Factors Affecting 2023/24 US Apple Exports: High Stocks and Low Prices

Fresh Apple
United States
Published Apr 11, 2024
The US fresh apple industry faces a critical juncture in the upcoming 2023/24 season, as high stocks and low prices are set to reshape the export landscape. Despite a 47% YoY increase in exports, reaching over 1 billion lbs between Aug-23 and Jan-24, exports remain below levels from a decade ago. Mexico and India are key destinations, with India seeing a 16-fold increase in shipments after tariff removals. However, challenges remain, with Canada experiencing a 24.89% YoY export decline. As of December 1, 2023, US apple storage levels were at 173 million bushels, a 33.6% YoY rise, leading to downward price pressure and financial strain on growers and exporters.
The industry is responding with intensified marketing efforts and a push to diversify export destinations. Efforts to open the South Korean market to US apples face opposition from the local agricultural community. The US apple export market for 2023/24 is expected to increase, driven by increased supply and competitive prices, despite challenges from other apple-producing nations and currency exchange rates.

The US fresh apple industry stands at a crossroads, with multiple events converging that will dramatically alter the condition of exports for the 2023/24 season. The combination of overly high stocks and soft prices will drastically shift from past seasons, and industry participants need to be informed and prepared immediately.

The United States Department of Agriculture (USDA) announced that apple exports from the US surpassed 1 billion pounds (lbs) during the 2023/24 marketing season (August to January), a 47% year-on-year (YoY) increase over the same period last year. However, exports remain below the level established a decade ago. Mexico and India were the most significant destinations in this period, and shipments to India increased 16 times after tariffs were removed.

Figure 1: US Fresh Apple Export Volume 2019-2023

US Apple Exports

Source: Tridge

In the first half of 2023/24, the US exported 39 million lbs of fresh apples to India, representing 4% of the total export volume. This is the most significant volume exported to India since 2017/18, when it was the second-largest market for fresh apples from the US. India has removed retaliatory duties on US apples, increasing shipments in season 2023/24. The leading destination for US apples, Mexico, showed 2.14% YoY growth in calendar year (CY) 2023, reaching 266,955 metric tons (mt). In the same period, exports to Taiwan soared 45.33% YoY, up to 65,444 mt. Positive results in these markets softened the decline in the Canadian market of 24.89% YoY to 133,618 mt.

Impact of High Inventory Levels on US Apple Industry

As of December 1, 2023, there were 173 million bushels of fresh apples in US storage, indicating a slower movement than the five-year average prior to December, totaling 2,138,376 mt, a 33.6% YoY rise.

A direct result of a bumper crop, the high inventory levels were initially seen as a boon for the industry. However, this abundance has led to an oversupply in the market, exerting significant downward pressure on prices. The situation is further exacerbated by the substantial storage costs of maintaining large stocks, which are eating into the profit margins of growers and exporters, posing a serious threat to their financial sustainability.

Figure 2: Tridge Price Indices and Forecasts

Tridge Price Indices

Source: Tridge

While beneficial for consumers, low prices present a challenge for US apple exporters. The domestic market saturation has necessitated a push for increased exports. According to Tridge Price Indices and Forecasts for US fresh apples, prices are also expected to continue the downward trend in Apr-24. However, the global market has its challenges. Competitive pricing from other apple-producing nations, such as Poland and China, means that US exporters must balance price competitiveness and profitability.

Another factor to consider is the currency exchange rate. A strong US dollar makes American exports more expensive for foreign buyers, which could dampen demand. This is particularly relevant in price-sensitive markets where buyers may opt for cheaper alternatives.

The industry is proactive in counteracting these challenges. Marketing efforts are being intensified to showcase the superior quality and diverse variety of US apples. Moreover, there is a concerted push towards exploring new markets, like South Korea, and diversifying export destinations, a move that not only reduces reliance on any single market but also opens up new avenues for growth and profitability.

Since 2018, the US government has been lobbying for South Korea to allow the import of American apples and pears to open up the Korean fruit market to US products such as grapefruits, stone fruits, and blueberries. However, this effort, which aims to capitalize on South Korea's favorable market conditions, is met with intense criticism from the Korean agricultural community. They are concerned about introducing foreign pests, reducing native production, and affecting the broader fruit business.

In conclusion, the US apple export market for the 2023/24 season is influenced by high stocks and low prices, along with a complex interplay of trade policies and market dynamics. Tridge expects an increase in US fresh apple exports, driven by increased supply and favorable prices.

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