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OVERVIEW GLOBAL LEMON MARKET
Representatives from Spain, Argentina and South Africa, the biggest lemon exporters worldwide, held a meeting recently. One of the points in the agenda was the significant growth of lemon production in these countries. "There are concerns about the quick growth in the production," said the Spanish representative. "We are currently analysing the situation in order to predict where the market is heading." The three countries also want to intensify their promotions so that the markets can absorb a larger volume.
At the moment, India, Mexico and China stand at top of the world ranking of biggest lemon producers. Almost 3 million tonnes of lemons are harvested annually in India. For Mexico (2.4 million tonnes) and China (2.3 million tonnes), the harvest figures are slightly lower. Most countries on the ranking are seeing production grow slightly. Turkey is recording double growth figures, resulting in a harvest of around 850,000 tonnes per year.
South Africa exporting more
Up to and including week 19, a total of 5 million boxes (15 kg per box) of lemons have been exported. This is 17% more than in the same period a year earlier. The volume is also expected to be 8% greater this year.
The Middle East is usually the most important sales market for South Africa and this year is no exception. Roughly half of the exports up to week 19 went to this market. Besides, there is a growing demand in North America, although that market is only open to exporters in the Western Cape and the North Cape. The United Kingdom is also a bigger market compared to last year. Traders are worried about the Argentinian volumes that are coming to the market in Europe and Russia. According to them, the European market is suffering the consequences of that larger volume.
The fruit colouring is good in the Western Cape, but in the Eastern Cape, the process is lagging behind. Growers in the Western Cape are expecting plenty of small sizes (113-138), but they are satisfied with the quality. Growers in Senwes expect a stable season. The Sunday River Valley, which is the largest lemon producer, expects larger sizes, but within the retail standards, from 88 to 138. Although the quality is good, the packing process is slightly lagging behind due to a delay in the colouring.
The expansion of the acreage has slowed down slightly. In some regions, such as Senwes, there are more unproductive lemon trees than productive ones. The South African production will increase by a million boxes per year and will therefore reach around 38 million boxes in 10 to 15 years. Large growing companies are aiming towards diversification in organic or wax-free lemons. According to growers, CBS and the fruit codling moth are under control.
Citrus cancer hits Australian growers
Lemons are available year-round, with a peak in June. However, growers are having some problems with citrus cancer. This week, the disease was detected in three plantations in the north, namely in Western Australia, Kununurra and Wyndham. Last month, the disease was already detected in other plantations in the north. The infected trees have been pulled up and destroyed in order to limit the risk of spreading. Also, the authorities are enforcing precautionary measures.
Citrus Australia now warns that overproduction could be a cause for concern. In a recent survey, the number of lemon trees has increased by 28% compared to four years ago. The export of lemons and limes accounts for less than 1% of all citrus fruit exports. 50% of this goes to Indonesia. At the same time, imports are growing by 21%, the largest part of which are imported from the US.
Californian growers welcome smaller sizes
The harvest of organic lemons has shifted to another region, as a result of which, Californian growers are eagerly looking forward to a larger supply of small sizes. The harvest in District One is characterised by large calibres, with a predominance of sizes 63 and 75. That the harvest is shifting to District Two is a welcome change. Growers hope for smaller lemons from this area.
Although the total harvest is good and there are no complaints about the yield, these large sizes are a cause for concern. "Since there is less fruit hanging on the trees, the lemons grow bigger," say the growers. Also, there are many young plantations becoming productive, and these young trees usually yield larger lemons. "In District Two, there is a higher number of older trees, so we also have smaller sizes."
The demand for organic lemons is on the rise, with the market benefiting from the improving economy. A trader says that the price difference with conventional lemons is not too big, which contributes to the product's good position in the market. He also claims that slightly damaged fruit is still easy to sell, because those lemons are usually processed.
The challenges with the calibres are reflected in the prices. Although in general terms, the price level is comparable, the small sizes (140-150) are slightly more expensive than last year. The price is expected to show a rising trend until the Mexican supply arrives in August.
Growers are worried about Argentinian lemons, which have regained access to the US after a few years. The concerns are not only about the large volume that Argentina, as a leading global producer, puts on the market, but also about the import of diseases. Traders are not as concerned. The larger volume would lead to a rise in domestic consumption, according to a trader. They see little threat in the overlap of the seasons, as this happens in a period with a lower production in California.
Season comes to a close in Brazil
An exporter tells us that the campaign has just finished for him. The last lemons of this season have already been shipped. The season started in February with the first shipments. The trader tells us that he is exporting larger volumes each year, as the acreage was expanded considerably a few years ago. Although the season overlaps with those of other countries and also with the European campaign, Europe is the main destination for the exporter. "For decades, our exports have gone mainly to Europe," says the trader. The biggest markets are Spain, the United Kingdom, Italy and Canada.
Chile celebrates easing of US export rules
Exporters are delighted with the agreement reached with the US, thanks to which lemons may be exported under the Systems Approach. This means that the fruit no longer has to undergo treatments with methyl bromide, which results in a better shelf life for the lemons. The US is an important market for Chilean exporters. Last season, the South American country exported 77,500 tonnes, 43,000 of which went to the US.
Argentina regains access to the US
For the first time in fifteen years, Argentinian lemons will arrive on the East Coast of the US. Limited volumes will be exported this season, as traders remain cautious with exports to the US. The US market has recently reopened for Argentinian lemons. "This year is a test year, just to see how the market reacts," says a trader. Sales for the fresh market finish in July, while exports for the processing industry continue until September.
