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Pear orange prices in the in natura market hit a new record in February, considering Cepea historical series, which has started in October 1994 – values were deflated by IGP-DI December/23. Quotations are likely to continue at high levels in March, since the volume of early varieties in the spot market in São Paulo is still small.

In February, pear orange prices averaged BRL 87.40 per 40.8-kilo box, on tree, 9.29 % up compared to January/24 and an increase of 83 % in relation to February/23 (in this case, in nominal terms). Price rises are linked to the lower supply in this offseason period, while the supply of late and early varieties is also limited. It is worth noting that the firm industrial demand reduced even more the fruit availability in the domestic market during the entire season.

TAHITI LIME – Prices have started February in a downward trend; however, they rose during the month, leading to an increase of the monthly average. Although it is the peak season, frequent rains limited the harvest and, consequently, the supply. Moreover, weather conditions have been favoring the fruit quality.

In this scenario, the tahiti lime price average in the in natura market was BRL 20.11 per 27-kg box (harvested) in February, moving up 46.36 % and 104 % in relation to January/24 and February/23, respectively, in nominal terms.

Values are likely to remain firm in March because of the lower volume that will be harvested. Moreover, exports may increase, especially due to the proximity of Easter, which can influence to flow the product.

Pear orange prices have been moving up since the beginning of the 2023/24 season in the in natura market. In January, values hit the record of Cepea series, which has started in 1994. In the first month of 2024, the price average was BRL 78.89 per 40.8-kilo box, moving up 16% compared to December/23 and 90% in relation to January/23, in real terms (values were deflated by IGP-DI Dec/23). Up until January/24, the highest value in real terms had been BRL 74.92/box, in November 1994.

This scenario of high prices is related to the limited supply. The production in the current crop is on average; however, low orange juice stocks increase the need to buy the raw material, reducing the orange supply in the in natura market.

As for the demand, players surveyed by Cepea say that it is firm, since temperatures are high, favoring the consumption of the fruit.

The pear orange supply is expected to continue limited in February, which is still considered offseason.

Industry

Prices for pear orange and late varieties for the industry had hit a real record in November. Since then, they have been renewing the record level of Cepea series, which has started in 1994. However, values are now moving down, considering the closing of new trades.

The price average for pear orange and late varieties for the industry was BRL 57.68 per 40.8-kilo box, harvested and delivered, in January, increasing 10% against the month before and 76% in relation to January 2023, in real terms.

Tahiti lime

Prices finished January at low levels, due to the peak season. The price average in January 2024 was BRL 13.56 per 27-kg box (harvested), for a decrease of 28% compared to the last month of 2023.

The tahiti lime supply is expected to continue high in February, due to rains in January, which can favor both the fruit development and the quality.

In 2024, orange prices paid to citrus growers in São Paulo/Triângulo Mineiro may remain at high levels. The supply may continue to be lower than the industrial demand, keeping the availability limited in the in natura market.

So far, there are no solid aspects that allow to project the volume that will be harvested in the 2024/25 season; however, the orange juice supply may not be enough to meet the demand, especially because of the expectation of low juice stocks in June 2024.

CitrusBR says that the volume in stocks by the end of the 2022/23 season (in June/23) was only 84.745 thousand tons equivalent to concentrate juice. Cepea calculations based on the orange production forecast by Fundecitrus indicate that the volume in stocks by the end of the current season (2023/24, in June/24) may not be higher. This scenario may be reinforced in case exports continue intense and the productivity remains below-average.

Therefore, it would be important if the orange volume harvested in São Paulo and in Triângulo Mineiro is above the average over the last years in order for the processed volume to meet exports and allow a recovery in stocks by June 2025. However, challenges faced in the second semester of 2023 (greening and heat waves) may bring difficulties for a good harvest in 2024/25.

It is worth noting that Brazil does not have major competitors regarding the global orange juice supply. Mexico, an important supplier for the US market, has been facing difficulties in the production, especially because of the dry weather, while Florida has been facing the impacts of greening. In this scenario, a decrease in the Brazilian availability might affect the world orange juice supply.

