The ending stocks of orange juice ended the 2021/22 season at low levels (on June 30th, 2022), according to data released this week by CitrusBR. And even if orange production increases in the 2022/23 season, the volume of juice stocked by the end of the crop is not expected to be high.
According to CitrusBR, the ending stocks of Frozen Concentrate Orange Juice (FCOJ) Equivalent totaled 143.1 thousand tons at the end of the 2021/22 season, almost 55 % lower than that in the previous crop and below the strategic level (250 thousand tons).
CitrusBR estimates juice stocks to total 140 thousand tons by the end of the 2022/23 crop, in June 2023. Despite the increase in the number of oranges allocated to the production of juice, industrial yield is expected to be lower than that last season – it is important to consider that, in the 2021/22 crop, rainfall was not that frequent, which favoured yield.
According to CitrusBR, the Brazilian exports of orange juice to the United States may increase, due to the low orange production in Florida, which is keeping low the American stocks of juice.
This scenario confirms the high industrial demand for oranges in the current season (2022/23). However, next season, the demand from juice processors is expected to continue high – to replenish stocks, at least partially. Thus, juice prices are on the rise abroad.
Cepea estimates that, for the volume stocked by the end of the 2023/24 season (in June 2024) to return to the strategic level of 250 thousand tons, orange processing during that season needs to be around 300 million boxes of 40.8 kilograms, which accounts for an output of 340 million boxes in São Paulo State + the Triângulo Mineiro. This calculation considers stable juice sales, of a million tons, and the average yield of the five previous crops.
However, since the beginning of Fundecitrus surveys, in 2015/16, orange production has surpassed 340 million boxes in only two seasons: 2017/18 and 2019/20. Since then, the area with orange groves has shrunk. On the other hand, groves were renewed in that period, which tends to favour productivity and production.
In late February, the large-sized processors in São Paulo made their first purchase proposals for the oranges from the 2022/23 crop. Of the three companies in the state, two of them are interested in closing deals, bidding from BRL 30 – BRL 32.00 per 40.8-kilo box, harvested and delivered. The third processing plant was only renewing existing contracts. However, the number of deals closed is still low, since farmers expect prices to rise higher, due to both firm demand from the industry and, largely, higher production costs.
Indeed, data recently released by CitrusBR show that the volume of orange juice stocked by the end of the current season (in June 2022) will not be enough to supply the international market until the middle of next season. According to CitrusBR, ending stocks of Frozen Concentrate Orange Juice (FCOJ) Equivalent in the 2021/22 season are expected to total 126.574 thousand tons – possibly ranging between 115 and 135 thousand tons. It is important to mention that previous estimates (from September 2021) pointed to stocks between 170 and 190 thousand tons, but bad weather conditions (drought and frosts) reduced processing and hampered fruits development and ripening (influencing industrial yield).
If CitrusBR’s forecasts are confirmed, the volume stocked is expected to be much lower than the strategic level, of 250 thousand tons, scenario that may be observed at least until the end of the 2022/23 season (in June 2023) if the number of oranges produced is not high.
Cepea calculations show that, for stocks to surpass the strategic level by the end of next season, the number of boxes harvested in the citrus belt in São Paulo and the Triângulo Mineiro needs to be over 340 million – and of this total, 300 million need to be allocated to the industry. For these results were considered sales of a million tons (slightly lower than the average) and the average industrial yield of the past five crops.
Although it seems juice supply in Brazil will be tight for at least one more season, agents from processors have not reported any significant valuations for the commodity yet. This would be the major reason why bids for the new season have not been higher. On Feb. 23, the May contract at ICE Futures closed at USD 1,993/ton, 2 % down from that on December 30. However, it is important to mention that values at ICE Futures do not reflect real sales prices of processing plants.
One of the facts that may be constraining juice valuations abroad is the fear of bottling plants as for the negative effects of higher prices in Brazil. In the major destinations for the Brazilian orange juice, the United States and the European Union, demand for the product has been fading for some years, majorly because of the wide variety of other beverages, such as flavoured water, energy drinks and other types of juice, for instance.