The harvest volume is estimated at between 1.4 and 1.5 million tonnes. A small part of it will be shipped to the US. The lemons may be imported into a limited number of ports on the east coast of the US; the west coast is still out of reach.
Earlier this month, a fruit fly was found in a batch of lemons from Tucuman bound to the US. According to the government authorities, the situation is under control and the export has not been delayed. Exports to the US can continue and the quality standards for this market are adhered to, according to the government.
Most of the lemon harvest (1.1-1.2 million tonnes) is sold to the processing industry. This has a number of causes, including the shipping time and the limited exporting period. Besides the US, the lemons also reach destinations such as Europe, Canada, the Middle East and Asia. It is expected that 30% more will be exported this year due to the low prices paid by the processing industry.
Israel flooded with lemons
The season ended last month with a big harvest, which resulted in a low profit for the growers. Prices on the domestic market oscillate between 1.50 and 3 Euro per kilo. This is in line with the price level achieved in recent years. The export season ended in March.
The lemon market has seen better times. The current situation is marked by overproduction and a lack of market opportunities. Over the past decade, the domestic market has been good, resulting in high profits for the growers. They therefore focused on the domestic market and expanded the acreage. At the peak, the acreage was almost twice as great as the current one, but with the new plantings coming into production, the market has become flooded with lemons. In the past, growers used to take advantage of a strong European market, but exports were abandoned due to the success in the domestic market. Other countries filled the gap that Israel had left in the European market. Exports amount to between 2,000 and 3,000 tonnes per year, but the lemons only have a chance on the European market when there are shortages in the Spanish or Turkish supply.
Spain: Less Verna, big sizes
The first Verna lemons hit the market in the first week of May, overlapping with the last Fino (or Primofiore). Since week 19, however, the Verna is again alone on the market. The estimates point to a harvest of 206,000 tonnes. Last year the harvest amounted to 360,000 tonnes, which means a 40% decrease. Despite the lower yield, there is a large supply of sizes 2 and 3. The season lasts for six weeks and ends in late June. "Because of the smaller production, we expect a short season," says a trader. "But sales are going well." In June, there will also be stable volumes from Argentina on the European market. That season has been delayed slightly by the rain. South Africa will also hit the market then, so the transition to the Southern Hemisphere will take place around mid-June.
After a few weeks of low demand in January and February, the market recovered again halfway through March. The market conditions are currently stable. Spain has the European market almost exclusively for itself. The world market is divided into two parts: the Middle East and the Far East are in the hands of South Africa, while Europe is the most important market for Argentina (after Spain is off the market).
Italy optimistic about season
The current season in Sicily started in October 2017 and will last until August. The results during the final months of the campaign could very much determine the global results. At the moment, the demand is much greater than the supply, says a trader. Argentina is not yet on the market, South African lemons are still available and the Spanish Verna clearly won't reach a volume comparable to that of the Fino. At the start of the season, there was more competition with Turkey and Spain than last year.
The main destinations for organic lemons are France, Switzerland, Austria and Germany. "In this case, we are better than Spain in terms of quality and price," argues a trader. There are limited opportunities for conventional lemons in the European markets. According to a trader, Italy is gaining a foothold in markets which exporters had lost in the past. That doesn't only apply to Europe. The Middle East is also a good market. "Ramadan has just begun and will end in mid-June, so the demand is high," said one exporter. "It is not easy to meet the demand."
The season in the Amalfi Coast has gone through some ups and downs. Due to the latest rains, sizes have become larger than early in the season. "So far, there are no problems comparable to last year's," said a trader. The production volume of these lemons will be slightly greater than last year's.
Shortages on the French market
The demand in France is much higher than the supply, as for now, only the first Spanish batches of the season are on the market. The volumes of these are limited, so the prices are high, but stable. "The Spanish lemons are very large and it is difficult to get smaller sizes," says a French trader. "There is currently some Chilean and Brazilian fruit on the market, but that one is second class."
Israeli volumes were still available until last week. In two weeks, the first containers from Argentina are expected, followed by some from South Africa. "It is going to be okay on the market, but for now, the situation remains difficult due to the limited supply."
"In general, Argentinian lemons are of lesser quality than the South African, and the South African lemons don't look as old when they arrive in France, even if we get the same varieties from both countries. I don't know why this happens. Perhaps it is due to the age of the trees, to the growing conditions in different areas, or to the transport conditions, but of course, the difference in quality is not the same every year. It depends on the weather conditions."
Netherlands: Importers concerned about huge growth of lemon acreage
Both in Argentina, and above all in South Africa, the planting of lemons has increased considerably in recent years. Given that there are plantations that still have to become productive, importers expect tougher conditions to market the fruit in the coming years. South Africa alone expects its production to double in the next four years and to reach 33 million boxes. That is why it will be a matter of time before competing in the lemon market becomes tougher. For Argentina, the European market, with a share of about 85%, is a leading destination, absorbing between 280,000 and 300,000 tonnes. South Africa only ships 25-35% of its lemons to Europe. At the moment, high prices are still being paid in the market, but the shipping statistics show that South Africa has already exported 134% more compared to last year. However, the supply of Spanish lemons is now declining, so it's only a matter of time before prices fall.
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