Investments

Although the profitability scenario had been positive in 2023, major investments in São Paulo are not expected for 2024, due to the high incidence of greening. The planting can continue firm in Triângulo Mineiro, but the availability of soil and water for irrigation are limited.

2023 was a very positive year for the citrus activity in São Paulo state and in Triângulo Mineiro concerning prices received by citrus farmers. Orange values were at firm levels during the year in both the in natura market and at the industry – in this segment, quotations hit record levels in real terms, allowing a year of good profitability.

This scenario is explained by the lower supply compared to the demand, despite the fact that the 2023/24 production is on average. Orange juice stocks started the season at low levels, and there was the need to purchase the raw material in order to prevent a significant decrease of stocks at the end of the current season. Moreover, the orange juice demand is firm in the international market, especially from the US, country that has been registering limited production for years due to greening (HLB) impacts.

In November, prices of orange to the industry hit real records, considering Cepea historical series, which has started in October 1994 (monthly values were deflated by IGP-DI October/23).

Orange production

The 2023/24 orange season in São Paulo state and in Triângulo Mineiro may decrease 2.2 % compared to the previous, according to Fundecitrus. The total volume is forecast at 307.22 million boxes, 0.7 % smaller in relation to the first estimate, released in May.

The decrease is related to above-average rains, which increased the incidence of blossom-end rot, to the negative biennial cycle (except in the north), the lower volume of flowers verified in some late variety trees and to the intensity of greening.

It is important to mention that this volume is below the need of the industry to meet the international demand and increase juice stocks, which are very low. According to CitrusBR, the volume in stocks hit the lowest level in 12 years, totaling only 84.745 thousand tons of volume equivalent to concentrate juice by the end of the 2022/23 season (June/23), downing 40.7 % compared to the previous crop. These critical numbers arise serious concerns about the global orange juice supply.

Regular rains registered in tahiti lime producing areas since mid-September have been gradually increasing the supply of this fruit. Thus, the tahiti lime supply in October was slightly higher and it may increase more in November. The peak season is expected in December.

Due to the increasing supply, players surveyed by Cepea expect tahiti lime prices to move down in November, decreasing even more from December on.

In October, the tahiti lime was traded at BRL 68.92 per 27-kg box (harvested) in São Paulo state, downing 4.1 % in relation to September/23 and a decrease of 17.4 % compared to October/22, in nominal terms.

Orange

The season of late varieties was intensified in mid-October, and valência was the variety that was most offered, but volumes of natal oranges were also available in the market. The amount of these fruits is expected to increase significantly in November, taking part of pear orange share and increasing its importance in the juice industry. As for pear oranges, the supply has been reducing. In October, the average price was BRL 52.44 per 40.8-kg box (on tree), 11.4 % above that in September.

After fading for some weeks, tahiti lime prices increased in the second week of June, due to lower supply. Players surveyed by Cepea reported that farmers have reduced the harvesting pace, expecting higher prices in the coming weeks.

In that scenario, between June 12 – 15, the average price closed at BRL 17.96 (harvested), 33.8 % up compared to that in the previous week. This valuation brought some relief to farmers, since quotations had been low since mid-May and that some producers were working with negative margins.

Players surveyed by Cepea expect supply to decrease even more up until the end of June, which may boost values in the domestic market and export prices. However, weak demand may limit valuations, since the weather is cold, which usually discourages consumption. The weather has also been limiting the quality of tahiti lime.

INTERNATIONAL MARKET – The international demand for lemons and limes from Brazil has been increasing. May is not a month of significant shipments, but, this year, the performance was above-average. Secex indicates that Brazil exported almost 23.1 thousand tons in May, 42 % more than the volume shipped in April and 78 % up from that in May last year.

