves still suffer the effects of the disease).

BRAZILIAN MARKET IN OCTOBER – Despite the higher demand for oranges in the Brazilian in natura market in the first fortnight of October, the supply of high quality fruits was low (oranges are wilted and small). Thus, prices for higher quality oranges increased in the Brazilian market in the first half of the month. Between October 1 and 15, pear orange prices averaged 21.38 BRL per 40.8-kilo box, on tree, 12.6 % up compared to that in the first fortnight of September.

As regards tahiti lime, quotes increased in São Paulo in the same period – some deals reached 100.00 BRL per 27-kilo box, harvested. The scenario was linked to lower supply, since the fruits still on tree had not reached the ideal size and maturation stage to be harvested.

Between October 1 and 15, tahiti lime prices averaged 79.94 BRL per 27-kilo box, harvested, 68.3 % up compared to that in the first half of September. On the other hand, rains in the first fortnight of October may have favored fruits growth on tree, raising expectations for an increase in supply still in October.

In June 2019, the inventories of Frozen Concentrate Orange Juice (FCOJ) equivalent at Brazilian processing plants closed at 253.18 thousand tons, 26.2 % smaller than that in the 2017/18 season, according to data from CitrusBR (Brazilian Association of Citrus Exporters).

This volume is considered small in light of historic inventories – in recent years, inventories were only lower than that in 2010/11 and in 2016/17. The worse performance of Brazilian juice exports in 2018/19, therefore, prevented juice inventories at Brazilian processing plants from decreasing to critical levels.

CitrusBR should only release data about the ending stocks from 2019/20 and 2020/21 (June/20) next year. However, according to Cepea calculations, inventories should bounce back at the processing plants from São Paulo in 2020/21, due to the large 2019/20 crop in the citrus belt.

Considering initial inventories at 253.18 thousand tons in June/19, the demand in the in natura market, between 50 and 60 million orange boxes (the remaining production is allocated to crushing), and the increase in exports, to around 1.05 million tons, Cepea estimates inventories to be around 400 thousand tons by June/20, much higher than the current levels.

Although this scenario points to high inventories (the last four seasons ended with lower inventories), the effect on orange quotes in 2020/21 will depend on the volume to be produced next season. If production is average or high, the season tends to end with large volumes stocked again, which may constrain remuneration to growers as well as price rises for orange juice.

According to Fundecitrus (Citrus Defense Fund), the annual orange production in the Brazilian citrus belt has been oscillating between  high and low. However, it is still early to forecast the 2020/21 season, since flowering is still beginning in some groves from SP – but, considering the long drought, flowerings may be favored.

With the higher juice supply in 2019/20, shipments may bounce back from 2018/19. The needs of European distributors may favor exports, but higher demand from the United States will still depend on Florida’s production.

BRAZILIAN MARKET – The high price levels for tahiti lime hampered new deals in the in natura market from SP in August. According to agents, supply was low, since, until the end of the month, the fruits still on tree had not reached the ideal size and maturation stage to be harvested.

Drier weather limited fruits growth, which should underpin tahiti lime prices in September. Between August 1 and 31, quotes averaged 30.03 BRL per 27-kilo box, harvested, 20.1 % up compared to that in July.

In the in natura market of pear oranges, the trading pace was slow and demand decreased in August. However, low supply underpinned prices. Thus, pear orange quotes averaged 18.26 BRL per 40.8-kilo box, on tree, in August, 1.1 % up compared to that in July.

The harvesting of murcott tangor, which started at a slow pace in the second fortnight of June, is now stepping up in São Paulo State. According to Cepea collaborators, despite the good quality of the fruits, sales in July were below the expected, due to the colder weather in southeastern Brazil as well as the competition with ponkan tangerine – whose prices are usually lower.

However, the demand for murcott tangor increased in late July, surpassing that for other citrus varieties. Besides, most growers from SP have already ended the ponkan harvesting – there is only some volume available in the in natura market, from orchards from Minas Gerais State. This scenario, in turn, should boost the demand for murcott even more.

Despite higher supply in São Paulo, the fast sales pace for murcott tangor favored prices last month. Between July 1 and 31, quotes averaged 34.88 BRL per 40.8-kilo box, on tree, 5.9 % up compared to the average in June.

PERSPECTIVES – Agents believe that the murcott harvesting should last until December, with the crop peak between October and November. The size of the fruits harvested so far is between small and medium, according to growers – due to the higher number of fruits on tree, which hampers growth.

PEAR ORANGE MARKET – Concerning pear oranges, the faster crushing pace helped to control supply in the in natura market. According to Cepea collaborators, this scenario should continue until the beginning of the harvesting for late oranges (mainly valência and natal), forecast to late August/early September.

Still, although pear orange prices are usually at the lowest levels in July, due to the crop peak and lower demand (because of the cold), quotes did not drop so sharply compared to June (only 1 %). The price average in July, at 18.06 BRL per 40.8-kilo box, on tree, dropped 32.6 % compared to that in the same month last year (when the output from the citrus belt was lower), in nominal terms, – but, compared to that in the same period of 2017, quotes rose 12 %.

Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent decreased 19 % in the 2018/19 crop – compared to the previous season), as expected. Between July/18 and June/19, shipments totaled only 982.24 thousand tons, according to Secex. As for the revenue, it totaled 1.8 billion USD, 19 % down in the same comparison.

The volume exported from Brazil in the 18/19 season was the second smallest in the last 20 years of Secex historical series, only larger than that from 2016/17, when the Brazilian citrus belt harvested a small crop – which, in turn, resulted in the lowest inventory of all times, according to data from CitrusBR (Brazilian Association of Citrus Exporters).

The bad performance in 2018/19 was linked to two factors: lower orange supply in the Brazilian citrus belt (São Paulo and Triângulo Mineiro) and a decrease in the international demand, mainly from the United States. Lower exports, however, prevented juice inventories at Brazilian processing plants from decreasing to critical levels at the end of the season (June 30 2019).

According to a report from CitrusBR, in June/19, inventories at Brazilian processing plants closed at only 224.51 thousand tons, which is considered low compared to that in recent years – inventories in June/19 were only lower than in 2010/11 and in 2016/17.

Brazilian shipments to the United States decreased a steep 38 % compared to that last season, totaling only 196.4 thousand tons. Revenue, in turn, dropped 39 %, to 340.96 million USD. Besides lower consumption in America, this result is linked to expectations for a crop recovery in Florida in 2018/19. According to a report from the USDA released today, July 11th, Florida should harvest 71.6 million boxes of 40.8 kilos, 59 % more than in 2017/18.

To the European Union, the biggest importer of the Brazilian orange juice, shipments totaled 643.74 thousand tons, 11% down compared to that last season. Revenue, in turn, reached 1.19 billion USD, 9 % down in the same comparison.

BRAZILIAN MARKET IN JULY – The cold weather in São Paulo State reduced citrus consumption in the first fortnight of July. According to Cepea collaborators, despite the occasional frosts in some producing regions (mainly in southwestern SP), there were no losses at orchards. Between July 1 and 15, pear orange prices averaged 18.07 BRL per 40.8-kilo box, on tree, stable (-0.05 %) compared to that between June 1 and 15.

Concerning tahiti lime, besides lower supply (due to the harvesting end for the fruits produced in the first semester of 2019), rains pushed up quotes in the first half of July. Between July 1 and 15, tahiti lime quotes averaged 25.19 BRL per 27-kilo box, harvested, a staggering 84.5 % up compared to that in the same period of the previous month.

Major processing companies in São Paulo say that, in July, they are likely to increase the receiving of mid-season fruits from contracts of the 2019/20 season. According to players surveyed by Cepea, pear orange has been received in June, but in small volumes, because the quality was not good for juice production.

Besides, the volume of early varieties continued high in late June, which increased acquisitions of the industry – some companies reported that processing activities increased at the end of the month. As a result, the supply of these fruits may continue high, even with the availability of mid-season fruits increasing gradually.

As for trades in the spot market, only two of major processors were purchasing in late June, with values between 16.00 and 18.00 BRL per 40.8-kilo box, harvested and delivered – the value may change during the season. For small processing companies, in turn, quotes reach up to 20.00 BRL per box, depending on the company and the quality.

CONTRACTS – As for mid and long term trades (two or more crops), players surveyed by Cepea say that the demand is high until December/18, when contracts were established between 20.00 and 22.00 BRL per 40.8-kilo box, harvested and delivered.

BRAZILIAN MARKET – Players expect that, in July, as processing companies are receiving oranges, the volume in the in natura market may reduce, preventing prices to decrease sharply. Agents say that the demand for pear orange increased in late June because the supply of early varieties reduced in the in natura market.

Concerning ponkan tangerine, the crop from São Paulo, which started in February in some areas of the state, is about to end. According to agents consulted by Cepea, only a few orchards still had fruits to be harvested at the end of the month.

The Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent in the 2018/19 season are ending and the volume shipped to all destinations is still low – May was the ninth consecutive month of lower sales (this scenario has been observed since September/18).

This scenario, which was already expected by agents, is linked to the lower orange production in the Brazilian citrus belt (São Paulo and Triângulo Mineiro) this season as well as lower demand from the international market, mainly the United States. The exports decrease, in turn, prevents orange inventories of Brazilian processing plants from decreasing to critical levels by the end of the season (June 30 2019).

This season (July/18 to May/19), Brazilian juice exports to all destinations have decreased 18 % compared to the same period in the 2017/18 season, totaling 918.46 thousand tons, according to Secex. Revenue, in turn, has dropped 17%, totaling 1.69 billion USD.

Exports to the European Union, the biggest purchaser of the Brazilian juice, totaled 592 thousand tons, 8 % down compared to that in the same period last year. Revenue, in turn, totaled 1.09 billion USD, 6 % down in the same comparison.

Shipments to the United States had the steepest decrease in the season, of 38 % compared to the previous crop, totaling 190.71 thousand tons of juice. This result is linked to the lower demand from the USA, due to the estimates for the recovery of the 2018/19 crop from Florida as well as lower consumption. Revenue, in turn, dropped 39 % in the same comparison, totaling 331.55 million USD.

