In 2022, orange prices were similar to those in 2021 in the in natura market. Although the production had increased in the citrus belt in São Paulo and in Triângulo Mineiro, the supply was controlled, due to the fact that more fruits were sent to the industry. However, both the Brazilian economy and the weather were unstable, limiting the consumption in some periods. From January to November, the average price for pear oranges was at BRL 38.93 per 40.8-kilo box (on tree), 1.6 % down compared to the same period in 2021.

As for the industrial segment, values moved up from 2021 to 2022, despite the recovery in the orange production. Juice stocks closed the 2021/22 season at low levels, leading processors to increase the demand for the raw material. From July to November, the average price in the spot market was BRL 31.22 per 40.8-kilo box (harvested and delivered), 8% up in relation to the same period in 2021. It is worth noting that producers were expecting more significant price rises, due to the sharp increase of production costs.

The orange production in the 2022/23 season is likely to hit 314.11 million 40.8-kilo boxes in the citrus belt (SP and Triângulo Mineiro), for an increase of 19.5 % in relation to the crop before, according to that projected by Fundecitrus in December/22. This forecast is related to the favourable weather (regular rainfall). In spite of the recovery, the production may not be enough to have surplus, due to the high demand from the industry, since juice stocks are low.

According to CitrusBR, orange juice ending stocks in the 2021/22 crop (June/22) were confirmed at low levels, 143.1 thousand tons, downing almost 55 % compared to the season before.

Despite the increase in the 2022/23 orange production, the volume in stocks by the end of the crop may not recover. CitrusBR estimates that 2022/23 stocks, in June 2023, are likely to total 140 thousand tons. The industrial yield, in turn, may be lower than in the crop before, and exports are expected to increase, due to the higher juice demand from the US.

JUICE EXPORTS – Orange juice shipments decreased 3 % in the 2021/22 season (from July/21 to June/22) compared to the previous. Exports to all destinations totaled slightly more than 1 million tons, according to Secex. The revenue amounted USD 1.68 billion, 9 % up in the same comparison.

This is the second consecutive crop that shipments move down, and this may be related to the low orange production in São Paulo and Triângulo Mineiro over the last two crops (2020/21 and 2021/22). The revenue increase, in turn, is linked to the higher dollar prices, especially from March/22 onwards. In the partial of the current season (from July/22 to November/22), exports are moving up again, influenced by the firm demand from the United States.

The 2022/23 orange crop in Florida may be the lowest since 1936/37, with the impacts of greening reinforced by hurricanes Ian and Nicole. In December, the USDA updated its production estimate to only 20 million 40.8-kilo boxes, 29 % less compared to that forecast in October and 51 % below the previous season.

By the end of the 2020/21 season, in June 2021, the inventories of Frozen Concentrate Orange Juice (FCOJ) equivalent at Brazilian processors totaled 316.93 thousand tons, according to data from CitrusBR (Brazilian Association of Citrus Exporters) released in mid-August. Compared to that at the end of the 2019/20 season, inventories decreased by 33 %. This reduction was already expected by agents, due to the slower crushing pace of oranges in 2020/21, when orange production was low.

CitrusBR avoided releasing estimates for the current season because of the weather issues (extended drought in the citrus belt and frosts in late July) in the major citrus-producing regions in Brazil, which are still concerning agents. However, ending stocks in the 2021/22 season (by June 2022) may be lower than the strategic level.

So far, considering Fundecitrus’ (Citrus Defense Fund) production estimates from May, of 294 million boxes (40.8 kilograms each), the volume processed may be around 250 million boxes. In that scenario, Cepea data indicate that ending stocks in the 2021/22 season (which ends in June/22) may not be enough to generate a world surplus of orange juice.

Also, agents in the Brazilian citrus sector believe that the estimates from Fundecitrus will be revised down, due to the drought and frosts in Brazil. In this context, the volume processed may be revised too, and juice inventories may be even lower. Thus, processors will depend on higher orange production in 2022/23 to, at least, replenish inventories – which is a concern too, considering that the effects of the weather may be extended to the coming season, since many trees are currently debilitated.

As regards orange processing, the crushing pace for the fruits from 2021/22 was fast in August at the large-sized plants in São Paulo State (SP), with mostly pear oranges being crushed.

Orange processing is expected to last until mid-February/March 2022, with less plants in activity compared to that in the second semester of 2021, however, with higher volumes being produced than that in the same period of previous years, because of the delay in the development of trees (due to weather issues) and irregular flowering. It is worth to consider that the 2021/22 season is expected to have higher volumes of fruits from the third and fourth flowering events (altogether) since Fundecitrus began estimating crops, in 2015/16 – making it a late crop.

BRAZILIAN MARKET IN AUGUST – The demand for oranges was low in the Brazilian market in August, constrained by the current high price levels and lower quality of the oranges available (small-sized and wilted). Still, prices increased, boosted by low supply.

Since the financial and economic crisis, there has only ever been an upwards trend for food processing and packaging machinery. In 2020, the 10-year growth phase in tis mechanical engineering sector came to a temporary end with a decrease of 9 percent to 13.9 billion euros.

“The drop in production doesn’t come as a surprise, as 2019 was an exceptionally strong year for our industry. Even without the Corona pandemic, we would have probably only just exceeded this high level,” explains Richard Clemens, Managing Director of the VDMA Food Processing and Packaging Machinery Association.

In the packaging machinery sector, production dropped by a total of 8 percent to 6.7 billion euros. In food processing machinery, the change rates varied in the individual subsectors. Production of meat processing machinery slightly increased to over 1.2 billion euros. The demand also remained stable for bakery machinery. Both subsectors reported a good domestic business, which overcompensated the decrease in exports.

Production of confectionery machinery dropped by 18 percent below the very high level of the previous year. There was also a double-digit drop in the production of beverage machinery. “These two sectors are very active in non-European countries and are among those suffering from the Corona pandemic. In addition, the customers of these industries include many multinationals that have simply frozen their investment projects,” says Clemens, explaining the different developments.

Corona- pandemic weakens export business

Exports of food processing and packaging machinery dropped by a total of 8 percent to 8.5 billion euros in 2020. The decline varied greatly from one sub-sector to another. Manufacturers of packaging machinery, meat processing machinery and bakery machinery recorded downturns of 5 to 6 percent. Confectionery machinery was down by 24 percent, and brewery machinery saw a 38 percent drop in exports. However, the reference values of the previous year were also exceptionally high in these two sectors. The severe impact on the brewery machinery sector is also directly related to the limited or complete standstill of business activity in the hotel and catering industry as a result of the Corona crisis.

From a regional point of view, foreign shipments of food processing and packaging machinery decreased in almost all economic regions in 2020, except of North America. In particular, deliveries from Germany to the USA increased by 8 percent to over 1.2 billion euros. Positive impetus also came from important individual markets, such as Russia, Mexico and China.

However, deliveries to the EU-27 as the most important sales region dropped by 15 percent. Exports to Asia also decreased by a significant double-digit percentage.

Outlook

According to current estimations, a return to the 2019 level is not very likely for 2021. “We do expect production to grow this year, but it is unlikely to be in double digits,” says Clemens. The general outlook for the industry is positive, according to the trade association’s managing director, as the sector’s companies are well positioned internationally and continue to benefit from a rising global demand for processed and packaged food, beverages, cosmetics and pharmaceuticals.

The VDMA represents around 3,300 German and European mechanical and plant engineering companies. The industry stands for innovation, export orientation, small and medium-sized enterprises and employs around four million people in Europe, more than one million of them in Germany only.