W42: Weekly Orange Update — Tridge
W42: Weekly Orange Update - Tridge
Tridge's global market analysts and country representatives take a deep dive into what happened during W42 in the…
The wholesale price of fresh oranges in Spain (Andalusia) plummeted 32.84% YoY in W3 of October 22. According to Carlos Iborra, Tridge Origination Manager in Spain, the first navelina orange harvest in the Andalusia area (Southern Spain) has already started. The first indicators of the harvest’s performance confirm experts’ predictions that the quantities from this area will be significantly less, according to some estimates, even a 70% decrease. Lack of rain in the area and heat waves reduced the fruit size. At the moment, harvested sizes are between medium and small. Reduced quantities and small caliber mean that oranges from this part of Spain will be marketed in the domestic market. It is expected that this production area will be sufficiently regulated from mid-November to start offering overseas fruit.
The 2022 harvest of the first navelina oranges has started in Andalucia, Southern Spain. Due to the lack of rain and heat waves that hit Spain in 2022, the current harvest volume in Andalucia only reached one-third of the expected volume, with sizes ranging from medium to small for the domestic market. From mid-November, this production area is expected to be sufficiently regulated to be able to start offering fruit to export markets. Additionally, the Mediterranean area, especially in the Valencian Community, has better harvest expectations since there has not been a water shortage. However, there are at least 10 more days until the start of the harvest in this region. The first price for navelina oranges is expected to be around USD 0.89/kg EXW Spain for November.
Between October 2021 and July 2022, Andalusian orange exports, which in that period accounted for 79% of Andalusia’s total citrus exports, increased by 27% in volume and 19% in value compared to the previous season. Exports increased, but domestic demand faltered. From July 2021 to July 2022, the consumption of oranges in Spanish households decreased by 9.6%. That is a significant drop for this most widely consumed fruit in Spain, but it is still slightly less than the 10.6% drop for the entire fruit range — data from the Ministry of Agriculture tells us — and also less than the worrying drop in the value of oranges consumed during that period (-13.2%).
At the beginning of 2021/22, the average producer price for class I Navelinas in Andalusia (€0.21 per kilo in week 41) was 12.5% lower than at the beginning of 2020/21 and 2% lower than the average for the beginning of the eight previous seasons. In week 24 of 2022, the orange season ended with an average price of € 0.11 per kilo, which was 70% less than the five-year average in the same week. These extremely low prices invite reflection, especially since the harvest was disappointing and cultivation costs had risen sharply. In week 39, after two consecutive weeks of increases, the producer price for Navel oranges fell by 2% to €19.45 per 100 kg — €0.19 per kilo — which is 3.2% less than in the same week of last season and 9.5% less than the five-year average. The first prices for packaged product destined for the Seville wholesale market are € 66 per 100 kg.
In the province of Alicante the difficult meteorological circumstances of last spring, the rainiest of the entire historical series in the Valencian Community, which affected the flowering season; the high summer temperatures and the delay in harvesting the fruit caused by the market situation have caused a general decline in citrus fruit. Young Farmers ASAJA Alicante places the most relevant decrease in late oranges varieties. Lane Late and Powell, harvest losses of 30% are expected. Regarding orange prices, navelina is trading at EUR 0.25–0.30/kg in 2022 compared to EUR 0.15/kg the previous year, depending on quality and earliness.
On June 22, the review that the European Commission (EC) proposes to carry out of Directive 2009/128/EC on the sustainable use of phytosanitary products was published. The proposal that remains on the table today modifies the current directive — the most restrictive in the world — and transforms it into a regulation. This change is not trivial since a directive involves imposing a result but not the means to achieve it and a regulation is directly applicable as a whole, without transposition at the national level.
The new regulation proposed is one of the key instruments to apply the European ‘Green Deal’ for 2030 which, in the case of the agricultural sector, is executed through the ‘From farm to table’ project. And in terms of phytosanitary products, this strategy requires reducing the use and risk of pesticides by 50% on that date. To achieve this, the proposal now proposes that in all the so-called ‘sensitive’ areas it is prohibited to apply these products.
The Citrus Management Committee (CGC), whose associates exploit thousands of hectares of citrus throughout the country, warns that, if applied in this way, it would have a “huge and unaffordable” impact because in a short time the pests would get out of control and such restrictions would degenerate in a “massive” abandonment of fields, especially in the Valencian Community, in which practically the entire citrus area would remain within these areas. ( Continue)
On the eve of the new citrus campaign, the Italian market is dominated by oranges, lemons, and grapefruits of South African origins, as its wholesale prices are currently lower than the domestic ones. Wholesale prices for South African citruses in October ranged from USD 1.35–1.40/kg for Eureka lemons, USD 1.20–1.25/kg for grapefruit, and USD 1.45–1.55/kg for Valencia Late oranges. However, in Italy, the only available variety of lemon is Primofiore, and it is currently sold at USD 3.30/kg in October.
