Shortage of Chilean Prunes will Impact the Global Market

Prune

Fruits

Chile

Published Jun 8, 2021

The 2021 Chilean prune export season will experience severe shortages in volume and a considerable increase in prices. In February, harsh and heavy rainfall has caused severe damage to various key fruit crops in harvest season like plums. It is estimated that the unfavorable weather caused a decrease of around 40% smaller than last season. This will cause direct harm to the Chilean prune export industry as they will be forced to raise prices and will need to avoid engaging in new markets. This will weaken Chile's position as the top prune exporter worldwide and will bring opportunities for other suppliers.

Unexpected Rainfalls Damage a Promising Season

Unusual and unexpected heavy rains hit the growing areas in the last days of January when most of the fruit was ready for harvest. Prune producers in Chile were expecting a very productive harvest for this 2021 season, as the previous 2020 harvest season was a great summer season for prunes in Chile. Producers were expecting between 70,000 to 75,000 tons of harvest plums. However, over the last days of January, an unexpected heavy rainfall of 50 mm in some areas and up to 110 mm in other areas was experienced. These heavy rainfalls caused severe damage to fruits that were almost ready for harvest and caused a considerable loss in volumes.

Tridge talked to Pedro Acuña from Chileprunes, a Chilean association representing around 70% of the Chilean prune exporters. He mentioned that “the unexpected rainfall brought several harvest obstacles. It brought an accelerated maturity on the crop and a sudden fall to the ground, which triggered protocols to harvest as soon as possible. All of these generated a substantial decrease in our volume.” Chileprunes estimates that the actual production was reduced between 40,000 to 45,000 tons, which is a 40% decrease from what was expected.

Global Shortage of Prunes Pushes Prices Up

The shortage in Chile´s production happened when dry fruit exporters ran low in stocks from the previous season, which worsened the situation. In parallel to the Chilean case, France, another main exporter of fruit, has reported forecasting a 35% decrease from its previous season due to snowfalls in french producing areas. Like Argentina, which, similarly to Chile, lost about 12,000 tons of its production due to heavy rainfalls. This has led to a rise in the global demand for this product due to the supply shortage.

Chile is the leading supplier of dry prunes globally, accounting for 31.7% of the global export share, followed by the US with 24.3% and then France with 9.5%. According to the Fruit Exporters from Chile Association (ASOEX), the Chilean prune export volume decreased by 14% during the first quarter of 2021 compared to the previous year. However, the FOB price per ton increased by 11% within the same period as prune prices rose at the beginning of the year. According to Tridge’s Engagement Manager in Chile, Leandro Remedi, prune suppliers have been forced to raise the price on current customers. “The vast majority of prune exporters have decided to increase their pricing, so it will be common to see regular Chilean prunes going for $ 3.5 - 4.0 per kg,” he stated.

For Acuña, traders, and exporters this season will experience a severe shortage in terms of available volume at the global level. “The main suppliers of dry prunes have severe shortages this year, so undoubtedly the international price of plums will significantly increase,” he mentioned.

Export Market Outlook for 2021

According to Chileprunes, Chile supplies dry prunes to around 70 different countries in different regions. In 2020, Chile exported USD 160 million in value of dry prunes, for which the main markets are Central Europe and Mexico. The leading destination for Chilean dry prunes was Poland with 11.7% of the share, followed by Germany with 10% and then Mexico with 9.7%. Prune exports in Chile saw a 10% increase from the previous year, where a low volume of exports was recorded due to pandemic restrictions. However, the worst outcome of the shortage is that Chile´s promotional efforts to open new promising markets will have to be paused due to the country's supply shortage this season.

Acuña shared that the current main goal of the industry is to expand to new markets that promise to have an increasing demand for dry fruits. He mentioned that “markets like Malaysia, Vietnam, Indonesia, and India are part of our main marketing plan, as are markets that have huge potential for this fruit consumption and where we have been promoting the Chilean fruit lately. However, this season will be tough to supply this market due to the shortage.”

Source: ITC Trade Map, Tridge

The shortage will have a global impact on the different suppliers and markets. It is true that Chilean prunes have a very well-known reputation for their quality and nutritional values. However, there are other suppliers that play a key role in the market dynamics of the fruit. The European production, mainly French, will have an immense reduction due to the snowfalls presented this year. This will aggravate the supply situation mainly in Central Europe, where France is the leading provider.

The main beneficiary of this situation will be the US, as Californian prunes have not reported any shortages in their production this season and will be available in full for the market. The US is the second-largest exporter of dried prunes after Chile, accounting for 24.3% of the global export share. Although the US covers most of the same Chilean markets in Europe, US exporters will have a unique advantage in increasing their shipments into traditional and new developing markets under an elevated international price.

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