W41: Melon Update

In W41 in the melon landscape, in Spain, Cooperativas Agro-alimentarias Castilla-La Mancha reviewed the melon and watermelon campaigns, expressing concerns about the low profitability for farmers. The campaign began with high prices, with 5 to 8% of the production sold. However, prices soon dropped significantly, falling below production costs. Export volumes also suffered due to lower temperatures in major European markets. Despite excellent product quality and slightly increased production compared to 2022, prices remained low. The melon and watermelon sector called for a reflection on the production model, as many farmers struggle to achieve economic benefits from their crops in most years. The planted area for melons increased slightly compared to the previous year, with 6 thousand hectares (ha), while watermelon covered 3.5 thousand ha.

Melon sales are experiencing a boost in Europe due to warm autumn weather. The demand has quickly depleted the supply of Southern European melons, resulting in an empty market for overseas melons. Higher-than-usual consumption, driven by good weather, has made melons sell without promotions. Prices for Galia and Cantaloupe melons are around USD 10.54 per kilogram (EUR 10/kg). Current prices are favorable, but the supply for winter is not guaranteed, with more average temperatures expected. Despite the strong market, there is concern that new players may enter the market, sourcing products from other regions due to lower transportation rates. Producers in Central and South America are increasingly focusing on April through May for melon production, aiming for a good early spring season. Shorter transit times and improved melon varieties are enhancing quality and driving consumption.

Lastly, Brazilian melon exports experienced a significant surge in Aug-23, with a 454% increase compared to the same period in the previous year, primarily due to rising European demand, especially from the United Kingdom (UK) and the Netherlands. These countries accounted for 48% and 41% of the total exports in Aug-23. Due to adverse weather conditions, this demand shift resulted from limited supplies of European melons, particularly from Spain. Brazilian melons have dominated the market due to the opportunity created by the supply gap, and the total export value for Brazilian melons in H1 23 reached USD 69.02 million, a 17.54% year-on-year (YoY) surge compared to the same period in 2022.

Brazilian melon exports are forecasted to continue rising in Sep-23, making melons the second most important fruit export for Brazil, following mangoes. The primary markets for these exports are the European Union (EU), the UK, and the United States (US). However, to meet the growing demand, particularly from new markets like China, Brazil must double its current melon cultivation area of 20 thousand ha. This expansion could have social and environmental impacts, potentially affecting traditional farming communities and small agro ecological farmers in regions like the Chapada do Apodi. The surge in Brazilian melon exports highlights the dynamic nature of global fruit markets, emphasizing the importance of sustainable and equitable agricultural practices for long-term sector viability. Strong export figures for Brazilian melons are forecasted to continue, surpassing 2022 results and marking a successful 2023/24 season for Brazilian traders.