ESTIMATES – According to a report released by the USDA on June 11, the orange crop from Florida should increase by 58.4 % compared to the previous, totaling 71.4 million boxes (1.3 % down compared to that forecast in May).

Despite the decrease in the consumption of orange juice in the United States, the demand from the country for the Brazilian orange juice may not decrease too sharply in the coming seasons, due to the effects of greening on American crops in the long term.

BRAZILIAN MARKET – The trading pace was slow in the Brazilian citrus market in the first fortnight of June. However, the volume of oranges in the ideal stage for the in natura market was gradually decreasing in São Paulo, due to the increase in the deliveries to processing plants. Thus, between June 3 and 14, pear orange quotes averaged 18.08 BRL per 40.8-kilo box, on tree, 21.5 % down compared to that in the first half of May.

As for tahiti lime, despite the large volume available for harvesting, the current weather allows the fruits to stay on tree for longer. Thus, growers reduced the pace of activities in the field, aiming to prevent prices from dropping too much. In the first half of June, tahiti lime quotes averaged 13.65 BRL per 27-kilo box, harvested, a slight 20.6 % down compared to that in the first fortnight of May.

EXPORTS – Lemon and lime shipments were positive in May, surpassing, for the first time in the year, the amount exported in 2018. Last month, exports hit a record (revenue and volume) in all Secex series, which started in 1997.

According to Brazilian exporters consulted by Cepea, as the weather delayed the maturation of tahiti lime crops in SP, shipments decreased from March to April, increasing again in May. According to data from Secex, Brazil exported 18.94 thousand tons of lemon and lime in May, almost two-fold the amount shipped in May 2018 and 57% more than that exported in April/19.

One of the large-sized processing plants from São Paulo State started purchasing oranges in the spot market in the first fortnight of May – early varieties from the 2019/20 crop as well as fruits out of the ideal period from the 2018/19 season. Two plants of this large-sized processing plant were crushing oranges in that period, one in Araraquara and the other in Colina.

Bidding prices were around 18 BRL per box, harvested and delivered at the processing plant, lower than that observed until December/18 for mid and long-term contracts, which ranged from 20 to 22 BRL per box – with the possibility of a participation additional in the international juice market. At smaller-sized processing plants, in turn, quotes ranged from 14 to 20 BRL per box in the spot market – depending on both the processing plant and the quality desired.

For mid and long-term contracts, the purchases of oranges from the new crop have been occasional this year, with no fixed prices and deals closed between some of the large-sized processors only.

The citrus farmers consulted by Cepea are concerned about the effects of the higher production expected for the citrus belt (São Paulo and Triângulo Mineiro) in 2019/20 on orange prices.

Higher supply estimates are based on the good development of orange orchards in all Brazilian regions, favorable weather in the second semester of 2018 (with mild heat and well-distributed rains) and the resume of investments. Still, greening should constrain yield at many orchards in SP.

Although higher productivity in 2019/20 may lower the unit cost of production, the new bidding prices are considered low compared to expenses, which may constrain the revenue paid to the growers who will depend on sales in the spot market. Concerning fruit volume, most oranges have already been traded, through contracts – either previously closed or closed in late 2018. However, a high number of farmers, probably smaller-sized ones, may have been waiting for prices to be fixed this year in order to sell their fruits.

THE MARKET IN MAY – Oranges quotes dropped in the first fortnight of May, pressed down by both higher supply and low purchases from processing plants. Between May 2 and 15, pear orange quotes averaged 23.03 BRL per 40.8-kilo box, on tree, 34.5 % down compared to that in the first fortnight of April.

TAHITI LIME – The demand for tahiti lime was low in the first half of May, while supply continued high in the field of São Paulo State – due to the delay in fruit maturation in the first months of 2019. Between May 2 and 15, tahiti lime was traded for 17.20 BRL per 27-kilo box, harvested, 26.8 % down compared to that in the first fortnight of April.

EXPORTS – In the international market, the demand for tahiti lime was firm, due to the higher quality of the fruits available. However, this year, the Brazilian exports of tahiti lime have been lower than in 2018. In April/19, shipments totaled 10.6 thousand tons, according to Secex, 9 % down compared to that in April/18. Between January and April 2019, exports were 20 % lower than in the same period last year.

As the harvesting of the 2019/20 orange crop steps up in the orchards of São Paulo, citrus prices dropped in the in natura market in April – this scenario should still be observed in May. Besides the higher supply of all varieties, the share of fruits that have not reached the ideal maturation stage for the in natura sector yet increased pressure on quotes.

Concerning early oranges (rubi, hamlin and westin, for instance), trades have been closed since March. However, only in late April these fruits reached a maturation stage closer to that demanded by the in natura market. Thus, the average price for hamlin oranges last month was 23.78 BRL per 40.8-kilo box, on tree, 14 % down compared to that in March.

As for pear oranges, the first fruits from the 2019/20 crop that were harvested had lower quality for the in natura sector, which pressed quotes in April. Thus, the price average last month, at 31.80 BRL per 40.8-kilo box, was 24.7 % lower than that from March. According to Cepea collaborators, the harvesting anticipation was an attempt of taking advantage of the high price levels – as growers are aware of the estimates indicating that the 2019/20 crop should be larger than the 2018/19, they fear that the prices paid for the fruits may drop sharply in the coming months.