The 2022 South African citrus season has all but wrapped up, and although smaller late volumes are still being shipped, suppliers have closed their season. In general the 2022 season was difficult with price drops and oversupply in the market, especially in the Middle-East market. Suppliers have expressed concern about the season’s overall results, citing logistical challenges as a major source of concern, as well as new EU cold treatment regulations that disrupted the season.
The following were the total citrus exports as of W40:
- Grapefruit: Packed 16.7M Cartons; Shipped 14.9M cartons [original estimate: 16.8M]
- Mandarins: Packed 31.7M cartons; Shipped 31.7M cartons [original estimate: 34.5M]
- Valencia: Packed 53.2M cartons; Shipped 48.8M cartons [original estimate: 58.2M]
- Navels: Packed 27.8M cartons; Shipped 27.0M cartons [original estimate: 28.7M]
- Lemons: Packed 34.6M cartons; Shipped 33.6M cartons [original estimate: 32.3M]
It was expected that the European market would receive large volumes of oranges from South Africa before the entry into force of the so-called duty deadline in W42. Despite the phytosanitary restrictions imposed by the EU, South Africa continues to be one of the main suppliers of oranges to EU markets. According to an importer located in the South of the Netherlands, and a specialist in citrus, during W41 approximately 1,200 million boxes of juice oranges arrived in Europe, primarily of the Valencia variety.
Resultantly, prices have fallen due to the oversupply of oranges. Prices were initially expected to remain around EUR 1.00/kg for category 1. However, prices have been slightly lower, around EUR 0.93/kg for category 1 and around EUR 0.86/kg for category 2 while oranges for industrial use (packed in bins) have been offered at EUR 0.75/kg. This pressure should continue for the next two to three weeks, once stocks decrease and balance returns to the market. Despite the large volumes, a good volume turnover is reported in the market and promotions with supermarkets are planned until the end of November.
2022 is a complicated season for South African citrus in the Middle Eastern markets. The selling prices of Navel and Valencia oranges are good, but the high prices and differing quality parameters shipped in this season made it hard to make profitable sales. The elevated freight and production costs also nullified any potential profits for producers and exporters, despite the high prices. Volumes shipped to the Middle East this year are lower compared to last year, and there is no oversupply or imbalance in demand and supply. The season is nearing its end, stocks are getting lower, but prices are not picking up as per the previous two years’ trends. Major companies are even holding back their fast moving sizes, first and second categories, with the hope that the demand will increase and they will be able to get a high selling price. However, they are not succeeding.
According to estimates from the United States Department of Agriculture (USDA), production of all varieties of Florida oranges is expected to drop 32% this season. The total estimate is 28.0 million boxes. This will be the fewest cases produced since World War II, and after Hurricane Ian hit Southwest Florida and citrus-growing areas, according to MarketWatch. L ast Wednesday, US Senator Marco Rubio, participated in Florida Citrus Mutual’s annual citrus crop estimate, where he announced that nearly $3 million of disaster funds will go to the USDA. “We will make sure, just like we did after Irma, that any spending bill has enough support for the people of Florida’s farming and rural communities, many of whom have lost everything,” Rubio said in a statement.
The Italian citrus campaign for 2022/23 is set for an uphill start according to Op Rosaria. In the Catania plain, volumes are expected to be reduced by at least 20% compared to an average year and there is a lot of concern among producers, due to the difficulty of planning agreements with large-scale distribution and the skyrocketing costs. “I don’t know if the contraction in volumes is more due to the phenomenon of the so-called alternation or to the climatic conditions, but the fact is that some citrus groves are completely empty”, states Aurelio Pannitteri, president of the Op.
Pannitteri comments on the uncertainty in the planning of commercial agreements with the distribution: “The other years in this period the traders had already bought the fruits on the plants, in the sense that the distribution had already made the purchase and sale agreements with the Op. Unfortunately this year they are postponing, waiting to see how the situation evolves, and this wait puts producers in a state of apprehension “.
Finally, it is impossible not to think about the out-of-control costs of logistics, gas and electricity, which make the upcoming campaign even more complex. The campaign will begin at the beginning of November, as per the citrus-growing tradition of the Catania plain, and will start with the early variety of the Rosaria basket: the Bionda Orange. The Tarot campaign will follow at the start of December, the Sicilian Orange par excellence and Rosaria’s flagship.
Despite the increase in average temperatures this week, the period of the month (second fortnight) did not favor the marketing of oranges. This scenario is putting pressure on pear prices in the fresh market. This week (October 17th to 21st), the pear orange had an average of R$ 39.75 / cx of 40.8 kg, on the tree, down 4.04% compared to last week.
Originally published at https://www.tridge.com on October 25, 2022.