Europe closes apple harvest season; positive mood

American apple harvest lower and smaller sizes

The last apples are harvested in Europe. Germany and the Alpine countries are expecting to pick the final apples this week, Spain is also bringing its harvest to a close. The start of the season went well in many countries. The optimism with which the Dutch exporters started the season has diminished a bit, due to a difficult export of apples. Throughout Europe, new markets are being looked at. China and Asia are often mentioned. In the southern hemisphere, exporters are also looking at this market. South Africa focuses on China, just like Chile. This country is facing a lot of competition from the US, where the season has been shifted because of investments. In Argentina, warehouses are full due to disappointing export to Brazil and an adverse exchange rate.

British aim for year-round supply of British apple
The weather was an uncertain factor during the growing season in the United Kingdom. Low temperatures inhibited growth, July was hot and dry, which turned out badly for the regions with less developed irrigation systems. The wet month of August also limited growth, but made up for the water shortage from the previous period. September was also too wet, delaying harvest. Still, the sector is optimistic, the color is good and larger volumes are expected.

Estimates mention 7.5 to 10 percent larger volumes, which would mean a record volume. The market share of British apples will increase further this year to forty percent. The harvest is turning out well for all varieties, only for Bramley a lower volume is expected. Many trees of this variety are uprooted due to low yields. So despite supply turning out lower, there is a lot of demand for the apple, but prices lag behind.

In terms of export, the British are also making inroads. The first apples were shipped to Shanghai last year, this year Dubai opened its borders for the British apples. The market in the Emirates mainly focuses on the expats living in the desert state. Specific varieties are shipped to this market, with size playing an important part. Among the exported varieties are Delbard Estivale, Red Windsor and Galmac.

In supermarkets, a trend is noticeable toward year-round British apples. While one trader profits from this and the season is extended with new varieties, other traders are reluctant. They claim that the quality of the product is more important than the country of origin, and that the consumer will ultimately go for quality as well. This year, for the first time a year-round supply of British Kanzi was realized.

France: positive expectations
The volumes have recovered after a dip last year, and the exchange rate favors exporters; in short, the French are positive about the apple trade. For some varieties, the market isn't going well, because last year's harvest isn't entirely off the market. Other varieties, like the Gala, are almost certain to have a good season. September and October are always quiet months for trade, but the market is good this year. An even better second half of the season is reckoned with. In the export outside Europe, Asia and Africa are important markets. The American market is difficult due to regulations.

Italy sees good start to season
A few months ago, the apple harvest began in South Tyrol-Trentino. The season had a good start with a better balance between supply and demand. This year the prices are higher than last year, which is logical in view of the exceptionally large harvest last year, when 33 percent more was harvested than in 2013. Sizes are larger this year. The high summer temperature hasn't caused any damage to the apples. The organic apple sector is also growing. To give an idea of the prices on the wholesale market in Bologna: Golden Delicious and Gala 0.50-1.20 Euro per kilo, Granny Smith 50-80 cents and 1.00-1.10 Euro per kilo, Fuji and Red Delicious 0.45-1.00 Euro per kilo. The prices for the club varieties are higher, with the Kanzi yielding 1.70-1.80 Euro per kilo.

Spanish Gala harvest began on empty market
The final Fujis are currently harvested. The apples will stay in storage until next season. After the Golden, the Fuji is the most consumed apple in Spain. The season for the Gala is going well. The first harvest arrived at an empty market, also with little supply from the southern hemisphere. Storm, hail and frost did have a negative impact on the season. The harvest turns out lower than expected, causing prices to be higher. From France and Poland, the Spanish are facing less competition, Italian exporters on the other hand are doing good business on the Spanish market, utilizing marketing campaigns. Italy has a big market share in the Spanish market.

The club varieties generally don't perform exceptionally well in the Spanish market. According to one trader, that's due to the conservative nature of the consumers. In addition, there are too many club varieties, with insufficient distinctiveness, the trader says.

Dutch export difficult
In general, the apple market is having a difficult time. Although there is sufficient demand on the domestic market, export lags behind. On the eve of the season, there is a slightly euphoric mood among traders, although too much optimism was being warned against. Most apples are currently being exported to Germany and Scandinavia. The export is expected to go a little bit better, later in the season the Eastern European countries are no longer self-sufficient. There is a lot of competition from Poland though. Beyond Europe, India is a promising market, and last year North Africa turned out to be a good market. At the moment, it's still difficult to get good prices there, partly due to competition from Italy and Greece.

Finally, the lower quality batches from the later harvest are now entering the market, which means many batches of lower quality are available. The mood among the traders is still positive. No shortages are expected, the negative signals are mainly due to the struggling export.

New markets save Polish apple
The Polish apple sector was hit hard by the Russian boycott last year. Since then, a lot of energy has gone into opening new markets for the top fruit. One trader lists Hong Kong, Algeria, India and Saudi Arabia. The prices in these markets are good.

