The USDA calculated that there will be 7.3 percent less volume of oranges on the market this season. The decrease is visible in all production areas with the exception of South Africa, according to the American organisation. The South Africans started their season a few months ago on an almost empty world market. And South Africa is still the only big player. Europe had little stock due to the Spanish season finishing earlier. The season also ended earlier in the United States. A South Africa export advises: "Buy the Navels on time, because South Africa has limited volumes."
There are hardly any alternatives. Brazil and Uruguay have a limited volume available and Argentina is also hardly exporting any oranges to Europe.
In Australia the export is profiting from the lower exchange rate of the Australian dollar against the American dollar. This meant the export could be ramped up and the pressure on the domestic market reduced. Besides the US, Australia exports to countries in the region, for instance China. That country imports citrus unless there is domestic production. Between September and June 60 to 70% of the market is filled with Chinese oranges.
There are hardly any alternatives. Brazil and Uruguay have a limited volume available and Argentina is also hardly exporting any oranges to Europe.
In Australia the export is profiting from the lower exchange rate of the Australian dollar against the American dollar. This meant the export could be ramped up and the pressure on the domestic market reduced. Besides the US, Australia exports to countries in the region, for instance China. That country imports citrus unless there is domestic production. Between September and June 60 to 70% of the market is filled with Chinese oranges.
South Africa: stable volume to EU despite CBS
The Valencia harvest started in Western Cape this week. Over the next few weeks the regions with Valencias will be in full production. The quality of the Navels is satisfactory. According to an exporter the internal quality has been better than in recent years. A light decrease in volume is expected for the Navels. The cause is natural fluctuations.
The area in South Africa is growing, but there are also clearances and new varieties planted within the existing area. Due to water scarcity the possibilities are limited. Old orange trees are replaced by new Navel varieties or mandarins.
Despite the threat of Citurs Black Spot, South Africa continues to ship volumes to Europe comparable to previous years. CBS keeps the market busy, partially because Europe has set a limit of five CBS finds in citrus max. However, it is not known what the consequences of this limit being broken would be. A boycott seems unlikely. This year the South Africans did not ship citrus to Spain. The Southern European countries finds a striking amount more CBS in parties than other European countries. Moreover, Argentina has passed the limited of five CBS discoveries and has not been affected. This is why South African growers are looking more at other markets. A number of growers have stopped exporting to Europe.
Alternative markets that are mentioned are in the Far East. South Africa is discovering markets like India, Indonesia and China. "There are a lot of growing possibilities. There are growing markets outside of Europe and there are opportunities for South Africa and Peru," according to a South African exporter.
Australia: exchange rate promotes export
The orange season down under is going well. The Navels from the Murray Valley are of 'exceptional quality' according to growers. The volumes are large enough to be able to be exported to the US. Besides this, oranges are also being shipped to Japan and China. The lower exchange rate for the Australian dollar is playing into the hands of the export. Because the US is prepared to buy more volume, the pressure on the small domestic market is reduced. Other varieties grown include Washington, Cara Cara and Late Lane.
Australia: exchange rate promotes export
The orange season down under is going well. The Navels from the Murray Valley are of 'exceptional quality' according to growers. The volumes are large enough to be able to be exported to the US. Besides this, oranges are also being shipped to Japan and China. The lower exchange rate for the Australian dollar is playing into the hands of the export. Because the US is prepared to buy more volume, the pressure on the small domestic market is reduced. Other varieties grown include Washington, Cara Cara and Late Lane.
Argentina: difficult times for orange growers
The Argentinian trade is in deep water. A trader from a large exporter with a wide assortment illustrates this with figures. Whereas in 2007 around 200,000 pallets were shipped, of which 50% through Rotterdam, there is now much less. A difficult economic situation and the climate are making it difficult for the growers. The main sales market was Europe, specifically Spain, the Netherlands, Italy and Russia.
Economically it is difficult. Argentina had a period with high inflation, which could go up to 25% in a week. Due to this the production costs have risen severely and the exchange rate isn't attractive. "The peso becomes 10% more expensive in dollars every year," says the exporter. The competition with South African is strong and South Africa has the advantage.
This is why growers left part of the harvest on the trees last year. The costs of picking the oranges were higher than the yields. Even the industry and the domestic markets, of 40 million consumers, couldn't absorb the large volume.
The Argentinians see new markets in Asia. Indonesia was a good market before quotas were introduced. Now the focus is on China and South East Asia. The growth in those markets makes the exporters hopeful.
Europe
The prices for South African citrus are high. For the South African exports this year will go down as one of the better ones in terms of prices. The main cause of this is that South Africa started on an empty market.
This is why growers left part of the harvest on the trees last year. The costs of picking the oranges were higher than the yields. Even the industry and the domestic markets, of 40 million consumers, couldn't absorb the large volume.
The Argentinians see new markets in Asia. Indonesia was a good market before quotas were introduced. Now the focus is on China and South East Asia. The growth in those markets makes the exporters hopeful.
Europe
The prices for South African citrus are high. For the South African exports this year will go down as one of the better ones in terms of prices. The main cause of this is that South Africa started on an empty market.
Spain: estimate -25%
The Spanish season ended early this year, which gave the South African exporters and advantage. The new season starts at the end of October with the first Navalinas. Spain expects a decrease of 20 to 25% in production in all regions: Valencia and Andalusia. Especially due to the heat waves and hail storms in recent months, less Navalina, Navelane and Salustiana are expected. However a larger volume of class 2 and industry is expected.