For May, oranges quotes are expected to keep dropping, at least in the first fortnight. Besides the forecast for higher quality and supply in São Paulo, the crushing pace at processing plants should continue slow in the first days of the month. This scenario leads the early oranges that would be allocated for crushing to be sold in the in natura market.

2019/20 CRUSHING – The growers from São Paulo believe that the orange production in the 2019/20 season may be up to 40 % higher than that from 2018/19, based on orchards higher productivity. Higher supply in the new season, however, should allow the opening of new plants of the large-sized processing plants from SP this month. Higher crushing, however, is forecast only for June, when most fruits should reached the maturation stage desired by the sector.

Currently, only two plants of the large-sized processing plants are operating, in Araraquara and Matão. However, while one of them is still receiving fruits in the spot market, remaining from 2018/19, at 18 BRL per 40.8-kilo box, harvested and delivered at processing plants, the other is only receiving the oranges previously purchased, at more advanced maturation stages. Concerning the prices for the next season, remuneration in the spot market has not been defined yet.

The combination of lower orange supply in the Brazilian citrus belt (São Paulo and Triângulo Mineiro) in the 2018/19 crop with the recovery of Florida production is keeping the Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent low. This season (from July/18 to March/19), Brazilian juice shipments to all destinations have totaled 783.4 thousand tons, 14 % down compared to that in the same period last season, according to Secex. Revenue, in turn, has reached 1.4 billion USD, 12 % lower in the same comparison.

To the European Union, the biggest purchaser of the Brazilian juice, shipments have totaled 506.29 thousand tons this season, 8 % down compared to the same period last year. Revenue, in turn, has reached 941.2 million USD, 6 % down in the same comparison.

To the United States, the Brazilian exports of FCOJ Equivalent totaled 167.8 thousand tons between July/18 and March/19, 26 % less than in the same period of the previous season. Revenue reached 296.7 million USD, 27 % down in the same comparison.

The American demand for the Brazilian orange juice should not decrease too much in the coming seasons, due to the damages caused by greening, a disease with severe effects on production in the long term.

CROP END – Fundecitrus (Citrus Defense Fund) announced, on April 10, that the orange production in the citrus belt (São Paulo and Triângulo Mineiro) has totaled 285.98 million boxes of 40.8 kilos this season, 28.2 % down compared to the output in 2017/18 (398.35 million boxes). Compared to the average in the last 10 years, the current production is 11.6% lower.

Lower productivity was triggered by the weather (heat and drought) during fruit development. Low supply, in turn, kept high the need of Brazilian processing plants for oranges in 2018, limiting availability in the in natura segment.

MARKET IN APRIL – The higher availability of early oranges in the 2019/20 crop pressed down the quotes of all varieties surveyed by Cepea in the first fortnight of April. With the maturation stage below that demanded in the in natura segment, trades were limited. Between April 1 and 15, pear orange prices averaged 35.17 BRL per 40.8-kilo box, on tree, 18.8 % down compared to that in the first fortnight of March.

TAHITI LIME – Tahiti lime prices have been firm in Brazil this year, which is not typical for a first quarter. Although harvesting stepped up (which is common for the beginning of the year, due to the crop peak), high demand for exports as well as from Brazilian processing plants is controlling supply in São Paulo State.

In this scenario, the average price in April (until April 15) is already the second highest for the month, in nominal terms, considering Cepea series, which started in 1996 for this product. The same was observed in the first quarter of 2019, when the nominal average in January was only lower than in Jan/18 and the nominal averages in February and March were only lower than in the same months of 2016 – tahiti lime quotes reached nominal records in Feb. and Mar. 2016 and in Jan. 2018, in the historical series.

Agents’ initial expectations were that the harvesting of the fruits from the second blossoming would increase tahiti lime supply in the in natura market in April, despite the smaller volume compared to that in the crop peak. However, mainly in January and February, the demand from processing plants was high and prices, appealing. Thus, many growers harvested all the fruits early in the year, reducing supply in March.

Some citrus farmers accelerated the tahiti lime harvesting early in the year, aiming to prepare the trees for production in the second semester of 2019 (when prices usually rise).

In early April, according to purchasers, it was still difficult to find high quality tahiti lime in the in natura market. While mature fruits were missing, the new ones were still green – for that reason, harvesting was postponed. Higher quality fruits, in turn, were allocated to the international market. Thus, between April 1 and 15, tahiti lime quotes averaged 23.49 BRL per 27-kilo box, harvested, a staggering 63.6 % up compared to that in the first fortnight of March.

The harvesting of the oranges out of the ideal period from the 2018/19 crop was ending in São Paulo State in March, while the availability of the first early oranges from the new season (2019/20) was increasing, helping to supply the market.

Although still low, the availability of the first oranges from the 19/20 crop in the market limited the upward trend of pear orange quotes, observed in the first two months of the year. In March, pear orange quotes averaged 42.23 BRL per 40.8-kilo box, 3.8 % up compared to that in February.