Orange supply has been low in Brazil since early 2023. In April, the pear oranges available in the market were the ones that ripen out of the usual period. However, the ones that were harvested earlier are not well accepted by consumers in the table market, since they did not reach the ideal maturation stage.

Despite low supply, pear orange prices weakened, due to the arrival of early varieties, such as hamlin, westin and rubi, to the market. Last month, the average price for pear oranges closed at BRL 46.87 per 40.8-kg box (on tree), 3.08 % lower than that from March but still 11.56 % higher than that in April last year, in nominal terms.

As the availability of pear oranges is low, many farmers – majorly in northern SP – tried to anticipate the harvesting of early varieties, aiming to take advantage of the current firm prices and make cash flow during the inter-harvest.

Ponkan tangerine

The prices for ponkan tangerine dropped last month too. While in March, supply was low, in April, the harvesting stepped up. Still, availability was not that high. The average price for ponkan tangerine closed at BRL 64.07 per 27-kg box (on tree) in April, 8.56 % lower than that in March but 40.6 % up from that in April/22, in nominal terms.

Tahiti lime

Opposite to the scenarios observed in the markets of oranges and ponkan tangerine, for tahiti lime, prices are on the rise, boosted by low supply – as the peak of harvest took place in the first bimester of 2023, supply in lower now.

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.

The number of consumers cutting back on their grocery shopping as a result of inflation has grown significantly during the past year, according to new research.

In a survey commissioned by specialist PR consultancy Ingredient Communications, a quarter of respondents (24.9 %) said they had stopped buying a food or beverage product in the previous three months due an increase in price. This is significantly higher than 10 months earlier in late 2021, when the same survey found that 17.6 % of shoppers had traded out of a product because it had become too expensive.

The research, conducted by SurveyGoo, also found that nearly half of respondents (48.4 %) had purchased a product less often, compared with 36.5 % previously. More than half (50.9 %) said they had bought less of a product, compared with 40.8 % before, while 57.8 % said they had switched to a cheaper brand, compared with 47.5 % in 2021.

Retailer brands have benefited from the squeeze, with 35.6 % of respondents saying they had switched to an own label version of a product, versus 25.8 % in the previous survey.

SurveyGoo polled 1,000 consumers in the USA and UK during the first week of October 2022. The previous survey was carried out in early December 2021 when inflation was already on the rise. Since then, prices have soared even higher. Year on year inflation in the UK’s food and beverage category was 14.6 % in September this year.1 In the US, inflation for food consumed in the home was recorded at 13 % over the same period.2

Nearly all respondents to the latest survey (98.1 %) said they had noticed food and beverage prices rising in the previous three months, compared with 94.2 % in the 2021 survey.

Richard Clarke, Managing Director of Ingredient Communications, said: “Since we first conducted our price sensitivity survey in December 2021, the war in Ukraine has exacerbated an already volatile situation. As well as difficulties sourcing certain raw materials, fuel costs have gone through the roof. With winter on the way in the western hemisphere, and no sign of Russia backing down, demand for energy will spike and it’s hard to see any short-term easing of the inflationary pressures that food companies and consumers are facing.”

He continued: “In manufacturing, it’s tempting to look for quick fixes to cut costs but in the food industry there are always risks to this. Consumers are very attuned to recipe changes and pack size reductions and social media means news of these can spread fast. At Ingredient Communications, we’ve always advocated using high quality ingredients that differentiate a product. But in these challenging times, it’s also worth talking to your ingredients suppliers to see how they can help. Many have extensive formulation expertise and might be able to advise on how to reduce input costs without compromising on quality or losing brand equity and consumer trust.”

1https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/september2022#notable-movements-in-prices
2https://www.bls.gov/news.release/cpi.nr0.htm#:~:text=percent%20in%20September.-,The%20index%20for%20all%20items%20less%20food%20and%20energy%20rose,items%20less%20food%20and%20energy.

The harvesting of early oranges is expected to advance in May, which may raise supply and press down quotations. In general, availability has been growing since mid-April, weakening prices.

