Total shipments for the 2018-19 almond crop year finished strong despite the trade headwinds, bringing ending stocks to their lowest level since 2012. Prices for processing oranges are expected to be soft over the next quarter due to increased production, weak domestic demand, and ongoing trade issues.
Oranges:
The annual USDA Citrus Fruits report was released at the end of August, raising 2018-19 U.S. orange production estimates to 5,327 thousand short tons. This is a slight upward revision from last quarter.
While some Valencia growers in Florida reported difficulties finding a market last quarter, processors had committed to large supply purchases from Mexico following Hurricane Irma in 2017. Total 2018-19 U.S. processed orange utilization, as a share of total orange
utilization, was back up to 2016-17 levels. 2018-19 orange prices have averaged 31% below 2017-18, when supply was constrained, and 16% below 2016-17.
However, California Valencia orange prices have taken a much steeper dive, averaging 55% below 2017-18 and 51% below 2016-17, as size and quality issues have been reported. According to Nielsen topline reports,29 retail orange juice sales continue to decline, with YTD volume sales down almost 6%. Retail orange juice prices have been up 3%, while USDA reports a decline in process orange prices at the packinghouse door and on-the-tree.
As reported in the previous quarterly industry update, USDA projects 2018-19 orange production to be up 26% in Brazil and expects Mexico to remain at the peak level reached last year. With world production projected at its highest level in eight years, ongoing trade issues,
the increased production estimated for the U.S. and the declining orange juice consumption trends, U.S. process orange prices will likely remain under pressure over the coming year.
Tomatoes
On May 7, 2019, the U.S. withdrew from the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. As a result, a 17.56% tariff was been placed on Mexican tomato imports and the U.S. Department of Commerce resumed its antidumping investigations.
A new draft agreement was reached on Aug. 20 and was signed Sept. 19. The new agreement sets floor prices for round and roma tomatoes at 31 cents per pound, stem-on tomatoes at 46 cents, tomatoes on the vine at 50 cents, specialty loose tomatoes at 49 cents, and specialty- packed tomatoes at 59 cents.
Organic tomatoes will be priced 40% higher than non-organics. Under this new agreement, there will be border inspections on all Mexican round, roma, and bulk grape tomatoes. This was one of the more contentious provisions of the new agreement. U.S. fresh tomato growers contend it is a necessary provision to ensure the proper enforcement of the agreement, but critics warn that this level of inspection will cause delays that will affect quality and price for the consumer.
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