JBT Corporation, a global technology solutions provider to high-value segments of the food and beverage industry, announced it has acquired Urtasun Tecnología Alimentaria S.L., a provider of fruit and vegetable processing solutions. The company is headquartered in Navarra, Spain.
“The acquisition of Urtasun expands our product offering in fruit and vegetable processing, particularly in the fresh packaged and frozen markets,” said Brian Deck, President and Chief Executive Officer. “By integrating Urtasun into FoodTech, we can leverage JBT’s global sales and service footprint to accelerate growth.”
The purchase price was approximately $40 million. Urtasun expects 2021 revenue of approximately $25 million with Adjusted EBITDA margins in the mid to high-teens. The transaction is expected to be approximately four cents dilutive to 2021 GAAP earnings per share and one cent dilutive on an adjusted basis which excludes transaction-related costs and purchase price accounting. In 2022, Urtasun is expected to be accretive to GAAP and adjusted earnings per share by approximately three cents.
The Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) equivalent are currently 17 % lower than that in the previous season, according to Secex. Between July 2020 and February 2021 (2020/21 season), shipments totaled 670.7 thousand tons. Revenue from these exports totaled 985.19 million USD, 27 % down from that in the same period last season.
Among the major purchasers of the Brazilian juice, the European Union was the one that most reduced purchases. From July/20 to Feb/21, shipments to the EU totaled 419.7 thousand tons, 22 % down from that in the previous season. Revenue totaled 626.44 million USD, 32 % down in the same comparison.
Exports to the United States have been more stable, totaling 135.83 thousand tons, very similar to that from the previous season. Revenue totaled 201.62 million USD, 8 % down in the period.
Orange prices have been on the rise in the Brazilian in natura market this month – the upward trend of quotes has been observed since July. Although the share of late varieties is increasing in the in natura market, in general, supply is low, while consumption is increasing sharply, due to the current high temperatures in Brazil.
Between October 1st and 15th, the average price for pear oranges was 36.52 BRL per 40.8-kilo box, on tree, 14.7 % higher than that in the first fortnight of September.
Low supply, mainly of high-quality oranges, is expected to keep prices on the rise in Brazil in the coming weeks. Besides, estimates for a 26 % decrease in the output of the 2020/21 crop should be revised, due to the drought and high temperatures in São Paulo State, which should reduce even more the volume harvested compared to the official estimates.
Data released in early October by the ABCM (Brazilian Association of In Natura Citrus) indicate that the 2020/21 citrus crops in São Paulo and in Minas Gerais States are, indeed, going to be lower. The drought faced by the sector in the major producing months hampered the development of fruits, which are small-sized. ABCM reported that, soon, the retail market and distributors may have lower supply of in natura citrus – or even a lack of products.
ABCM entrenches that the high temperatures and low rains between July and August damaged the fruits from the second flowering in the 2020/21 crop, which accounted for most of the output. In this scenario, agents believe that Fudencitrus’ next estimates, forecast to be released in December, may be revised down.
ORANGE JUICE – The 2020/21 orange crop in Florida was damaged by the hot and dry weather, which constrained groves’ productivity. Thus, the American orange output should be lower, which may lead the country to import higher amounts of orange juice. This scenario may favor the Brazilian sector, since Brazil is the top supplier of orange juice to the United States.
Between Oct/19 and Jul/20 (2019/20 season), the USA imported lower volumes of orange juice: 38 % of concentrated juice and 39.5 % of fresh juice, compared to that in the previous season, according to the Florida Department of Citrus (FDOC).
Although the Brazilian juice is losing market share to that from Mexico, the orange harvest from Mexico in the 2019/20 season (Nov/19 to Oct/20) decreased sharply, which may constrain juice production. According to the USDA, the Mexican supply should be 45 % lower than that in the previous season, and orange juice production, 60 % lower. Although initial inventories are high, juice supply should be 50 % lower.