However, most of the early oranges from 2019/20 had not reached the ideal maturation stage demanded in the in natura market, which limited new deals. Concerning the pear and late oranges remaining from the 2018/19 season, only a few growers still had available amounts to sell in the in natura market – and, in general, lower quality also hampered trades.

The low supply scenario in the offseason period resulted from the lower production (almost 30 %) in the citrus belt in 2018/19 – estimated by Fundecitrus at only 284.88 million boxes of 40.8 kilos, according to the report released in February. Thus, in March, pear orange quotes increased sharply compared to the same period last year (in nominal terms): a staggering 46.3 %.

For April (mainly the second fortnight), the agents consulted by Cepea expect the supply of all varieties from the 2019/20 to increase, based on the possible favorable weather to the development of the fruits that are still on tree. Besides, it is worth to remember that crushing is currently at a slow pace at the processing plants from SP, which should allocate all the fruits available to the in natura market in April.

TAHITI LIME – As for tahiti lime, international demand helped to lower supply in the Brazilian market in March. Thus, quotes averaged 16.87 BRL per 27-kilo box, harvested, last month, 11.7 % up compared to that in February.

Demand from processing plants was low and the availability of fruits from the second blossoming was gradually increasing, which may press down quotes in April, mainly in the second fortnight – if the weather favors fruits growth.

Data released in late February reinforced perspectives that the inventories of Frozen Concentrate Orange Juice (FCOJ) Equivalent should decrease to critical levels at the end of the current season (2018/19). Although estimates were revised up (by 36.7 %) compared to the first report, released in August/18, the volume forecast is still one of the lowest in the recent citrus activity (the second lowest since 2010/2011).

According to the report, released by CitrusBR on Feb. 26, ending stocks of FCOJ Equivalent at processors from São Paulo State (on June 30 2019) should total only 200.56 thousand tons. If confirmed, this volume would account for a 41.5 % reduction compared to that in 2017/18 (at 342.96 thousand tons). Thus, even if higher production estimates for 2019/20 are confirmed in the citrus belt (São Paulo and the Triângulo Mineiro), low juice supply may again boost the orange prices paid to Brazilian citrus farmers next year.

This scenario, in turn, reflects both the lower production in the current season (2018/19), which is almost 29 % smaller than the previous one, according to Fundecitrus (Citrus Defense Fund), and the ending stocks in June/18 (related to the 2017/18 crop), which, although positive, were not considered too high. Besides, yield has decreased at processors this crop, due to the weather, demanding larger amounts of orange for juice production.

The increase in the volume estimated back in August/18 compared to that from February/19 may be linked to the reduction in the Brazilian juice exports, due to both lower demand from the main importing countries and processors strategy of keeping larger volumes stocked at the end of the 2018/19 season. Still, ending stocks in the new season will be lower than the strategic level established, at 300 thousand tons, reinforcing the predictions for firm prices paid to Brazilian citrus farmers – for both those who sell oranges to the industry and the ones who sell to the in natura market.

In fact, the first bids from large-sized processors for the oranges from the 2019/20 season started earlier again (in October/18). Bidding prices were around 22 BRL per 40.8-kilo box, harvested and delivered at processors, to which may still be added a participation additional to the juice selling price in the international market. In 2018/19, the first bidding prices were up to 20 BRL per box. Trades, however, have already been reduced or ended.

BRAZILIAN MARKET – The availability of high quality oranges was low in SP State in February, pushing up quotes of all the varieties surveyed by Cepea. Between Feb. 1 and 28, pear orange quotes averaged 40.66 BRL per 40.8-kilo box, on tree, 33.6 % up compared to that in January (2 – 31).

The average prices of all orange varieties (in natura) surveyed by Cepea in São Paulo State were considered satisfactory in January/19 compared to January and December of 2018. This scenario was linked to the lower orange supply in the citrus belt (São Paulo and Triângulo Mineiro) in 2018/19. Thus, it seems the prices paid to the citrus farmers from SP will continue at high levels in February, mainly for the higher quality fruits, since the availability of early oranges should only grow from April onwards, when the first fruits of the 2019/20 can be harvested.

In the first quarter of 2019, harvesting should be limited to both the fruits that are out of the ideal period and the remaining of the late oranges. Some farmers have even ended activities related to the current crop (2018/19). Besides, the high temperatures usually observed in February may boost the consumption of citrus fruits in SP, reducing supply even more.

According to the citrus growers consulted by Cepea, although perspectives regarding the volume to be produced are positive, the weather is still crucial for a good crop development – it needs to rain significantly in the citrus-producing regions this month so that fruits growth and new blossoming are favored.

PRICES – In January/19 the average price of the pera rio orange closed at 30.42 BRL per 40.8-kilo box, on tree, 52 % higher than in Jan/18 and 12 % higher than in Dec/18, respectively, in nominal terms. For natal oranges, the price average was at 26.34 BRL per 40.8-kilo box, 45.6 % and 8.6 % higher in the same comparison.

