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).
Close to 300 representatives of the international apple and pear sector met at the Prognosfruit Conference on 10th August 2017 in Lleida, Spain. During the Prognosfruit conference, the World Apple and Pear Association (WAPA), released the 2017 European apple and pear crop estimates. The 2017 apple production in the EU will decrease by 21 % compared to last year’s crop, standing at 9.343.000 T. The pear crop is predicted by European growers to be relatively stable at 2.148.000 T and to only decrease by 1 % compared to 2016.
The figures released at Prognosfruit leave room for careful optimism for the coming season, with a more balanced situation between supply and demand after the last three years, which registered in particular for apples, a peak crop.
The 2017 European forecast for apple is 9.343.000 T, which is 21 % down to last year’s figure, and 23 % less than the average of the last three years. This figure is based on the estimates from the top 21 Member States of the EU-28, having contributed to this report. In regard to varieties, Golden Delicious production will decrease by 18 % to 1.982.000 T. Gala is also estimated to decrease, by 3 % to 1.276.000 T. Idared will be down by 30 % to 679.000 T, while the production of Red Delicious is estimated at 576.000 T, which is a 9 % decrease compared to last year. Also, other new varieties (i.e. club varieties) will decrease by 15 %, from 157.000 T to 133.000 T. A particular point of concern this year was the intense frost during blossoming, and the drought during spring and early summer. In other non-EU Northern Hemisphere countries, significant decreases were noted: Russia (-37 %), Mexico (-30 %), Switzerland (-21 %), Belarus (-19 %), Ukraine (-10 %), and Canada (-5 %), while the USA is expecting a stable crop around 4.800.000 T. Additionally, China is expecting a further growth by 3 % compared to last year’s crop of 43.800.00 T. The US apple forecast will be updated after the US Apple Outlook conference in Chicago 24-25 August.
More specifically about the EU apple market, it is to be reminded that, over the last years, the market suffered the consequences of the Russian embargo and were more recently confronted by lower export volumes to North African markets. The new crop could therefore lead to a better balance of the supply. The market will start clearing stocks for most varieties, with expected good hand over from the Southern Hemisphere. Overall, the new season is due to start with two weeks earlier than average. There might be different market trends for each of the varieties, with better balance for Gala and more reduced volume for Golden or Jonagold, and Elstar. In the coming weeks, growers will closely monitor the quality, which could still influence the balance of the market between fruit destined for the fresh market and the fruit destined for processing. It is currently forecasted that ca 6.200.000 T will be moving on the fresh market and 3.200.000 T for processing.
In regard to pear, the total European pear crop in 2017 is estimated to reach 2.148.000 T, which is 1 % lower than last year, and 8 % less compared to the average of the last three years. This figure relates to the production of the top 19 Member States of the EU-28 growing pears and contributing with their data to this report. In 2017, the Conference variety will see its production decrease by 7 % to 844.000 T, and William BC will decrease by 6 % to 247.000 T. Abate F, on the other hand, is estimated to increase by 12 % to reach 332.000 T. Elsewhere in the Northern Hemisphere, crops increased, compared to last year, in Turkey (+11 %), Canada (+20 %) and Moldova (+50 %), whilst decreases are estimated for the production in Russia (-37 %), Belarus (-20 %), Switzerland (-34 %), and the US (-3 %).
In regard to the specifics, the market will be experiencing different trends between the Southern and Northern EU markets, reflected as well in higher volume of Abate and Rocha, while the Conference pear will be down. The pear season will start with less pressure than last year. There has been some positive development in the exports to new markets during the last years, but the effects of the Russian embargo will still be felt by the growers.
Overall, the European apple and pear sector stays committed to the best quality produce to be placed on the market and continues to adapt the orchards to varieties with taste and crunchiness adapted to evolving consumers’ expectations.
WAPA will continue to monitor the development of the Northern and Southern Hemisphere crop, and will issue updates whenever feasible and necessary.
Krones, the world’s leading manufacturer of filling and packaging technology, continued its stable growth in the first half of 2017. Overall, revenue improved 13.8 % year-on-year to €1,775.2 million. Adjusted for acquisitions, revenue was up 10.2 %. The increase was partly due to a relatively low baseline of sales in the first half of 2016. The strongest revenue growth came in the North and Central America, Asia-Pacific, and South America/Mexico regions in the period from January to June 2017.
Order intake at Krones increased 11.0 % in the first half of 2017 to €1,779.3 million. Adjusted for acquisitions, order intake was up 4.7 % year-on-year. Orders growth in Western Europe and Latin America was higher than overall orders growth. Order intake in China was lower. In the Asia-Pacific, North America, and Middle East/Africa sales regions, order intake was stable. At €1,148.8 million, orders on hand at Krones at the end of June 2017 were up 1.1 % over the year-earlier period.
EBT margin is 6.8 % after six months
Krones improved earnings before taxes (EBT) by 12.8 % to €121.0 million in the period from January to June 2017 despite a highly competitive market situation. As expected, market prices provided no support. By contrast, the Value strategy programme, with which Krones is increasing efficiency throughout the company, had a positive impact. At 6.8 %, the EBT margin for the first six months of 2017 was nearly unchanged year-on-year (previous year: 6.9 %). After taxes, net income was up 10.8 % to €82.4 million. Earnings per share increased from €2.37 in the previous year to €2.64.
The ratio of average working capital for the past four quarters to revenue came to 26.3 %, after 25.5 % in the year-earlier period. However, the ratio is an improvement over the first quarter of 2017 (26.8 %).
The return on capital employed (ROCE) increased to 16.3 % (previous year: 15.6 %). In the period from January to June 2017, the company generated operating free cash flow of -€126.7 million (previous year: -€155.5 million), which is an improvement of around €30 million.
Krones forecast for 2017 is unchanged
The company’s revenue growth target (excluding acquisitions) for the year 2017 as a whole remains 4 %. Profitability should be stable this year. Krones expects the EBT margin to be around 7.0 % for the year 2017. For its third financial performance target, working capital to revenue, the company is forecasting 27 % for the current financial year.
Krones has published the complete half-yearly report online at https://www.krones.com/en/company/investor-relations/reports.php.
The 2016-2017 Florida all orange forecast released by the USDA Agricultural Statistics Board is up 200,000 boxes from last month, and is now at 68.7 million boxes. The total comprises 33.0 million boxes of non-Valencia oranges (early, midseason, and Navel varieties), unchanged from last month, and 35.7 million boxes of Valencia oranges, up 200,000 boxes from last month.
The forecast of all Florida grapefruit production is unchanged at 7.80 million boxes. Of the total grapefruit forecast, 1.50 million boxes are white and 6.30 million boxes are the red varieties. The Florida all tangerine and tangelo forecast remains at 1.62 million boxes.
The forecast includes 600,000 boxes of the early tangerines (Fallglo and Sunburst), 210,000 boxes of Royal tangerines, 530,000 thousand boxes of Honey tangerines, and 280,000 boxes of tangelos. The Frozen Concentrated Orange Juice (FCOJ) yields as reported by the Florida Department of Citrus (FDOC), Report No. 39, for the period ending July 1, 2017, at 42 °Brix are: all oranges at 1.416618 gallons per box, late (Valencia) portion at 1.536500 gallons, and non-Valencia oranges at 1.336596 gallons.
Please download the full citrus crop production forecast: www.nass.usda.gov