However, it is worth to mention that the crops from São Paulo and the Triângulo Mineiro should also be lower in 2020/21. According to a report from Fundecitrus released last month, the harvest in the Brazilian citrus belt should total 286.72 million boxes, 26 % down compared to that in the previous season. This volume may decrease even more because of the drought in this region in the past months, which may even reduce supply in the 2021/22 season.
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Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent increased in October for the fourth consecutive month. This season (July to October/19), Brazil has shipped 390.5 thousand tons of the product to all destinations, 19 % more than that exported in the same period last year, according to data from Secex. Revenue, in turn, rose 8 %, in the same comparison, totaling 672.27 million USD.
This result was already expected by agents from the sector, who were based on the needs of bottling plants from the European Union (number one destination for the Brazilian juice) to replenish inventories – it is worth to mention that, last season, national shipments to the EU decreased. This season (2019/20), exports to the EU have already reached 284.3 thousand tons, 25 % up compared to the volume shipped between July and October 2018.
Shipments to the United States continue to decrease – between July and October/19, Brazilian exports to the USA decreased 6 %, totaling only 53.5 thousand tons, still reflecting the 2018/19 harvest offset in Florida as well as perspectives for a positive scenario in the American state in 2019/20.
Brazilian juice exports should continue on the rise in the coming months, 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. Shipments to the USA, in turn, will depend on the output from Florida (although greening has been controlled, it still damages local groves).
BRAZILIAN MARKET – The demand for oranges was firm in the in natura market in the first fortnight of November, according to Cepea collaborators, pushing up prices. As regards supply, the low availability of higher quality fruits and the reduction in the pear orange harvesting helped to underpin quotes. Between Nov. 1 and 14, pear orange quotes averaged 28.04 BRL per 40.8-kilo box, on tree, 31.1 % up compared to that in the first half of October.
As regards tahiti lime, the volume available in the in natura market of SP is increasing – although most are small-sized fruits, which are traded at lower prices. According to agents consulted by Cepea, the gradual supply increase tends to press down quotes from now onwards. Between Nov. 1 and 14, tahiti lime prices averaged 91.37 BRL per 27-kilo box, harvested, 14.3 % down compared to that in the first fortnight of October.
EXPORTS – Brazilian shipments of tahiti lime continue at record levels, both in terms of volume and revenue, favored by the higher supply between April and May. Between January and October/19, exports of lemon and lime totaled 93.3 thousand tons, 13.6 % up compared to that from the same period last year, according to Secex. Revenue, in turn, totaled 78.5 million USD, 3.2 % higher, in the same comparison. As supply increases in Brazil, which is expected between late November and early December, agents expect quotes to drop and shipments to increase, since lower prices favor the competitiveness of the Brazilian product in the international market.
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.
The Brazilian exports of Frozen Concentrate Orange Juice (FCOJ) Equivalent have been increasing for two consecutive months. This season (July to August/19), Brazil has shipped 199.6 thousand tons of FCOJ Equivalent – to all destinations –, 19 % more than that from the same period last year, according to data from Secex. Revenue, in turn, rose 6 %, in the same comparison, totaling 336.64 million USD.
To the European Union, the number one destination for the Brazilian orange juice, national exports have totaled 140.3 thousand tons, 22 % up compared to that between July and August/18. To the United States, on the other hand, Brazilian shipments have decreased again, by 13 %, totaling only 32.8 thousand tons between July and August/19 – this result reflects the higher supply in Florida in the 2018/19 season and perspectives for a positive scenario in 2019/20.
PERSPECTIVES – Concerning production in Brazil, new estimates for the 2019/20 season released by Fundecitrus (Citrus Defense Fund) on September 10 indicate that the orange harvest in the citrus belt should total 388.42 million boxes (40.8 kilos each). This volume is only 0.12 % smaller than that reported in May, but 35.8 % higher than the amount harvested last season (2018/19).
According to Fundecitrus, lower estimates are based on the smaller rain amounts in São Paulo starting May, which reduced the average weight for the early varieties (hamlin, westin and rubi), from 138 to 136 grams, as well as the size, from 296 to 300 fruits per box.