The harvest is limited by drought this year, due to which some varieties turn out smaller. At the start of the season, the traders are optimistic, apart from the fresh market the industry is also a good buyer.

Germany finalizes harvest
The harvest in Germany was finalized this week, which is why there aren't any current figures on volumes and prices yet. A similar situation applies to Austria and Switzerland, where the final apples were also picked this week. Traders are not yet able to provide clarity on the prices of the new harvest, prices are still under negotiation. At the start of the harvest, a German trader did mention he was satisfied about the prices.

Major varieties in Germany are Elstar, Boskoop, Braeburn and Royal Gala. In week 44, the market was dominated by Germany, with a 69.7 percent market share, BLE reports. Italy, with a market share of 20.9 percent mainly supplies Golden Delicious and Royal Gala, France is in third place with a nine percent market share and supplies Red Chief, while the Jazz in 56-size boxes are also arriving in Frankfurt. The prices for apples have been reasonably stable in the past weeks.

Belgian export waits to see
Belgian exporters saw that the apple harvest in export markets were also picking up steam a few weeks ago. Many countries preferred the domestic apples, which inhibited the export from Belgium. For the rest of the season, there are many variables that influence the outcome: the Polish apple harvest is estimated to be lower, but it remains to be seen whether it will turn out that way. In the US, drought might influence the harvest, China has a bigger harvest, but perhaps markets in India and the Middle East could provide a solution for the Belgian exporters.

South African export to China
The South African export to China went without problems, one exporter says. The growers in South Africa aren't going for the Chinese market en masse yet, but with new planting, they are opting for varieties that are popular in China more often. Within Africa, the green varieties, such as the Golden Delicious, find a big market, for instance in Nigeria. Of the total volume of Golden Delicious, about eighty percent is sold on the African continent. Other varieties, like Braeburn, Pink Lady/Cripps' Pink and Granny Smith, are mainly shipped to the British market. On the British market, the South Africans still experienced fierce competition from Chile in 2014. The South African apples were displaced by the South American counterpart. This season, South Africa made a comeback on the British market, a trader says.

Chile off the market due to cheaper apples US
El Niño is causing extreme weather in the South American country. There is a so-called constant spring, which is delaying the season. There's also a lot of rain, inhibiting production. One trader emphasizes that the quality of the apples is good though. Still, the Chilean exporters in the global market are facing fierce competition from the United States. There, big investments were made in new technologies for storage, which means last year's harvest hasn't been fully marketed yet. That limits the export from Chile; the American apples have a better competitive edge in terms of price. Geographically, the US is closer to the markets, logistics are better and transport costs are lower, in short the FOB is better.

Due to the increasing competition, Chilean apple growers are considering a switch to other products. Grapes, blueberries, citrus, avocados and cherries are suggested as products that are attractive to growers. The Asian market is promising for the Chilean products, not just for the apples, also for cherries, for instance.

Argentine storage full
The Argentine apple market is generally divided between two suppliers; domestic production or MERCOSUR. The latter is the economic union of South America, promoting free trade. Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela are members of the union. While at the beginning of the year the mood was still positive, and there was talk of an end to the crisis, the situation has changed. The export to Brazil was disappointing, just like the exchange rate of the Argentine currency, causing warehouses to be full of apples. The surplus can be partly supplied to industry, but at lower prices. The weather also plays a part. While last year's winter was mild, September and October were much colder than usual this year.

Apple harvest US: smaller sizes and less volume
Investments in new storage techniques have extended the season by about two months. That's why some of last year's harvest is still available, while the new harvest is already being picked. This year's harvest is turning out lower and sizes are smaller, 25 percent less volume is being reckoned with. Due to the smaller sizes, the apples from Washington are competing with the harvest from New York and Michigan, where generally smaller apples are being picked. In Ontario, the harvest turns out fifty percent lower, with the frost in spring being particularly tough on the season. Whether volume will remain for export and trade abroad is yet to be seen. For the export, the strong dollar can be an inhibiting factor.

The prices for apples are a lot higher than last season. The lowest price increase was for Red Delicious and Honeycrisp, the price of which went up by five percent. The biggest leap was made by prices for Gala, which became twenty to fifty percent more expensive. New varieties do well in the American market, with Juici, Opal, Cosmic Crisp and Ambrosia being listed as four apple varieties with high potential. The market for other varieties, like Red Delicious, McIntosh and Golden Delicious is shrinking.

Australian apples cheap due to oversupply
The Australian apple sector expressed its praise toward the minister of Agriculture, who promoted the International Eat an Apple a Day. "And the Australian apples are available year-round, so if everyone eats an apple every day, the sector will certainly notice," one trader says. Another trader reports, with the harvest nearly having been picked, harvesting thirty percent more than last year.

Price setting isn't good, the apples are yielding low prices all season due to oversupply. The export mainly focuses on the Asian markets, China and Hong Kong are frequently named for varieties like Pink Lady.

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 mandarins.

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