Bullish Factors Dominate the Brazilian Watermelon Market

Published Jan 30, 2023

Elevated prices dominated the Brazilian watermelon market in January 2023 due to a reduction in the national supply. In Companhia de Entrepostos e Armazéns Gerais de São Paulo (CEAGESP), the largest wholesale market in the country, wholesale prices of watermelons (>12kg) rose as high as BRL 2.54 per kilogram this month, up 35% compared to December 2022, and a 13% increase compared to last season. Watermelons are currently scarce in Brazil, with only limited volumes available in the Sao Paulo market. Most production regions are preparing for the second half of the season, with harvesting set to commence in a few weeks. According to CEPEA, trade volumes are forecast to improve in February, when the harvest for the new crop commences. Experts also expect Brazilian watermelon demand to rise, driven by the low production volumes in other supplier countries.

Source: CEPEA, Tridge

Producer prices for watermelons (>12kg) in São Paulo followed a similar trend, rising to BRL 1.34 per kilogram in January 2023, a significant increase of 39.6% compared to the previous month, and a 36.7% YoY increase. Producer earnings are currently the highest on record, making the 2022/23 watermelon season the most profitable in Brazil's history, with prices high enough to cover production expenses. This gain comes as a relief to growers as they are not suffering the significant losses they did last season.

Watermelons are currently scarce in Brazil, with only limited volumes available in the Sao Paulo market. Most production regions are preparing for the second half of the season, with harvesting set to commence in a few weeks. In Teixeira de Freitas, Bahia state, a leading production region in the country, harvesting is expected to start in early February. The first part of the 2022/23 season in Teixeira de Freitas began in October and ended in December. According to the Center for Advanced Studies on Applied Economics (CEPEA), growers ended their harvest in December due to concerns that rains could impact production, as was the case during the previous season.

December was a fruitful month for Brazilian watermelon exports owing to increased demand due to the end-of-year festivities. Watermelon shipments from the South American country reached 18.4 thousand tons, 9% more than the previous year, and the highest monthly export volume in over twenty-six years. During the same period, export revenue rose to USD 12 million, a considerable increase of 57% compared to 2021. Export figures are expected to drop in January, owing to the European winter period and the low supplies currently available in Brazil. According to CEPEA, trade volumes are forecast to improve in February, when the harvest for the new crop commences. Experts also expect Brazilian watermelon demand to rise, driven by the low production volumes in other supplier countries.