Still according to the report from Fundecitrus, the harvesting of early oranges has totaled 96 %, against 23 % for pear oranges and 6 % for late oranges. So far, the total volume harvested in the 2019/20 season is at 35 %.
BRAZILIAN MARKET – Tahiti lime quotes increased in São Paulo State in the first fortnight of September, reflecting lower supply, since the fruits still on tree have not reached the ideal maturation and size to be harvested yet. Between September 2 and 13, tahiti lime prices averaged 47.48 BRL per 27-kilo box, harvested, 50.73 % up compared to that in the first half of August.
Tahiti lime exports have reached record volumes this year, largely favored by the higher supply in Brazil between April and May. From January to August/19, exports of lemon and lime totaled 83.1 thousand tons, 9.3 % up compared to that in the same period last year, according to Secex.
Concerning oranges, supply was still low in the in natura market, due to the fast crushing pace in the large sized processing plants from SP. In the in natura market, the demand for oranges was high in the first fortnight of the month. Thus, between Sept. 2 and 13, pear orange quotes averaged 18.99 BRL per 40.8-kilo box, on tree, 4.05 % up compared to that in the first half of August.
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.
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.
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.
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.
Despite the positive ending stock scenario in July (referring to the 2017/18 crop), CitrusBR (Brazilian Association of Citrus Exporters) estimates a tight carry over for orange juice by June 2019 (2018/19 crop), at around 146.7 thousand tons.
This amount would be enough for two months of exportations, at the most, the second smallest in the CitrusBR series (which started in 1988/89) and 5.6 % lower than the minimum stablished by the Association in May, at 154.7 thousand tons of Frozen Concentrate Orange Juice (FCOJ) Equivalent. The critical volume is due to the smaller crop forecast for the citrus belt, at only 288.29 million boxes, 27.6 % down compared to the 2017/18 season.
New estimates from Citrus BR are based on an average industrial yield at 259 boxes of 40.8 kilos of oranges to produce one ton of FCOJ, higher than that last season, due to the dry period in the citrus belt – approximately 120 days. The lack of rains, according to CitrusBR, should significantly affect the initial volume forecast by Fundecitrus (Citrus Defense Fund), released in May (which still did not consider the scenario from May to July).
As for the 2017/18 crop, CitrusBR reported ending stocks at 343 thousand tons of FCOJ Equivalent on June 30 2018 at the processors from SP. That amount accounts for a significant recovery at 219.6 % compared to the volume at the end of 2016/17.
This positive result is linked to the larger harvest at the citrus belt (São Paulo and Triângulo Mineiro) in 2017/18, which totaled 398.35 million boxes of 40.8 kilos, 62.4 % more than in 2016/17, according to Fundecitrus. Compared to the average in the last 10 years, the output was 25% larger and the largest since 2011/12 (when it totaled 416 million boxes). The positive harvest in 2017/18 ensured comfortable inventories at processors, which, however, cannot be considered a surplus.
IN NATURA MARKET – Despite the weak demand, pear orange quotes remain at high levels in Brazil. As crushing of mid-season fruits steps up at processors from SP, and with the low supply of good quality oranges at orchards, availability is low in the spot. Thus, pear orange quotes averaged 27.85 BRL per 40.8-kilo box (on tree) in the first fortnight of August, 5.9% higher than in the same period of July.
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 to 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.
n 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 – Although the trading pace in the Brazilian citrus market slowed down in the second week of June, the supply of oranges in the stages demanded by the in natura market from São Paulo decreased, since delivery of these fruits to processors stepped up early in the month, when truckers’ strike ended. Thus, in the first fortnight of June, pear orange quotes averaged 25.52 BRL per 40.8-kilo, on tree, 1 % down compared to that in the same period of May.
As for tahiti lime, harvesting started again (after the end of truckers’ strike), pressing down quotes as well. Besides, demand was weakened in the domestic market. In the first fortnight of June, tahiti lime quotes averaged 36.36 BRL per 27-kilo box, harvested, 26.1 % down compared to that between May 1 and 15.