TAHITI LIME – For tahiti lime, on the other hand, the crop peak in São Paulo continued to press down quotes in January. However, farmers have reported problems caused by the high temperatures: some fruits were becoming yellowish and dropping down from trees, which may lower supply and push up the quotes of the higher quality fruits.

In January, the average price for tahiti lime was at 16.76 BRL per 27-kilo box, harvested, 18.2 % down compared to that in the same period last year and stable (-0.5 %) compared to the average price in December/18.

The smaller crop forecast for the Brazilian citrus belt in 2018/19 (São Paulo and Triângulo Mineiro), at 288.29 million 40.8-kilo boxes (almost 30 % lower than the 2017/18 season), should result in critical inventories at processors from São Paulo State on June 30 2019. In 2017//18, despite the larger crop, supply was not significant, only enough to slightly increase the low inventories from 2016/17.

Thus, by June 2019, inventories should be 50 % smaller, considering forecasts for the 2018/19 crop. Data released by CitrusBR (Brazilian Association of Citrus Exporters) on May 22 estimated ending stocks of Frozen Concentrate Orange Juice (FCOJ) Equivalent from 55.9 thousand tons to 154.7 thousand tons in June 2019. CitrusBR forecasts were based on the volumes crushed in the 2017/18 season, at around 243.4 million 40.8-kilo boxes, 34 % down compared to the 370 million boxes crushed in the current season (2017/18).

Cepea calculations, however, indicate inventories are more likely to be from 55.9 and 102.6 thousand tons, not reaching the maximum level estimated by CitrusBR (at 154.7 thousand tons). To forecast that scenario, CitrusBR considered exportations will keep firm. Now, if processors do not aim to reduce inventories that much, the volume shipped may decrease in 2018/19.

The 2017/18 ending stocks of orange juice should be at 305.9 thousand tons by June 30 2018, 20.3 % up compared to that forecast in February/18. The positive 2017/18 harvesting ensured comfortable inventories to processors this year.

In general, the global demand for orange juice has been firm, mainly from the United States, Considering Florida crop may be 35 % lower, according to the USDA, juice availability should continue low in the next season (2019/20).

Regarding growers’ revenue, forecasts for the short-term indicate prices may not change much. Most farmers have already closed contracts with processors, and even if bidding prices rise from now onward, only a few growers would have fruits available for trading. Besides, productivity should be low, since the number of boxes produced per hectare results in a higher cost per unit and lower margins.

BRAZILIAN MARKET – Orange sales were slow in the in natura market in May, due to both colder weather in São Paulo and truckers’ strike, which halted transportation. With the protests, which started on May 21, part of the fruits harvested stayed on trucks.
In that scenario, growers preferred to interrupt harvesting late in the month, aiming to avoid losses. In May (2 – 30), pear orange quotes averaged 26.33 BRL per 40.8-kilo box, on tree, 11.7 % down compared to that in April (2 – 30).

TAHITI LIME – The strike has affected the domestic and international markets of tahiti lime as well. According to Cepea collaborators, purchasers were concerned about acquiring fruits and not receiving them, while growers feared to be affected by flow difficulties. Farmers consulted by Cepea affirmed that the fruits that are still on tree should not be damaged by the harvesting interruption.

In May (2 – 30), tahiti lime quotes averaged 45.13 BRL per 27-kilo box, harvested, 142.5 % up compared to that in April (2 – 30).

Opposite to the expected by agents, tahiti lime supply has been controlled in São Paulo State, and quotes, underpinned at higher levels. The price average in April/18, at 18.61 BRL per 27-kilo box (harvested) was the second highest for the month, in nominal terms, in all Cepea series, which started in 1996 for this product – compared to March/18, that price average is 34.2 % higher.

Previously, agents expected the harvesting of the fruits from the second flowering event to increase tahiti lime availability in the in natura market in April. However, low rain volumes in the citrus belt in the first two months of the year delayed fruits development, extending their period on tree.

Purchasers have claimed difficulty to find good quality tahiti lime in the in natura market. While the amount of mature fruits is low, the new ones are still green, postponing the harvesting. In that scenario, agents fear the volume of tahiti lime may increase too much in May, which could press down quotes – purposeful harvesting delays may press down quotes as well.

As for the industrial segment, bidding prices in the spot market were around 15 BRL per 40.8-kilo box, harvested and delivered at the processor, in April, with only one plant (smaller-sized) receiving that variety.

In the international market, tahiti lime exportations have reached new records in the crop, totaling 32.25 thousand tons from January to March/18, according to Secex. Compared to the same period of the previous season, current shipments are 2.5 % higher.

For the coming weeks, however, competition with Mexico shipments is expected to increase, since supply is reduced in Brazil, but growing in Mexico. According to Fresh Plaza, the weather in Mexico has been favorable to tahiti lime production, and Mexican fruits have reached the ideal color and maturation for trading in that segment.

ORANGE – The first pear oranges from the 2018/19 crop are already available in the in natura market of São Paulo State. According to Cepea collaborators, with low supply and firm prices for this variety, harvesting has been anticipated. The higher availability of green fruits, however, has widened the price gap between the large-sized pear oranges and the small-sized ones.

