Egyptian Oranges will try to Keep their Boom this New Export Season

Published 2021년 10월 22일

Egyptian orange exporters will try to maintain last year’s boom for the upcoming MY 2021/22. During MY2020/21, orange exports reached 125,000 MT, a 9% increase from the previous season, which confirmed Egypt as the world’s largest exporter of oranges by surpassing its main competitor countries. However, this year will be different than the last one as exporters have reported important challenges to face. The upcoming export season is expected to be challenging due to a possible 30% decrease in production, considerable increases in packing costs, and sea freight shipping concerns.

The Egyptian orange export season will start by the end of November. While the industry has experienced substantial growth over the past two years due to an increase in global demand, concerns among exporters are threatening MY 2021/22. Tridge reached out to experts in the Egyptian market to get insight into the challenges the industry faces.

Continuous Production Growth Might Stop

Egypt has increasingly channeled its resources into improving orange production while pushing for the opening of new markets such as Brazil and Japan – added as export destinations earlier this year. According to USDA estimates, Egypt’s orange harvest area increased by 3.57% in MY 2020/21 as the number of fruit-bearing trees grew by 7% compared to the previous season. Orange production was also forecasted to be 6.2% more than the last season reaching 3.4 million MT. For MY 2021/22, it was estimated that orange production would remain upward. However, there have been concerns regarding potential damages to the trees due to unfavorable weather conditions in recent days.

Source: Tridge, FAOSTAT

Ahmad Shalaby, Tridge’s representative in Egypt, has reported that farmers are expecting a 30% decrease in production for MY 2020/21 due to heat waves that have affected the productivity of the trees. According to Mr. Shalaby, the Egyptian Agricultural Export Council has expressed that the sudden increase in temperature in productive regions will damage next season’s output.

Mr. Osama Abdel Hady, Managing Director of El Shark Egypt, an international orange distributor, has also expressed concern. “The expectation for this season is that the farms will produce 30% fewer quantities than last season due to the weather factors that affected the conditions of the trees,” mentioned Mr. Hady regarding the heat waves.

The Egyptian harvest in MY 2020/21 was mostly dominated by the smaller sizes (grades: 72/80/88/100/113/125), and there were far fewer large sizes (grades: 42/48/56/64). According to Mr. Shalaby, for MY 2021/22, “the quality is expected to be good with higher sizes than last season". So, besides the possible shortage, the quality and size of the fruit will be better this season."

Packing Costs and Logistic Shortages will add to the list of concerns

The amount lost in the production volume will remain to be seen throughout the season that will last until May of next year. However, there are other challenges the industry is already aware of that will need to be taken into account when forecasting next season’s export numbers. In MY 2020/2021, orange exports are estimated to have reached around 1.5 million MT, up from the 1.37 million MT recorded in the previous year. Spurred by a pandemic-induced global demand for Vitamin C-rich fruit, orange exports in Egypt have enjoyed a 7.5% average year-on-year rate since 2016.

Source: ITC Trade Map, Tridge

For exporters, the major concern is regarding the likely increase in prices for the next season. This is because the shortage of packing material will affect the price through the season. “There is a huge shortage in cardboard supply worldwide that leads the prices of packing material in Egypt to increase by 45-50%.” Mr. Hady mentioned to Tridge.

On the other hand, the global shortage of container crisis will also affect orange exports next season as it already did at the end of MY 2020/2021, where several logistic issues were being reported at the time with limited vessels and increased shipping costs. “The biggest fear in the market is the shipping and logistics. We are still suffering from a lack of space on vessels and shortage of containers plus the big increase in the shipping cost,” added Mr. Hardy.

Keeping the Top Destination Markets will be Key

The export season for oranges usually starts with shipments to the Arabian Gulf, followed by Russia, Ukraine, and then to the European Union and East Asia. In MY 2020/21, Egyptian orange exports reached 104 countries, with Saudi Arabia, Russia, the Netherlands, China, United Arab Emirates, Bangladesh, United Kingdom, Ukraine, Oman, and Malaysia remaining as Egypt’s top ten export destinations for oranges. For MY 2021/22, it is expected that these markets will remain as the main destinations, including three new markets - Brazil, Japan, and New Zealand, which were recently open for exports.

MY 2020/21’s success will be defined by the exporters’ ability to supply oranges throughout the season, particularly by April and May next year when supply from other major producing countries is short. Furthermore, global orange prices fluctuations will be determinants for Egyptian exporters to keep the product competitive in each market. The current challenges suggest prices will be higher next season, and the shipping issues might affect the demand for Egyptian oranges.

Sources: