High Grape Prices in the EU are Expected due to Low Peruvian Production

The 2023/2024 grape campaign in Peru is expected to be marked by a substantial decline in production volume. Reports indicate that table grape exports may plummet by as much as 20% compared to previous years to approximately 670 thousand metric tons (mt).

The reasons for this significant drop in grape production are multifaceted. Climatic factors, particularly Cyclone Yaku, which struck Peru early in the year, have created complex challenges for grape cultivation, especially in the northern region of the country. The repercussions of this climate-related setback in the northern region are expected to ripple down to the south, affecting grape production in Ica, another crucial grape-producing area. As a result, speculations are rife that the northern region may witness a production decrease ranging from 30% to 50%, while the southern region may experience a milder reduction, estimated at 5% to 10%.

When viewed holistically, the grape industry in Peru is bracing for a notable 20% drop in the total volume of table grape exports. Despite these impending production challenges, the grape market is witnessing a surge in prices, largely driven by speculative factors. For the 2023/24 campaign, which started in Oct-23 and will last until Mar-24, despite lower volumes, exports are anticipated to increase in value due to higher prices.

Source: TDS

The grape market's recent trajectory has seen prices reach unprecedented levels, primarily influenced by speculation. The changing climate patterns, exacerbated by the El Niño phenomenon, have undeniably left an indelible mark on the agricultural landscape. Across the board, harvested volumes of various fruit types are projected to decline, including early grapes with and without seeds, which are forecasted to be 30% lower in yield. Moreover, the earlier-than-usual grape exports due to prevailing heat conditions have also led to smaller calibers for certain grape varieties.

In the European grape market, the transition between locally produced grapes and those from the Southern Hemisphere plays a pivotal role. This exchange between the European Union (EU), particularly Spain and Italy, and overseas suppliers is crucial for streamlining grape shipments.

The Piura Region in Peru primarily focuses on exporting grapes to the United States (US), with some limited exports to the United Kingdom (UK) and the EU. Although European seedless grapes remain available until late October, other sources, like Greece, are grappling with quality issues. Brazil traditionally serves as the initial supplier of overseas grapes, albeit at higher prices due to factors such as royalty imports. In general, recent market trends indicate low availability and soaring prices, even during the Peruvian campaign.

In the US, the grape market is experiencing sustained high prices amid lighter production volumes. Quality challenges brought on by rain from Tropical Storm Hilary have reduced the grape crop in California. Consequently, offshore grapes from Peru and Chile are anticipated to reach US shores by early December to meet the heightened demand stemming from limited Californian supply. These conditions are forecasted to drive market prices higher compared to previous seasons.

The convergence of adverse weather conditions in Peru, strong demand from North America, and the aftermath of Hurricane Hilary in California is expected to impact grape prices in the EU significantly. As Peruvian grape production faces considerable challenges, EU consumers and stakeholders in the grape industry should prepare for an unprecedented season marked by higher prices and the need for alternative supply sources.