A challenging new citrus import season from southern hemisphere
"Various exchange rates have moved significantly compared to last season: a devaluation of the Peruvian Sol, Brazilian Real, Argentinian Peso and Uruguay Peso, etc. This seems to provide a short-term relief to their costing and returns, but in many cases, their inflation is not enough to manage the increased costs of the past years," comments Andres Ribas van Oosterom, from Dutch import company Vientosur.
South Africa, by far the biggest citrus origin imported into Europe from the south, is facing a strengthening of its Rand, and as result their costs have increased substantially. On the other hand, the political debate regarding land “expropriation without compensation” continues, and it only “adds noise to the channel”. Some agricultural investments may already have been parked due this uncertainty.
"In addition, a new phytosanitary EU protocol established to start in 2018, will interfere with some logical market-oriented decisions in many cases. The new protocol (phytosanitary barriers) to prevent False Codling Moth (FCM) and the already existing Citrus Black Spot (CBS) have strengthened actions to prevent them finding their way into EU productions. Multiple (farm, pack houses and port shipments) inspections will definitely result in a logistic disruption of the natural shipment-flow to Europe. The new protocol also establishes different temperatures for container-shipments, that will be assigned per production unit codes (PUC = different registered lots). According to the inspections findings (and excluding some exceptions, like lemons etc.), the pallets of each “PUC” will have to be transported at different temperatures (less than 3.5, less than 2 or less than 1 degrees), establishing a kind of cool treatment on their way to Europe, that could possibly affect & shorten the product shelf life, due chilling damage, etc."
"Regarding lemons, it is already known that Spain has a big shortage (+/- 35%) on their last season's Verna lemons. But it is also known that RSA and Argentina will this year have much bigger lemon crops due new increased plantations, many of them not yet productive. And that both will compete harder for the “fresh” market-shares in all continents, but principally in Europe. Therefore, it is a matter of time, before the lemon market turns into a stronger competition, but for the moment, we expect a less attractive market price that the previous year's season average."
According to Andres grapefruit pricing in Europe is high now and the offered volumes are very limited, as Florida grapefruit, best northern hemisphere quality, has experienced an important reduction of their production during the last years, causing exports to drop, due to Greening (HLB) and weather situations. Spain, Israel and Turkey have tried to fill the gap with bigger exports, but it has not been enough, as also some of their productions have been affected (volumes, sizes or shelf life). The production forecast of RSA is 8% higher this year compared to 2017, but again competing markets and the new CBS/FCM protocols will give South Africans a harder time logistically.
"The first satsuma volumes will enter a clean market compared to last year, and probably the Clementines will do as well, but after that, the production of late premium mandarins (Tango, Nadorcott, Orris, etc.) is expected to rise about 15-20% again due new plantations coming into production. Although the incorporation of these premium mandarins into some of the biggest European retailers, known to be hard discounters, has naturally increased the demand and in general their consumption has gone up 15 to 20% per year at the main retailers as well. More (new) orchards will start producing in the years to come, so the market price development will be truly seen in the coming years. Peru and Uruguay will probably continue targeting USA trying to increment their market share with their soft citrus and exporting less percentage to Europe than the previous years.
Regarding oranges, the navel production has recovered in RSA, but due the drought, the sizing is clearly peaking smaller now. This year the production does not show the sanitation problems of last year (infections) that forced a drastic drop in the export volumes. For Valencias, the RSA forecast is similar to last year, but emerging (big) new markets are heavily competing for the same produce. Also Argentina and Uruguay have normal crops, so again the new EU protocol and the rising costs of RSA will play a huge roll on the export tendencies.
Vientosur has several associated partners in the southern hemisphere citrus production, from all relevant citrus countries, and distributes all around Europe & UK, included its own group citrus (Fruitone Pty. Ltd.).
This year the group inaugurates two new pack houses in South Africa, Hoedspruit and Letsitele regions that will drastically increase its pack out speed, and will homogenise even better the export selections.
Vientosur will receive their first citrus shipments for the commercial programs, such as Satsumas on week 18, Grapefruit on week 19 , Lemons on week 20, Navels on week 21, Minneolas on week 24, Tangos in week 26 and Valencias on week 28 via Rotterdam and different ports of Europe, coming from South Africa, Peru, Argentina and Uruguay.
For more information:
Andres Ribas van Oosterom
Vientosur BV
Tel: +31 107 630 330
andres@vientosur.nl
www.vientosur.nl