Supply Crunch Causes Watermelon Prices to Rise in Brazil

Published 2022년 12월 19일

Elevated prices have dominated the current watermelon season in Brazil due to a reduction in the national supply. In Teixeira de Freitas, Bahia, a key watermelon production region in the country, wholesale prices of large watermelons (>12kg) rose as high as BRL0.83/kg in February, a 22% increase compared to last season. The case was similar at Companhia de Entrepostos e Armazéns Gerais de São Paulo (CEAGESP), the largest wholesale market in the country, where prices for watermelons (>12kg) reached BRL3.11/kg in July, a 109% rise compared to last year. Supply shortages experienced in Bahia and Sao Paulo have had the most significant impact on prices. Prices could remain bullish in the coming weeks as supply continues to decline, following the early completion of crops in Teixeira de Freitas, leaving only limited volumes in São Paulo.

The case was similar at Companhia de Entrepostos e Armazéns Gerais de São Paulo (CEAGESP), the largest wholesale market in the country, where prices for watermelons (>12kg) reached BRL3.11/kg in July, a 109% rise compared to last year. This month, prices have retracted to BRL 1.80/kg but remain BRL 0.16/kg more than in 2021. The average annual price for watermelons (>12kg) in Bahia rose from BRL 0.80 in 2021 to BRL 1.70/kg in 2022, while the same product witnessed a BRL 0.64/kg increase in Sao Paulo, reaching BRL 2.27/kg this year.

Source: CEPEA/ESALQ

Supply shortages experienced in Bahia and Sao Paulo have had the most significant impact on prices. The initial stage of the 2021-22 season in Teixeira de Freitas, south of Bahia, was marked by adverse weather conditions. La Nina swept across the state, causing downpours of rain throughout many watermelon farms, resulting in crop losses, elevated production costs, and low productivity. Fearing crop damage, local watermelon farmers concentrated on planting early, allowing the initial part of the 2022-23 season to conclude by mid-December.

However, this did not prove successful, as heavy rains fell more frequently on the country’s watermelon fields this season. In November, Texeira de Freitas recorded much more frequent rainfall than last year, with the accumulated precipitation rising to between 250 and 300 mm, according to the National Institution of Meteorology. The country’s production woes have also affected exports. Between August and October 2022, Brazil shipped 58K mt of melons, 24% lower than the volume shipped last year. As a result, export revenue decreased by 16% to USD 44 million.

Prices could remain bullish in the coming weeks as supply continues to decline, following the early completion of crops in Teixeira de Freitas, leaving only limited volumes in São Paulo.