Western and Central Africa
Eastern and Southern Africa
Eastern Europe and Central Asia
Wednesday, 23 Oct. 2013
The FCOJ market is the bell weather category for the fruit juice market. Even though sales have declined in many mature markets (e.g. United States of America), there is a strong growth in demand from emerging markets such as in Asia (e.g. China). Frozen Concentrated Orange Juice (FCOJ) supply and demand affects most other juice and pulp categories and impacts on demand for other juices. Clearly, if buyers believe that future stocks are threatened, they will take steps to ensure regularity of supply. Hence the market is often dictated by decisions that are made long before deliveries take place. This is the reason that with FCOJ more than any other juice, we try to look well into the future. As it takes up to five years from planting to meaningful harvest, we look at the planting projections as well as other factors, such as disease, which may only impact on supply in the long term. Therefore we were very interested to learn of new research taking place in Florida which will involve a large-scale test of new disease tolerant orange tree rootstock to save the US$ 9 billion state industry from a deadly citrus greening tsunami. Presently, on a macro scale, citrus greening is killing orange trees in the United States and Brazil faster than they are being replaced.# In the shorter term, unfortunately, the United States Department of Agriculture (USDA) first forecast for the next Florida crop was due for release on 11 October 2013, but it has been delayed by the United States government shutdown. In September they reported that the brix levels for the 2013/14 crop were down for both early and mid-season harvests. In both categories the levels were at the second lowest in the past five years. While ANUGA was very busy this year, for FCOJ, things were rather quiet. There are reports subsequently that prices have been reduced but most buyers seem to be covered in the short term but their medium term positions are weak. Liquidity in the supply chain seems to be relatively short but during the fair, prices were at these levels: Brazilian, FCOJ, 66 brix, bulk, US$1700-1800/mt FOB Santos Brazilian, FCOJ, 66 brix, bulk, US$2350-2375/mt FCA Holland, duty unpaid Buyers seemed prepared to offer at approximately US$200-250/mt below these levels What is for sure is that both Brazil and Florida are expected to show the lowest record productions this season - and this puts the key processors in a very comfortable position. On top, here in Brazil crop 2013/14 is showing very poor yields and quality has been described as disappointing. Stocks have come down and significant quantities of what remains will need to be blended to make it acceptable. Thus, despite the significant decrease in the demand, which is price driven, future supply from Brazil will be severely impacted by the following: • Fruit drop at the start of the crop 2013/14, but now the situation is improving quite fast. Smaller processors are already paying R$ 9.00/case to the growers and the bigger processors are reported to be indicating prices in the order of R$ 12.00/case for the next crop; • There is a continuing strong domestic market for fresh fruit; • Growers’ financial capacity after three years of selling at a loss or not even being able to sell; they are uprooting the trees – estimated thus far at a loss of 80MM trees; • Non treatment of trees with pesticides and fertilisers due to financial pressures; this could lead to diseases having significant impacts in the medium to long term. In short, it is likely that the market prices will be steady to bullish provided consumption can hold up with the present high price levels. The 2014/15 Brazilian crop outlook is settling down and the blooming was good. Present rains suggest that the trees, which are still productive, will yield a triple crop with excellent yields.