In April (until April 28th), the average price for pear oranges closed at BRL 42.10 per 40.8-kilo box (on tree), a slight 4.96 % down from that in March (BRL 43.00/box). Before that, values had increased for two months.

On the other hand, for early oranges, quotations were firm in April – the average price for rubi oranges closed at BRL 35.71/box, 3.63 % higher than that in March. As the values for this group of oranges have been lower than that for pear oranges, the competitiveness of early oranges has increased.

For the coming weeks, if prices drop, sales tend to increase, since demand may be higher. However, if values decrease too steeply, farmers may reduce the harvesting, since the oranges on tree have not reached the ideal maturation stage yet. Thus, citrus farmers may prefer to wait for the beginning of activities at processing plants. The industry’s purchase proposals for the oranges from the 2022/23 season have been up to BRL 32.00/box (harvested and delivered).

Although two plants of the large-sized processors were processing oranges in late April, activities were slow because of low supply. By the end of last month, only one plant was purchasing early oranges (as long as ratio is near or higher than 14).

The prices for Frozen Concentrate Orange Juice (FCOJ) Equivalent rose high at ICE Futures in the first fortnight of April, reflecting the current low world supply, majorly in Brazil and in Florida (USA). Between April 1st and 13, the May/22 contract for orange juice increased by 20 %, and in 2022, by more than 30 %, closing at USD 2,650/ton on April 13.

Indeed, orange production (and juice production) in the Brazilian citrus belt (São Paulo State and the Triângulo Mineiro) decreased in the 2021/22 crop, which is practically over. According to a report released by Fundecitrus in the first half of April, the Brazilian citrus belt is expected to harvest 262.97 million boxes (40.8-kilograms) of oranges, 10.6 % down from the first estimates (May/21) and 2.2 % lower than that in the previous season.

This context will influence the Brazilian supply of orange juice, since the citrus belt is the major orange-producing region in Brazil. In February, Citrus BR estimated that, by the end of the season (in June 2022), the national stocks of orange juice (forecast at 127 thousand tons) will not be enough to ensure the world supply until the new crop (2022/23) steps up.

The same scenario is observed in Florida, where production estimates were revised down by the USDA by 19 % compared to the expected in Oct/21, to 38.2 million boxes, 28 % lower than that last season.

Lower production in the current and in previous seasons is reflecting on local stocks. According to the Florida Department of Citrus, from the beginning of the 2021/22 crop, in Oct/21, to March 26, 2022, the stocks of FCOJ were 31 % lower than that in the same period of the previous season. For not-from-concentrate orange juice, stocks were 25 % lower.

In this context, although the United States did not increase imports of concentrated orange juice – which decreased by 4.6 % between Oct/21 and Jan/22, according to the Florida Department of Citrus –, they increased purchases of not-from-concentrate orange juice. Brazil supplied 85 % of all the not-from-concentrate orange juice and 71 % of the FCOJ imported by the USA.

These estimates for Brazil and the USA explain the recent valuations of orange juice at ICE Futures. In both countries, supply is not expected to recover in the coming season (2022/23).

In the Brazilian citrus belt, although orange production may increase slightly, a higher harvest would not be enough to raise stocks and ensure world supply, since the current volume stocked is very low. In Florida, with the high incidence of greening on orchards (which has been lowering the average productivity of orange trees) and the smaller area with orange orchards in the state in the last years, production is not expected to return to the levels observed in previous decades.

Energy and raw material prices were already on very high level but surged even further after the beginning of the war in Ukraine. Those increases combined with availability issues have serious financial impacts on the flexible packaging supply chain. All main substrates used for flexible packaging such as plastics, paper and aluminium are concerned but also adhesives, lacquers and inks. The industry is confronted with the high energy prices in their direct operations manufacturing flexible packaging and logistics.