As for the larger-sized fruits, prices have reached 35 BRL per 40.8-kilo box, on tree, while the small-sized fruits from the new season have been traded between 25 BRL and 28 BRL per box. Thus, in April, pear orange quotes averaged 29.83 BRL per 40.8-kilo box, 2.8 % up compared to that in March.

According to agents, the fruits available in the in natura segment have not reached the ideal maturation yet, due to the weather in the first two months of 2018, which delayed the development of some oranges from the 2018/19 season, mainly those from the second flowering event, which, in turn, opened between October and December/17. The slow maturation of these fruits is linked to the high temperatures in early 2018 and the smaller rain amount in the main citrus producing regions from SP, according to Inmet (National Institute of Meteorology in Brazil).

The larger rain volume in March, on the other hand, offset the development delay of the oranges on tree. Still, growers expect the fruits to be ready only from the second fortnight of May onward.

After decreasing in the first fortnight of March, tahiti lime supply increased in the second half of the month in São Paulo State. Although the crop peak has already finished, harvesting of the fruits from the second flowering event increased the volume available in the in natura market. According to agents consulted by Cepea, this second crop had a satisfactory development, due to humid weather in the first months of the year, but supply should not surpass that in the first bimester.

Cepea collaborators estimate the second crop harvesting to step up in April, since the maturation stage of the fruits allowed them to stay on trees last month. Thus, farmers slowed down the harvesting pace in order to avoid significant price losses.

In April, therefore, higher availability may press down quotes if the demand from processors, which was firm in the first quarter of the year, starts to move down. So far, purchases from processors have controlled supply in the in natura market. In March, the average tahiti lime price, at 13.86 BRL per 27-kilo box, harvested, was 2.7% above that in February, crop peak period in São Paulo.

Exportations

Tahiti lime shipments were slow in March, according to exporters. Besides the low price levels in the international market, record amounts of the fruit were sent to the European Union in the first bimester, according to Secex.
In the first two months of 2018, exportations totaled 20.9 thousand tons, 14.3% higher than in the same period last crop and a record for the season, according to Secex. In March, however, the cold weather in Europe (the world’s biggest tahiti lime importer) weakened consumption.

Brazilian market

Low supply of good quality fruits pushed up quotes of early pear oranges, as well as of late oranges, from the 2017/18 season – scenario observed since the second fortnight of February. In March, pear orange prices averaged 29.02 BRL per 40.8-kilo box, on tree, 28.9% up compared to that in February.

New estimates for the 2017/18 orange production in the citrus belt (São Paulo and Triângulo Mineiro) may affect ending stocks of the season, on June 30, 2018. Data released by CitrusBR (Brazilian Association of Citrus Exporters) indicate that the larger orange harvest may more than double the juice volume held by processing companies in São Paulo, compared to the same period last season.

The Association says that the season may finish with juice inventories at 254.2 thousand tons (equivalent to concentrate juice), which represents 12 weeks of consumption. This figure is 22 % higher than that estimated in August 2017; however, it is still the fourth lowest over the last 20 years.

Although still uncertain, initial expectations indicate that the 2018/19 orange production will be smaller than in the current season, except in southwestern São Paulo (Avaré and surroundings), where the weather may allow production similar to that in 2017/18. Therefore, there is nothing indicating orange juice surplus, also based on the good performance of exportations.

The recovery of inventories compared to the CitrusBR projection released in August was already expected by the sector, given that estimates for the orange crop, performed by Fundecitrus (Citrus Defense Fund), has already been reviewed upwards three times since the first release of CitrusBR. In the first estimate (May/17), Fundecitrus forecast 364.5 million 40.8-kilo boxes in São Paulo and Triângulo Mineiro; however, due to favorable weather conditions during the season and better cultural practices, that estimate was revised up to 397.27 million boxes on the projection released on February, 15.

The good rainfall, on the other hand, may affect industrial revenue (number of necessary orange boxes to produce one ton of concentrate juice). CitrusBR data indicate that, on the average of the season, 282.49 orange boxes may be necessary for each juice ton, 5.7 % more compared to the previous estimate (August).

2017/18 CROP – According to Fundecitrus data released on February 15, the citrus belt (São Paulo and Triângulo Mineiro) may produce 397.27 million 40.8-kilo boxes of oranges in the 2017/18 season, 62 % more than in the 2016/17 season (245.3 million boxes) and 3.13 % higher in relation to December forecasts. Fundecitrus says that, considering all varieties, 97 % of the total of the crop has already been harvested.

The pace of orange crushing in São Paulo State was in full swing in August, with eleven large-sized processors in operation. Still, agents from processors consulted by Cepea claimed that factories were operating at full capacity, due to high production in the citrus belt.

Nevertheless, agents from the sector expect the crushing pace to continue firm until early 2018 (when only a few plants usually operate), since a larger volume is estimated for the 2017/18 crop, requiring a longer time for processors to absorb output.

The harvesting of early oranges from the 2017/18 crop, in turn, has already ended in the main citrus regions from São Paulo – activities started in February, one month earlier than they did last year. According to Cepea collaborators, the last volumes, mainly of american valencia, were collected this month and allocated exclusively to processors. In September, crushing in the main processors from SP State should be limited to pear oranges.

