Citrus Supplies in the US Market Forecast to be Record Low

The US is on pace to have a historic low citrus production for the 2021/22 season. Florida's citrus industry has continued a long downward trend for the last ten years. The decline is mainly driven by the appearance of the citrus greening bacteria, which has been fatal for the citrus production in the state. As a result, Florida will reduce its orange production by 6% YoY for the second consecutive year.

California is not able to offset Florida’s declined

Although California has had a more moderate decrease in citrus production over recent years, it hasn’t been able to offset Florida’s production decrease trend. Furthermore, although not all citrus crops have a negative projection, the decline is largely driven by overall US orange production, projected to be 15% less than in the previous season to 3.7M mt. As a result, Florida’s orange supply forecast is expected to be 22% below last MY, and California's orange production is forecast to decline 5% YoY.

Production of tangerines, which includes tangerines, mandarins, and tangelos, is expected to be 25% below 2020/21 levels at a total of 878K mt. Lemon is the only citrus commodity forecast to reach production levels above last season, with a 10% increase at 976K mt tons. Same as in orange production, tangelos are forecast to decrease in California and Florida by 25% and 9%, respectively.

Grapefruit production follows the same downward trend with a 13% YoY decrease, with all productive states forecasted to decline in their production. In this case, Texas’s production is projected to have the most significant decrease with 33% YoY to 64K mt. In addition, California is forecast to reduce its grapefruit production by 9% to 140K mt, while Florida will decrease by 4.5% to 166K mt.

Texas, which is the US's third citrus producer state, hasn’t also been able to support the general production decline. The state accounts only for 2% of US commercial orange production, and in the same USDA report, orange production in Texas for MY 2021/22 was down by 62% YoY. The decrease in Texas production can largely be attributed to the lingering effects of Winter Storm Uri, which plunged the State into below-freezing temperatures for several days on Feb-21.

Increase in Imports Expected with Soaring Prices

If forecast production is accurate, the 2021/22 US citrus crop would be the smallest crop in more than 50 years. Therefore, citrus imports into the US are also expected to rise by Jun-22 when local production is expected to be shortened considerably. According to the USDA, import levels of fresh oranges for MY 2021/22 until Jan-22 were up by 36% compared to the same period last year. Seasonal US citrus imports allow for year-round availability for US consumers.

The USDA predicts total US fresh orange imports will reach 276K mt in 2021/22. It is estimated that Chile and Mexico remain the largest suppliers of fresh-market oranges to the US this season, followed by South Africa, Australia, and Colombia. Furthermore, by Jan-22, shipments from Chile are up 320% YoY since the beginning of the season, and shipments from Mexico are up by 28% YoY.

The projected volume increase of imported oranges for MY 2021/22 will come along with increasing prices in the US as a consequence of the domestic production levels. According to Tridge Index Price, US California-origin orange price started to soar in the last week of March-22 and has kept the upward trend until W2 of Apr-22. The price in the Los Angeles wholesale market in W2 of April-22 stood at USD 44.9/carton, while in W1, the price was at USD 36.5/carton for an 18.7% WoW increase. Furthermore, the price over the same W2 of Apr-21stood at USD 35.50/kg, representing a 26.48% YoY increase.