Water shortage threatens Brazilian production, but positive mood

Just now, Brazil is the biggest supplier of melons to the global market. Although the Brazilians have positive expectations, importers in Europe are concerned about the water shortages in the South American country. Israeli growers had a luxury problem: an empty domestic market and an empty market in Europe. Combined with high demand, Israel started the season well. Honduras and Guatemala are expecting losses in volume due to heavy rainfall. In Europe, the seasons have ended. France looks back on a difficult Charentais season. In Italy, despite a difficult start, they can look back with satisfaction. Spain has had a very bad season, despite circumstances being positive. In the United States and Australia, growers face viruses and diseases that affect the harvest. In the US, this results in a difficult market, in Australia sales are still going well, with higher volumes than last year.

Although for the fourth year in a row the South American country is being hit by drought and an El Niño, many melon growers have taken precautions to solve the water problem.

The favourable exchange rate also promises a good export season for the melons. The export has started, with several growers shipping the first containers to Europe, the United States, the United Arab Emirates and Russia. In week 32, the first yellow melons were shipped to Europe. Estimates mention an 18% increase in volume for yellow melons. The Galia volume is stable, Cantaloupe down 10%. Watermelon is doing exceptionally well, with an export increase to Europe of 90%. Piel de Sapo began in week 34, with an expected decrease in volume of 20% compared to last year. In addition to Europe, Canada is a good market for these melons.

"I've been on the field, and it's looking great," one grower says. "Normally, a melon plant dies during harvest, but this year the plants are still in full leaf. Beautiful, dark green leaves. The taste and the brix level of the melons is also great." Since week 32, Brazil has already shipped 1942 containers to Europe, 1015 containers of which went to Rotterdam, 822 to the British market and 29 to Spain.

World Food Moscow was an opportunity for the Russians to get to know the Yellow melon. "The Yellow melon is an exotic in their eyes," according to one grower who visited the trade show. "They are used to large, aromatic melons with good flavour, but softer than ours. But our tasting demo was a big success."

Dubai also seems to be a promising market. One trader says that after Fruit Logistica, the first melons were flown to the Emirates. The Emirates received the melons with open arms, and are now asking for containers, the trader says. In order to promote the Brazilian melons, traders are visiting fairs all over the world: WOP in Dubai, Fruit Attraction in Madrid, PMA Fresh Summit in Atlanta.

The export figures show that more volume is being shipped. While in 2014/2015 about 452.5 tonnes were shipped to Europe until week 39, that amount is 643 tonnes already this year. Roughly half of this volume arrives in the port of Rotterdam, accounting for 385 tonnes. During these weeks, Europe is the main export market, with the US and Canada buying hardly any melons.

At a variety level, a clear spread is visible within Europe. Rotterdam and the United Kingdom are clearly in the lead when it comes to import of virtually all melons, except for Piel de Sapo. While Spain imports hardly anything of the other varieties, the import flow of Piel de Sapo is almost completely destined for the Spanish ports.

The melon sector in Honduras and Guatemala is expecting big losses this year. Due to heavy rainfall, the harvest was damaged, and the volume is expected to turn out 30 to 40 percent lower. The definitive production figures are expected in the next few weeks, when there should also be more clarity on the losses. Prices could turn out higher than in previous years.

The melon cultivation in Israel can be divided into two parts: destined for export, and destined for the domestic market. For the domestic market, various varieties are grown, for export it's all about the Galia. The country has a small amount of growers, with a total yield between 1200 and 1500 tonnes. The exporters are satisfied with the beginning of the export season. With an almost empty market in Europe, and limited volumes from Brazil, the export was able to profit from a good market situation. Israeli trade had a luxury problem, however, because the domestic market was also empty. "So why take the risk of export, when you can also get good prices on the domestic market," one trader wonders aloud. The consequence was a lower export volume.

The high temperature in Israel is causing shortages in various products. Commodities like melons, tomatoes and cucumbers yield high revenue. Finally, the holidays that occur in the middle of the season, including Sukkot, also weigh heavily on trade, particularly logistically. Although fruit is available, it's difficult to organize logistics.

This week, the French have concluded the season of the Charentais, the most important melon in France and a variety of Cantaloupe. The season runs roughly from July until September. This year won't go down as a top year, with generally low prices, but a good volume. France has about 14,000 hectares of Charentais melons, with a yield of 240,000 tonnes.

In week 39, the season ended in Verona and Mantua, ending the season a few weeks earlier than last year. The season started in April/May with the first melons and watermelons from Sicily. Due to the weather, the harvest in Southern Italy coincided with the harvest in the greenhouses up north, putting prices under pressure.