As for late oranges, small amounts started to be harvested in August and some growers have already sent the first volumes to those processors that need fruits with lower ratio (to blend with other varieties). However, processors should start receiving these fruits only between September and October.

Purchases in the spot market have been occasional since the beginning of crushing activities in 2017. This pressed down quotes between May and August, compared to the same months last year. Last month, prices averaged 19.30 BRL per 40.8-kilo box, harvested and at the processor, 3.5 % lower than in August 2016, in nominal terms.

2018/19 – The rains that hit São Paulo State in mid-August should favor the opening of the first flowers, which, in turn, will become the oranges of the 2018/19 season. As most plants were already sprouting in early August, the first flowers should start to open in mid-September.

For growers, the drought and the low temperatures in July and early August favored the plants. According to agents, the oranges development, mainly of the pear oranges, was the same among all citrus regions (sprouting), except for southwestern SP (Avaré), where open flowers and fruitlets were already observed, favored by the higher humidity in the area. With the recent rains, growers increased fertilization and preventive measures to avoid problems, such as blossom end rot, which may affect the flowers and hamper production.

Confirming initial expectations of Cepea, ending stocks of orange juice at processors from São Paulo State should be recovered by the end of the 2017/18 season (June/18), but the levels stored continue to indicate low orange juice supply.

Data from CitrusBR (Brazilian Association of Citrus Exporters) indicate that inventories at Cutrale, Citrosuco and Louis Dreyfus should total only 207.6 thousand tons of frozen concentrate orange juice (FCOJ) Equivalent on June 30, 2018. That amount, however, is 93 % higher than the 107 thousand tons observed at the end of the 2016/17 season.

This increase of inventory is based on crushing forecasts of CitrusBR at 314.47 million boxes, with an average processing yield at 267.33 boxes to produce one ton of FCOJ Equivalent, and sales (domestic and international) at 1.107 million tons of the product. All these items are forecast to recover from the scenario observed last season (2016/17); however, yield should remain at levels below the historical average.

A significant recovery will only be possible due to a large crop in the citrus belt (São Paulo and Triângulo Mineiro), forecast by Fundecitrus (Citrus Defense Fund) at 364.47 million boxes. However, the possibility of replenishments of inventories (greater than 200 thousand tons) in June 2019 will depend, once again, on a large production at the citrus belt in the 2018/19 season. According to Cepea data, if sales, yield and volume from other states continue stable, processors will need to crush around 290 million boxes in 2018/19, meaning a crop in the citrus belt from SP + Triângulo Mineiro similar or greater than 340 million boxes (in natura consumption forecast at 50 million).

The replenishment of inventories at processors from São Paulo is a relief in light of the very low supply in the previous crop, when the Brazilian exportations of FCOJ Equivalent dropped 17 %. Therefore, forecasts for a higher orange juice supply may increase the Brazilian exportations in the 2017/18 season.

DOMESTIC MARKET – Pear orange quotes increased in the domestic market in the first fortnight of August, due to higher demand for the in natura fruit (favored by warmer weather in SP and the return of school classes) and crushing intensification in processors from São Paulo, which gradually reduced the volume available in the market. Between August 1 and 15, pear orange quotes averaged 16.54 BRL per 40.8-kilo box, on tree, 1.4 % up compared to the first fortnight of July (3-14).

The harvesting of the early oranges in the 2017/18 season is slowing down in some citrus producing regions from São Paulo, mainly in cities with higher temperatures (where fruits mature faster). The last fruits to be collected, therefore, should be harvested until late August, according to Cepea collaborators.

According to Fundecitrus (Citrus Defense Fund), the citrus belt should harvest 364.47 million boxes in 2017/18, volume 50 % larger compared to that in the previous season. Of this total, 68.5 million would account for early oranges (+ 42 %).

In late July, the deliveries of pear oranges purchased through contracts intensified in the main processors from SP, according to growers. That reflected on the price averages of fruits in the spot market. In July, early orange quotes averaged 18.32 BRL per 40.8-kilo box, 6 % up compared to the average in June; pear oranges prices, in turn, averaged 18.55 BRL per box in July, 15.2 % up in the same comparison – both values only include expenses with harvesting and freight to the processing plant.

Pear orange harvesting, however, should step up in August, as the supply of early oranges decreases. Regarding late oranges, mainly valencia and natal, the first volumes should be available only in September.

Purchases of pear oranges were occasional in July. In the first fortnight of the month, some pear orange trades reached 20.00 BRL per box, depending on the quality and ratio of the fruit supplied, regarding the standard demanded by processors.

According to agents from processors, early orange crushing should keep firm in August, in order to focus on pear oranges, in September. Thus, the gradual increase of pear oranges in crushing this month, added to the back to school period, may reduce the availability of the fruit in the in natura market, pushing up quotes.

Regarding the in natura market, not even the warmer weather favored demand for pear oranges in late July. Besides, supply of fruits with lower quality than that demanded by the segment increased as well. Last month, pear orange quotes averaged 16.17 BRL per 40.8-kilo box, on tree, 6 % down compared to that in June.