Even though the cost share for logistics is less than in other packaging sectors due to the low product to packaging ratio of flexible packaging and very efficient transportation (usually on reels) the absolute increase is very significant. Reports from forwarder associations even show the risk of reduction of available logistic capacities as companies will have to give up their operational business due to high diesel prices.

“The level of cost increases due this situation for manufacturers of the flexible packaging industry cannot yet be assessed completely but we are convinced that the peak is not reached yet,” commented Guido Aufdemkamp, Executive Director of Flexible Packaging Europe the situation.

“Main difficulties for our membership are the high uncertainty of serious pricing to their customers as many suppliers to the industry change their rates even after fixed delivery confirmation. Non-acceptance of such increases is often penalised by non-delivery or non-availability of the next order. Compared to the supplier and customer industry our sector is in a certain sandwich position. Furthermore, liquidity issues are of growing concern in particular for small- and medium-sized companies. That is combined with insufficient credit insurance lines due to high raw material prices.”

Almost half of the Fast-Moving Consumer Goods (FMCG) in Europe, excluding beverages, are packed with flexible packaging.

The processing of the oranges from the 2021/22 season has been high in the major processors in São Paulo State. Although activities usually slow down in January, the orange harvesting is late in the current season – because of the higher share of fruits from the second, third and fourth flowerings.

In January, seven plants of the large-sized processors in SP were in operation, receiving majorly late varieties and early pear oranges. However, activities slowed down last month compared to that in December, due to the end of processing at the plant located in Uchôa. In February, the plant in Conchal is supposed to end activities for the season too – then, there will be only two plants of each one of the large-sized processors in operation.

Despite the fast processing pace, the quality of the oranges is below the expected. Industrial yield (number of orange boxes necessary to produce a ton of concentrated juice), which had been favoured by the lack of rains along the season, is now being reduced by excessive and frequent precipitation – higher moisture favours fruits growth, but raises the volume of water within the oranges, which is not desired by processors.

PRICES – Two large-sized processors purchased oranges in the Brazilian spot market in January, paying from BRL 28 to BRL 30.00 per 40.8-kilo box, harvested and delivered to processor. At smaller-sized processors, prices hit BRL 32/box. Some plants were also processing tahiti lime, paying from BRL 18 to BRL 21.00 per 27-kilo box.

In 2021, orange prices were high in São Paulo State (SP) and in the Triângulo Mineiro. In general, the industry in SP kept the demand high for fruits, and the low production limited the supply throughout the year. Although the remuneration (in BRL per box) had been higher, the profitability for many citrus growers was restricted, given that the limited productivity increased the cost of production per unit even more.

Fundecitrus (Citrus Defense Fund) indicated, in its estimate released in December/21, that the production in the citrus belt may reduce 1.7 % compared to 2020/21, totaling 264.14 million 40.8-boxes. Even with the positive biennial cycle in the 2021/22 season and the higher fruit load, oranges have presented a smaller size, which explains the lower production.

From May to August 2021, rainfall accounted for only 30 % of the regular volume for the period, according to data from Somar Meteorologia/Climatempo. Fundecitrus says that this scenario affected even irrigated orange groves (which correspond to 30 % of the citrus belt), due to the limited water supply in tanks. In some areas, frosts in July worsened the situation. Besides the small-sized oranges, the premature fruit drop was one of the worst in history.

Due to the low supply of fruits, orange juice processors boosted prices compared to the 2020/21 season. In the partial of the crop (from July to December/21), the average price in the spot market was 27.50 BRL/40.8-kilo box, harvested and delivered at the industry, for a nominal increase of 22.5 % in relation to the same period last year.

EXPORTS – As expected, orange juice (volume equivalent to concentrate juice) shipments finished the 2020/21 season with a 7 % decrease in relation to the previous (2019/20). From July/20 to June/21, shipments to all destinations totaled 1.03 million tons, according to data from Secex. The revenue, in turn, amounted 1.54 billion USD, 15 % down compared to the season before.

