Outlook for the 2020 Orange Season: Spain, Egypt, United States, and China

Value Added Orange

Fruits

Germany

Egypt

Published Jan 21, 2020

As South Africa is wrapping up its harvest, Spain, Egypt, and the United States are starting the season. Harvest and prices look relatively stable with a slight decrease in yield. Egyptian oranges are on the rise globally. Demand for processed oranges is strong, and a new Russian ban on citrus imports from China is set to affect the market.

As the second-largest orange exporter in the world, South Africa, is currently wrapping up its production for the season, orange buyers are turning to top exporters in the northern hemisphere, where the season is just starting.

Spain ranks a prominent first for orange exports, with almost twice as many oranges exported as South Africa. As the largest exporter of the fruit, the Spanish harvest is usually the most anticipated of the bunch, with Egypt, third in ranking, and the United States also having started their harvests in late 2019.

This year the harvest of Egyptian oranges looks promising whilst Spanish and Turkish oranges have gone through slight decreases in production. A recent Russian ban on citrus imports from China is also expected to impact import-export relations.

Spain Starts the Season with Minimal Harvest Reductions

The start of the Spanish harvest this season has begun with the Navelina variety in October followed by the harvest of navel oranges, which began in November. There have not been many changes in the Spanish market this season. While there has been a reduction in citrus yields, oranges were much less affected than mandarins or clementines, with a 15% to 20% drop in total orange production.

Spanish Prices Remain Stable

Due to a minimal harvest reduction, orange prices during late 2019 remained relatively stable compared to the prices of other citrus fruits, with an average origin price of approximately EUR 0.65 per kg (USD 0.72) in December 2019. While this indicates an increase of 12% over the average of that period in the last five years, it was 8% lower than the November prices and similar to those of December 2018. The slight drop in Spanish harvest is expected to affect European buyers such as Germany, France, and the United Kingdom who are the biggest importers of the fruit from Spain.

Egyptian Oranges on the Rise Globally

Egyptian oranges are well-known for their good quality and quantity due to fertile soil and optimal weather conditions all year round. This, combined with their proximity to big export markets and weak currency compared to Spain and Morocco, gives Egyptian oranges a great competitive edge.

In recent years, the Egyptian government has been seeking to expand its overseas markets by expanding its cultivation area, which now amounts to 168K ha. Egypt’s top orange importers are European and Middle Eastern buyers such as Russia, Saudi Arabia, the Netherlands, and the United Arab Emirates as well as China, and the country has recently been approved to export to Brazilian and Japanese markets.

The supply of oranges in Egypt is growing, with the country exporting to 98 countries, and totals at approximately 1.9M tons from October 2018 to September of 2019. Overall, the market for Egyptian oranges is looking optimistic this year. Egyptian exports to China are looking especially promising as it increased by 107% during the first 10 months of 2019 at 191K tons and industry experts expect this trend to continue in the 2019/2020 season.

Small Setbacks Not to Affect Overall Exports from Egypt

While there has been a slight climb in prices, which are currently at USD 0.5 per kg FOB for the navel variety, this can be attributed to stricter quality standard regulations by the Egyptian government, ensuring that only high-quality fruits are exported. Quantity-wise, there has been a slight reduction in harvest due to hot weather conditions and total quantity is expected to be slightly lower than during 2018, but still expected to be higher than that of 2017. As a result, Egyptian exports to top importers such as Russia, Saudi Arabia, and China are not expected to be negatively influenced this season

Stable Supply and Demand for US Oranges

Florida and California are the major orange-producing regions in the US, the second-largest producer and fourth-largest exporter of oranges. About 90% of the oranges produced in these regions are domestically consumed and mainly used by the processing industry, while the other 10% is exported.

Experts comment that the volume harvested this year in California is nearly the same as last year, but the sizes of the oranges are remarkably bigger. In Florida, which accounts for 70% of the US orange production, the harvest season was delayed as the fruit’s size was too small, but there are larger volumes on Navel and Hamlin oranges compared to the last few years when Hurricane Irma devastated the region. Likewise, the supply in the North American market is currently stable. With stable demands for American oranges both domestically and internationally, the price is expected to be stable.

Supply Shortage Caused by Unfavorable Weather in China

After heavy rains recorded in the first half of the year, dry weather in the second half of the year hit many orange production areas in China. As a result, the average size of the oranges is smaller than average, and the volumes harvested in some areas are lower than during a typical year. In addition to the unfavorable weather, citrus greening diseases diffused in the continent reduced the harvest and hurt the overall Chinese orange market.

In spite of the supply shortage, the demand for Chinese oranges has been consistently increasing over the years, mainly due to the growing exports of mandarins and oranges to Southeast Asian countries. During the first ten months of 2019, Chinese exports to Indonesia, Vietnam, and Myanmar had increased to +312%, +18%, and +5%, respectively. China is expected to put continuous efforts on increasing exports to these countries, as a recent import restriction on Chinese citrus in Russia will affect Chinese orange exports negatively.

Russian Ban on Chinese Citrus Imports

An impactful global trend on the buyer’s side is Russia temporarily restricting Chinese citrus imports as of January 6th, 2020, following the discovery of harmful pests in several products. While the ban on Chinese oranges is temporary, it is not clear when it will be lifted, as the country was not satisfied with the results of an audit constructed in China after implementation of the ban. Russia has announced that it will continue with restrictions until China establishes adequate measures to meet the country’s standards for the safety of imported foods.

As China is the 4th biggest exporter of the fruit to Russia, with 180K tons of yearly exports, Russia is expected to turn to other exporters to keep up with the demand. As Russia’s top orange importers, Turkey, Morocco, and Egypt are the contenders expected to fill the gap. Egyptian oranges, which share harvest season with their Chinese counterparts, could act as the main substitute, as Turkey suffered from mild shortages in the previous season when there was a 35% production decrease in the first 9 months of 2019 compared to 2018.

While Turkey only takes up 3.2% of worldwide exports, its main customers are European nations due to proximity. Egypt, as another geographically advantageous country for the European and Middle Eastern markets, could act as a more stable source for Russian buyers due to a large number of oranges available.

Overall Consumption Trends

Global consumption of oranges has been on the rise in recent years and this trend is expected to continue, with a steady increase in total imported value since 2015. The increase in demand for processed oranges and products derived from oranges is an important factor that is driving the trend. Egypt has recently started to export the fruit to cosmetics and flavors industries in the US and Germany. Additionally, an increase in domestic and international consumption of Brazilian orange juice is also playing an important role in the increasing demand trend. Consequently, July through November of 2019 saw a 54% increase in juice exports compared to the same period in 2018.