Although the harvest is still awaited, oranges are being sold. The distributors want a guarantee that they have enough volume when the harvest starts. The prices are 8 to 15% higher at the moment. These prices are no guarantee for the rest of the season, but it is a good start.
Last year was bad for the growers. The Russian boycott disrupted the market, which meant that, for instance, the region of Valencia lost 34 million Euro. The area in Spain is decreasing. Growers are switching to persimmons. In the last ten years the area in Valencia, worth 60% of the citrus production, decreased by 25,000 hectares.
The Netherlands and Belgium: diversified supply expected
The South African orange season is going well. The fruit arrived on an empty market. There were no more stocks of the Valencias. For the Navels, Navel Late and Autumn Gold the season went well. The prices are between 11 and 12.50 Euro for Navels and Navel Late, Autumn Gold is between 13 and 13.50 Euro. The stocks in Belgium are also small, which is allowing the South African season to go well. The larger volumes are on their way by boat. Although the season started slightly later, the prices are stable and comparable to previous years. A Belgian importer says he has Navel Late and Midknight in his assortment at the moment. There are also sufficient volumes of Cambria Late coming in.
Importers expect a reasonably spread out supply this year. In contrast to the normal trend where, right before the 15 October duty deadline large volumes are supplied. After this date there is an import tax for the South African citrus.
Last year was bad for the growers. The Russian boycott disrupted the market, which meant that, for instance, the region of Valencia lost 34 million Euro. The area in Spain is decreasing. Growers are switching to persimmons. In the last ten years the area in Valencia, worth 60% of the citrus production, decreased by 25,000 hectares.
The Netherlands and Belgium: diversified supply expected
The South African orange season is going well. The fruit arrived on an empty market. There were no more stocks of the Valencias. For the Navels, Navel Late and Autumn Gold the season went well. The prices are between 11 and 12.50 Euro for Navels and Navel Late, Autumn Gold is between 13 and 13.50 Euro. The stocks in Belgium are also small, which is allowing the South African season to go well. The larger volumes are on their way by boat. Although the season started slightly later, the prices are stable and comparable to previous years. A Belgian importer says he has Navel Late and Midknight in his assortment at the moment. There are also sufficient volumes of Cambria Late coming in.
Importers expect a reasonably spread out supply this year. In contrast to the normal trend where, right before the 15 October duty deadline large volumes are supplied. After this date there is an import tax for the South African citrus.
British market: low wholesale market prices, stable retail prices
The British market is receiving more volume from Peru this year, where the area has increased. The number of Peruvian suppliers has increased, which means the prices on the wholesale markets are lower. The price in the supermarket isn't under pressure due to a low supply from South Africa.
France: stable prices despite sales dip
South Africa is France's purveyor, only small volumes are imported from South America. Through the summer the consumption of oranges is lower. It is expected that the demand will increase when the schools start and the summer comes to its end. The prices are stable, whereas the prices usually decrease due to the lower consumption. For the French the danger of CBS doesn't play a role. Due to large investments by growers and attention the risks are limited.
Russia too large a risk
The Russian market is difficult due to the economic situation in the country. South African exporters aren't queuing up to export to the Russians. The risk is just too big. A few million boxes have been shipped to Russia, but due to the bad situation and the exchange rate the trade has shrunk considerably.
Israel doesn't export enough oranges
Oranges are a small product in Israel. The Shamouti is exported to the British and Scandinavian markets. Besides this, there are a number of new varieties that are mainly brought onto the domestic market. A small portion of these are shipped within the region. At the peak of the season, week 22 (ending on 30-05-2015) the export volume of the Shamouti reached 250,921 tonnes, whereas a year ago this was 402,223 tonnes.
America: empty market for South Africa
In the United States only the Valencia's are in production. Most of the oranges are imported from Chile and South Africa, as well as smaller volumes from Uruguay and Peru.
The South African season in the United States is going well, partially due to the large demand from the retail.
The US and California are also ending the season early, which meant the South Africans had an empty market here too. Due to strict import rules only import from the West Cape is possible. Despite this America chooses the South Africa organ. The expectation is that the volumes in the US will soon decrease and the Navel season will not connect to the Midknights. An increase in price is expected until the end of the season. The season of the Valencias is going satisfactorily. There are no extremes, the supply is stable, says a trader.
Chinese prices go up during season
China imports oranges from Australia and South Africa between June and October. From September to June the citrus is imported from the United States and Egypt. During those months there is also domestic production available, worth up to 60 to 70% of the volume on the market according to estimates. A small part of the domestic production is exported, especially to countries in the region; Thailand, Malaysia and Singapore.
This year there is less supply from Australia due to an unfavourable exchange rate and it is uncertain how the market will develop. Prices are around 220-270 yuan (34-42 dollars) for a box of 18-19 kilo. South African citrus yields 120-150 yuan (18-23 dollars). These are prices halfway through the season. At the start of the season the prices were a lot lower.
The import season is coming to an end. The volumes are lower and the prices are expected to increase. That trend was also visible for the last two years. In recent weeks the prices have gone down slightly, which means the market isn't following the image of previous seasons. A few Chinese importers are looking into the possibility of importing oranges from Pakistan.
The import season is coming to an end. The volumes are lower and the prices are expected to increase. That trend was also visible for the last two years. In recent weeks the prices have gone down slightly, which means the market isn't following the image of previous seasons. A few Chinese importers are looking into the possibility of importing oranges from Pakistan.
Every week FreshPlaza and AGF.nl publish an overview of the market situation of a product in a global context. With these articles we aim to provide a view of a global market, which is becoming smaller and smaller due to globalisation. Next week mangos are central.