IN NATURA MARKET – Orange prices hit nominal records in most part of 2021. Increases are attributed to the limited supply in the 2021/22 crop, because of the low volume of rainfall and high temperatures in the second semester of 2020 and the low humidity in 2021. From the second semester of 2021 onwards, the low quality of fruits (due to a long period of dry weather and frosts in July) reinforced the upward trend. In the partial of the crop (from July to December/21), the average price for pear oranges (in natura) is at BRL 39.52/40.8-kilo box, on tree, 20 % up from the average in the same period in 2020, in nominal terms.

TAHITI – The price trend was atypical in 2021. Values were low in the first semester and in some periods of the second part of the year, and peak prices were less intense. From January to December, the average price for tahiti lime was at BRL 25.19/27-kilo box, harvested, 31.3 % lower compared to that in 2020.

The price for pear oranges has been on the rise in Brazil since the beginning of the season, in June, influenced by the low supply of oranges in the market. In the second fortnight of October, pear orange prices surpassed BRL 50.00/40.8-kilo box, on tree, setting a new nominal record in the series of Cepea. The monthly average in October (in São Paulo State) closed at BRL 49.88/box, on tree, 10.1 % up from that in September/21 and 28.3 % above that in October/20, in nominal terms.

Agents in the Brazilian citrus sector did not expect supply in the 2021/22 season to be high, based on the effects of the weather on blooming and flower set. However, along the season, weather issues increased, with rainfall below the ideal and frosts in some locations at the end of July.

Although rains were more frequent in October, agents reported that the oranges were mostly small-sized, which kept the prices for larger-sized fruits on the rise – since this standard is required in the in natura segment. From November onwards, quality may increase, and a higher number of late oranges is expected to be available in the market. On the other hand, high purchases from the industry are also expected to control supply in the in natura market.

TAHITI LIME – In the Brazilian market of tahiti lime, the return of rains favored production and raised supply. Besides, the quality of the fruits continued low, and the exports pace was slow in October. Thus, prices for this variety dropped in the orchards in SP, averaging BRL 23.15/27-kilo box, harvested, 21.8 % down from that in September.

ORCHARDS – The rains that hit São Paulo State in October favored blooming in orange orchards, largely in dryland or those that had not bloomed yet. According to citrus farmers, the scenario varied among regions, according to the volume of rain and the production system (irrigated or dryland), but, in general, all agents agree that blooming was satisfactory.

As in previous seasons, this year’s flowering has been irregular and heterogeneous. While in some regions, orchards bloomed earlier (in September), in others, flowering was observed in October. However, the early flowers were compromised by the hot and dry weather in many areas, which led some of the fruitlets to fall, even in irrigated orchards.

Citrus farmers believe this will be another season of multiple blooming, which would hamper both the harvesting and management of trees because of the different development stages of flowers – as it happened in most Brazilian regions in the last years.

Although flowering brought some relief to citrus farmers in all regions, it is important to consider that plants are still debilitated, due to the long drought, which may hamper fruit fixing. Thus, the success of the recent blooming will depend on the weather from now onwards (high moisture interleaved with sunny periods) and preventive care for blossom-end rot. According to Cptec/Inpe (weather forecast agency), rains may be lower than the average in November and in December, which may be a reflex of the La Niña phenomenon, and hamper flower set.

The global pandemic has affected the packaging solution industry by leading to a significant price increase and shortage of raw materials and components used in packaging equipment. To compensate for the rising costs and continue to provide the highest quality solutions, Sidel is implementing a commodity-induced price adjustment on its equipment by an average of 5 % effective September 6, 2021. Deficiency of raw materials and components may impact equipment delivery time as well.

Since the outbreak of COVID-19, Sidel has been striving to keep the same price level for its equipment despite the fact that the price of raw materials has increased significantly since 2020. Moreover, this increase is not expected to recover in the foreseeable future.