Prices went down to below cost price. In June, prices recovered thanks to the change in weather. A warm summer, higher consumption and hailstorms characterized the course of the season. In the north of Italy, between Lombardy and Emilia-Romagna, about 1000 hectares were lost due to hail. Combined with warm weather and more demand, prices eventually increased to above last year's levels. The watermelons performed well this year, after a few years of low prices. The cost price of watermelons increased in recent years, thanks to investments in cultivation. In order to guarantee a good quality, however, more investments are needed. All in all, nearly 600,000 tonnes of watermelons are harvested, with mini watermelons making up around 35% of the total.

The export has developed positively in recent years. In 2014, the export amounted to 30,000 tonnes, with a value of 21 million euros. The ratio between production and export is still five percent, but an upward trend is noticeable. Main export markets are in Europe, with 60% of sales going to Germany, Switzerland and Austria.

Despite the growing export, Italy is still a net importer of melons, with a stable volume between 30,000 and 35,000 tonnes a year. Most import comes from other European countries, particularly France and Spain, followed by South America, with Brazil and Costa Rica in particular, and Africa, mainly Senegal and Tunisia.

The season for watermelons and melons in Spain is described as "one of the worst ever." Prices were below production costs, although the quality did cause major price differences. The market for Cantaloupe and watermelons improved toward the end of the season, when supplies decreased. A high temperature damaged the blossom, causing the volume to decrease and sizes to be on the large side. On the export markets, demand for small melons was biggest, however. Piel de Sapo is also doing better and better in export, that growth is expected to continue in the coming years. In addition, the New Delhi virus was going around among growers in Castilla-La Mancha, the virus is under control.

Despite the lower volumes, good quality and warm summer promoting consumption, prices were disappointing. According to the sector, the only reason for this is the price war in the supermarkets. Melons are used to lure the consumers to the store.

Experts expect the temperatures to continue going up as a result of the climate change. This means more insects and diseases could rear their heads. Growers expect to shorten the season in order to prevent losses. This makes more room for Brazil at the beginning of the season.

The Belgian melon market is reasonably stable for most varieties. Brazil is the main supplier of melons in this period, with varieties including Galia, Cantaloupe, Yellow melon, Green melon and Watermelon being supplied. The early stop of the Spanish Galia season resulted in early demand for Brazilian Galias. The market is positive, and despite the good demand on the domestic market, there is room for export. Trade is reckoning with a Galia shortage though, because not all the requested volumes are shipped. The weather turns out positively for the Dutch importers. Despite the good supplies, the importers have no large stockpiles, and sales are going well. The Netherlands plays an important part in transit of melons, including to Italy.

The country's biggest melon grower has an acreage with 150 hectares of watermelons, 150 hectares of orange melons, and 50 hectares of green ones. The fruit is popular in South Africa during the summer months. The production peak is between December and April. Last year, prices were average, although the consumer is looking more and more at the quality of the melons.

Growers in the north of the vast country had "no real problems" in supplying the market with melons during the winter months. There was even a surplus, thanks to an increase in production of 30 to 40 percent. It's not yet known how much larger the harvest will be, since the season is not yet over. Road trains are loaded on a daily basis to go to Sydney, Melbourne and the rest of the country.

Cool temperatures on the East Coast were visible in the price setting, which turned out lower. Growers were also faced with a cold winter, which made production more difficult. In addition, growers faced the Cucumber Green Mottle Mosaic Virus (CGMMV). Various outbreaks across the country confirm the necessity to contain the virus.

The harvest in California is nearing its end, the harvest in Arizona is picking up. Supplies in the West of the US are limited. Partly due to these low supplies, prices for Cantaloupe and Honey Dew are higher. The volumes turn out lower, partly due to viruses, diseases and quality problems. Prices are expected to go up to between 10 and 14 dollars a box in November, which means the expectations turn out lower than last year's price setting. In the winter months, there is supply from Guatemala, Honduras and Costa Rica.

Annually, around five million tonnes of melons are harvested in China. The most important production region is the province of Hainan, in the south of China. Melons are also grown in the provinces of Shanxi, Gansu and Xinjiang, three northerly provinces. The harvest occurs in the summer months. The export mainly focuses on countries in Southeast Asia. The import flow mainly comes from Vietnam and Myanmar, last year the total import amounted to 215,000 tonnes. The market is developing rapidly. In the top segment, prices for a Cantaloupe melon can be as high as about 20 yuan (almost 3 euros) per kilo.

Every week, FreshPlaza publishes an overview of the market situation of a product in a worldwide context. With these articles, we're aiming to give an idea of a global market that's becoming ever smaller as a result of globalization. Next week, the spotlight is on lemons.