The growth of orange concentrate factories in Egypt this year has sparked local competition between industrialists and exporters for supply, resulting in shortages in the second half of the season. How have Saudi Arabian importers, the third-largest market for Egyptian citrus after the Netherlands and Russia, experienced these disruptions? Abdul Bassit, the head of quality assurance at Global Star Group, a Saudi importer of fresh produce, shares his insights.
© Global Star Group
Complications arose as soon as the Egyptian campaign started
Abdul Basit states, "The Egyptian orange export season for Navel and Valencia oranges typically runs from December to July. Navel oranges are primarily exported from December to April, while Valencia oranges are available for export from March to July. From early April, we observed a pronounced global shortage of supply for Navels from Egypt as their season for this variety was coming to an end. This coincided with significant challenges for Spanish Navels, which were badly affected by floods and heavy rains, preventing them from loading substantial volumes to the Middle East. Consequently, a large portion of the available Egyptian export volume was channeled towards European countries, which further raised prices in the Middle East market. At that time, only smaller sizes and lower-grade Navel quality were predominantly available for export to KSA."
© Global Star Group
Abdul Basit, Head of Quality Assurance at Global Star Group
The campaign only got more complicated later, Abdul Bassit adds: "Regarding Valencia oranges, their export started by mid-March. While their market performance was good, most of the volume was utilized locally by juice companies, and major export activity was directed towards European countries."
"In terms of our adaptation, this dynamic necessitated a swift pivot in our sourcing strategy. Our actual imported volumes from Egypt in April-June were approximately 30-35% below our initial expectations for that period. The impact on prices was significant. As Egyptian Navel volumes tightened and other origins faced disruptions, we saw a sustained firming of prices across the KSA market, with some categories reaching maximum levels due to the acute shortage. This scarcity pushed the market upwards, creating a premium for the remaining available good quality fruit," the importer continues.
South African option not yet conclusive
To offset the shortage of oranges on the market, Global Star Group turned to early oranges from South Africa, a peculiarity at this stage of the season. Abdul Bassit shares, "The early South African orange season, particularly for Navels, initially benefited significantly from the supply vacuum created by the disruptions from Egypt and Spain. South Africa's orange export season generally runs from April to October. For Navel oranges, harvests typically begin in areas like the Eastern Cape and Western Cape in April-May, with peak volumes usually occurring between May and August. Valencia oranges follow, with major production in warmer regions like Limpopo and Mpumalanga, harvested from May and exported through October."
© Global Star Group
"Compared to the previous season, the start of early South African oranges was quite promising. The quality of these initial African oranges was notably superior to the lower-grade Egyptian Navels available at the tail-end of their season. This higher quality gave them a very good initial reception and strong pricing in the KSA market. However, this positive trend for Navels did not hold consistently. Despite strong initial demand, we observed that prices dropped drastically since Week 27 & 28. This significant decline was primarily due to an oversupply of Navel oranges entering the market, creating considerable pressure," he continues.
The importer adds that the picture is not yet clear for Valencia oranges from South Africa: "The situation is still developing. We are seeing prices remain relatively stable so far, as most of the South African Valencia oranges, especially from later-producing regions, are still in transit. We expect more clarity on their market performance in the next couple of weeks as these volumes arrive and are absorbed."
© Global Star Group
Sourcing strategies need to be adapted
The experiences of this season have reinforced the critical importance of diversification and flexibility in Global Star's sourcing strategy. Abdulbassit explains, "For the upcoming season, we are focusing on several key adaptations:
- Data-Driven Gap Analysis: We are rigorously gathering and analyzing data from every year to identify precise supply gaps from major orange origins. This detailed information allows us to proactively seek out orange availability from different countries throughout the world, ensuring we can maintain consistent availability for our customers.
- Expanded Southern Hemisphere Partnerships: While South Africa remains a cornerstone, we are actively strengthening relationships and exploring increased volumes from other Southern Hemisphere origins to build even more robust backup options.
- Proactive Contractual Agreements: We are looking to secure more proactive and long-term contractual agreements with growers and exporters in key origins to ensure consistent supply and better manage price volatility, rather than relying heavily on spot market purchases.
- Enhanced Logistics Planning: Given the challenges observed with vessel delays and transit times, we are investing further in advanced logistics planning and monitoring to minimize unforeseen disruptions and optimize arrival windows.
- Closer Monitoring of Origin Conditions: We will be placing even greater emphasis on real-time intelligence from growing regions, including weather patterns and harvest forecasts, to anticipate potential disruptions far in advance.
"Ultimately, our goal is to build an even more resilient supply chain that can withstand unforeseen challenges and consistently deliver high-quality oranges to the Gulf market, leveraging a broader, data-informed network of reliable partners," the importer concludes.
For more information:
Abdul Bassit
Global Star Group
Tel: +966 542137484
Email: [email protected]