Additionally, the pandemic, combined with other external factors, has resulted in a significant shortage of microchips globally. This shortage is an outcome of supply-related disruptions, including forced closure of factories, together with an unanticipated increase in demand for personal electronics such as cell phones and laptops as people were required to work or study remotely. Both supply shortage of microchips and increase in consumption of personal electronics lead to supplier delays which might impact the overall Sidel delivery channels for the near future.

Price averages of all orange varieties were firm in January in São Paulo state and may continue high in February. The lower production in the citrus belt (São Paulo and Triângulo Mineiro) in the 2020/21 season and difficulties to harvest in some areas, due to rains, underpinned values. Moreover, the supply of high-quality orange was low – most fruits available in January had characteristics unwanted by consumers, such as large size and thick peel.

In January/21, pera rio orange quotes averaged 39.06 BRL per 40.8-kilo box, on tree, 27.9 % up compared to January/20, but a decrease of 3.6 % in relation to December/20, in nominal terms. As for lima orange, the average was 73.85 BRL/box, 101 % up in the annual comparison, but 8.6 % lower in relation to December/20. Natal orange values averaged 35.07 BRL per box (+29.9 % in one year, but -3.4 % compared to the month before).

Values may continue at high levels to citrus growers in February, mainly for high-quality fruits in the in natura market. The loss of fruitlets and the low rate of established flowers last year that now result in a limited volume of out-of-season oranges favor this scenario. As for the demand, it can increase in February because of high temperatures.

As for the first oranges harvested in the 2021/22 season in Jales, where major flowerings are advanced, they can be available from March onwards. However, due to the dry weather in the second semester of 2020 and the consequent low rate of flowers established, the volume may not be very high.

TAHITI LIME – The peak season in São Paulo continued to press down tahiti lime prices in late January. However, producers reported problems brought by hot weather and rains, which can increase the allocation of fruits to crushing activities and limit the supply in the in natura market.

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.

Brazilian agents expect orange production in São Paulo and the Triângulo Mineiro region to be low in the 2020/21 season. Although lower productivity constrains growers’ revenue, a smaller harvest tends to underpin the prices paid by the industry, despite higher ending stocks in June 2020.

In general, the biggest flowerings (observed in August) were considered positive by most of the growers consulted by Cepea. However, the dry and hot weather between September and October damaged plants and delayed their development during the fruit-fixing period. Besides, new flowerings (although occasional and smaller than that from August) were spotted in early December, favored by November rains.

Thus, trees development has been heterogeneous in the Brazilian citrus belt, even within a single region. However, it is worth to mention that the flower settlement period lasts until mid-January, which makes it difficult to measure the results for the coming season. Besides, the scenario is still uncertain and depends on the flowers that are now opening, the percentage of fixed fruitlet and fruits development in January.

INVENTORIES – Higher orange production in the current season (2019/20) has allowed crushing to be high at the processors from São Paulo State. In this scenario, perspectives for June 2020 indicate higher inventories of Frozen Concentrate Orange Juice (FCOJ) Equivalent, possibly surpassing 400 thousand tons, according to Cepea estimates – higher than the strategic level. Isolated, this scenario may press down quotes at processors in the coming season, but, with the low production estimates for 2020/21 in São Paulo and the Triângulo Mineiro, quotes may continue firm.

Thus, in 2020/21, prices should be largely influenced by production – the agents consulted by Cepea believe the harvest will be smaller than 300 million boxes. If that is confirmed, this scenario may stabilize quotes in 2020, since it would keep the demand from processors high, and there would not be pressure on quotes in the in natura market.

Orange prices were weakened in the Brazilian market in May, due to both the colder weather and high supply at the orchards from SP.

As crushing increases in Brazil, citrus farmers tend to reduce orange supply to the in natura market, aiming to prioritize the trades already closed with processing plants – which may prevent prices from dropping more sharply – many farmers allocated large volumes of early oranges to the in natura segment in May, waiting for crushing to start at the industry.

Between May 2 and 31, pear orange quotes averaged 21.17 BRL per 40.8-kilo box, on tree, 33.4 % down compared to that between April 1 and 30.

