US: Softer than predicted price range in the east for citrus

In our last report, a mere two weeks ago, we predicted that clementine prices would
hold the US$ 26 – 28 value-added packaged selling price or perhaps soften slightly for a short-while. We were not quite right. On the strength of hefty clementine
departures from Chile in Weeks 23 onward (corresponding to very heavy arrivals on the east coast in Week 26 and beyond) in concert with the peak of east coast South African clementine arrivals, there is a surplus of product being offered in the market. The result is a softer than predicted price range in the east through Week 29. On lighter Chilean volumes and without the added pressure of South African product, the west coast clementine market has remained more stable.

Clementine prices on the east coast in Weeks 28 and 29 have fallen to US$ 22 – 26 in the value-added package which will generate a selling price in the original arriving 15 kg carton of US$ 18 - 22, values that are below general expectation. Small fruit is getting the low end of the range (and perhaps lower). But program fruit is doing better.

On the west coast prices are staying buoyant with value-added prices of US$ 26 – 28 on standard sizes which are returning US$ 22 – 24 in the original arriving 15 kg
package. The price for smaller caliber fruit is US$ 24 – 25 in the value-added package.

The heavy volume of clementines arriving from Chile is the principal factor that is
softening prices. Through Week 28, Chilean clementine volumes departing to the east coast are up over 60% from the previous year. From Week 25 through 28, volume is up almost 90%. In addition, the last two weeks of July are in the heart of the summer vacation season when consumer preferences can tend away from citrus. Finally, shipping delays have impacted the regularity and predictability of container arrivals on the east coast with the effect of creating arrival volume surges in some weeks.

All of that said, we stand by the prediction that clementine prices should start to firm up by the last week of July and perhaps recover to a value-added package price of US$ 28+ by the first week of August. We expect that Chilean summer clementine
departures will decline significantly in Weeks 29 and 30 bringing supply more in line with demand by Week 32. By that time, South African clementines will have ceased to be a major factor in the market. This suggests a more stable and robust market for early August and likely a gap in supply until the Chilean W. Murcotts start to ship. In the meantime, Peruvian W. Murcotts will arrive and should face a healthy and welcoming market.

Navel Oranges:
The navel orange season is off to a strong start with the east coast dominated by South African navel arrivals and complemented by Chilean product. Indeed, Chilean
departures through Week 28 to the USA are running almost 60% ahead of 2011,
consistent with a season that has seen a generally earlier than usual Chilean crop.

As we have reported earlier, the South African crop is tending toward smaller caliber
fruit while the Chilean fruit is tending toward larger sizes. With South African navel
orange volumes dominating the east coast market, we are seeing continued robust
pricing on large fruit and a noticeably softer market for small calibers.

On the east coast, large size navels (sizes 40, 48 and 56) are maintaining values of US$ 28 – 30 and 64’s are selling at US$ 24 - 26. The smaller counts are struggling at US$ 20 -22 for 72’s and US$ 18 - 20 for 88’s. These prices for small fruit are below what we would expect at this point in the season.

On the west coast, Chilean navel oranges sizes 40, 48 and 56 are selling at US$ 28 – 30, 64`s are at US$ 24 – 26 (mostly US$ 26) which is generally on par with east coast pricing for these calibers. In the west, though, 72’s are selling at US$ 22 – 24 and 88’s at US$ 20 – 22, a price range slightly stronger than in the east.

Minneolas:
Peruvian Minneolas have been available in the market for the last two weeks. The
earliest fruit is getting US$ 18 for 10 kg on standard counts (40’s, 45’s and 55’s).
More fruit is slated to arrive in the coming weeks and we expect to see this additional volume apply some pressure to the price level. That clementines will be in short supply during the heart of the Minneola arrival season may help Minneola prices stay firm.