Concerning tahiti lime, besides the higher supply, quotes were pressed down by the low demand, from both the Brazilian and the international markets. In May, tahiti lime quotes averaged 15.21 BRL per 27-kilo box, on tree, 36.8 % down compared to that in April.

The larger crop estimated by Fundecitrus (Citrus Defense Fund) for the Brazilian citrus belt (São Paulo and Triângulo Mineiro) in 2019/20, at 388.89 million boxes of 40.8 kilos (36 % larger than that from the 2018/19 season), should offset the inventories at processing plants from São Paulo in June 2020, according to Cepea estimates. However, this is not a high supply scenario, since the volume produced in 2018/19 was small and processing plants need to purchase raw material in order to replenish the low inventories forecast for June 2019.

According to CitrusBR (Brazilian Association of Citrus Exporters) estimates from Feb/19, the 2018/19 season should end, in June/19, with the smallest output since June/11, smaller than the strategic amount (of 250 thousand tons). Thus, if these estimates are confirmed, industrial demand may be firm in 2019/20, offsetting higher orange supply – this context has practically been confirmed, considering the anticipated trades closed in late 2018 at firm prices.

According to Cepea’s first estimates, by the end of the 2019/20 season (in June/20), juice inventories may surpass 300 thousand tons (Frozen Concentrate Orange Juice – FCOJ – Equivalent). For this calculation, Cepea considered the initial inventories forecast by CitrusBR (200.6 thousand tons), 300 million boxes crushed (88 million boxes allocated to the in natura market), average yield at 260 boxes for each ton of orange juice and sales at 1.05 million tons.

Thus, although 300 thousand tons are higher than the strategic level stablished, it is important to consider that production has oscillated in the citrus belt from year to year, with periods of larger volumes followed by years of low production. In this scenario, taking into consideration that the 2020/21 crop may be smaller, inventories should be kept stable at processing plants, aiming to avoid major decreases in the global supply.

PRICES PAID TO CITRUS GROWERS IN 2019/20 – Despite the larger volume forecast for the citrus belt, growers’ revenue should be positive in 2019/20, due to high productivity (which may reduce the cost per unit). Besides, much of the output has been purchased at the same price levels from 2018/19, between 20 and 22 BRL per 40.8-kilo box, harvested and delivered at processing plants (counting or not on a participation additional in the juice selling price in the international market).

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 supply of larger-sized tahiti lime increased in São Paulo State in November, due to rains. And as larger-sized fruits arrived at the market, the availability of small-sized tahiti lime decreased – until mid-November, the supply of small-sized fruits was high, since farmers were interested in trading them at high price levels.

In that scenario, quotes were 47.7 % lower than in October, averaging 39.57 BRL per 27-kilo box, harvested, last month. As for liquidity, sales decreased in the Brazilian market too.

PERSPECTIVES – At processors, crushing is forecast to step up only in mid-January – prices have not been estimated yet. This year, the average tahiti lime quotes were higher than in 2017 most part of the year (except for March, July and August), pushed up by lower supply and firm demand, from both Brazilian processors and the international market.

ORANGE – Higher supply and weakened demand pressed down pear orange quotes by 7.9 % from October to November, to the average of 30.24 BRL per 40.8-kilo box, on tree, last month. In general, rains and the slight cold front during the month halted the citrus market. However, although demand decreased, the harvesting was limited by precipitation, constraining sharper price drops.

FIELD – The heavy rains from October and November in the main citrus producing regions from São Paulo State concerned Brazilian citrus growers regarding the quality of the mature oranges from the current season (2018/19). High moisture was leading the late fruits to grow up to large sizes before the ideal harvesting period (due to the higher water concentration), reducing acceptance in the in natura market.

This scenario may also reduce yield at processors. Still, farmers believe these fruits may be accepted for crushing, which may limit volume reductions, based on the smaller production in 2018/19.