1. Weekly News

Brazil

São Paulo and Triângulo/Sudoeste Mineiro Orange Harvest Forecast Reduced by 7%

Fundecitrus has revised its 2024/25 orange harvest estimate for São Paulo and Triângulo/Sudoeste Mineiro to 215.78 million 40.8-kilogram (kg) boxes, a 7% decrease from May's forecast. This reduction of 16.6 million 40.8-kg boxes is due to smaller fruit sizes caused by hot, dry weather, with rainfall 31% below normal and severe drought conditions. The fruit's early ripening has led to about 45% of the crop being harvested by mid-Aug-24, compared to the usual 30%. Although average fruit size has decreased from 169 to 155 grams (g) per orange, the fruit fall rate has improved slightly to 17.10% from 18.50%, partly due to the early harvest mitigating greening-related losses.

Brazil's Orange Prices Surge Due to Production Drop

In Brazil, orange prices have surged significantly, with the average price reaching USD 20.21/40.8-kg box (BRL 113.89/40.8-kg box) in W37, a 4.3% week-on-week (WoW) increase. The price increase is due to high temperatures in São Paulo, which have increased orange demand, and a revised harvest estimate from Fundecitrus predicts a 30% year-on-year (YoY) drop in production. Severe drought has worsened the situation by causing fruit wilting and declining quality.

Europe

EU Reports Increased Citrus Black Spot Cases from South Africa

In Aug-24, the European Union (EU) reported a sharp increase in citrus black spot (Phyllosticta citricarpa) interceptions from South Africa, with eight new cases—seven in lemons and one in mandarins—bringing the total to twenty detections in the first three months of the export season. Due to persistent phytosanitary risks, the Valencian Association of Farmers (AVA-ASAJA) calls for stricter measures against South African citrus imports. Zimbabwe has also reported black spot and false orange moth (Thaumatotibia leucotreta) interceptions, leading to calls for mandatory cold treatment of its citrus imports. AVA-ASAJA has criticized the EU-Mercosur trade agreement, citing phytosanitary concerns from Brazil, Argentina, and Uruguay, which have reported various pest detections this year.

Mexico

Veracruz Orange Production Dropped by 51.6% Due to Drought and Pests

In Veracruz, Mexico's top orange-producing state, production has dropped by over 51.6% due to droughts and the spread of pests like yellow dragon disease, or Huanglongbing (HLB). At the 5th National Congress of Applied Entomology, the Autonomous University of Chapingo reported that around 20 thousand hectares (ha) of orange trees are affected. The yellow dragon disease, caused by the bacterium Candidatus Liberibacter, severely reduces citrus quality and yields, resulting in major economic and environmental losses. Despite these challenges, there is hope for recovery through increased cooperation between farmers, the academe, and the government to improve agricultural practices and tackle these issues.

United States

Decline in Florida Orange Supply May Boost Brazilian Exports

According to United States Department of Agriculture (USDA) data cited by the Center for Applied Economic Studies (Cepea), Florida has experienced a 5.9% drop in orange supplies this season due to disease and severe drought. The yield of Valencia oranges, the state's primary variety, is expected to fall by 2.06%, potentially reducing orange juice production by 7%. This decline could create export opportunities for Brazil, which may increase its shipments to the US to meet the strong demand for orange juice.

California Orange Exports Expected to Improve in 2024/25 Season

After a tough season due to extreme heat and thrips damage, California orange exports are set for a rebound in the 2024/25 season. The tight supply of navel and Valencia oranges led retailers in price-sensitive markets, such as Mexico, Costa Rica, and El Salvador, to purchase sizes they don't typically carry, driving up prices. Despite competition from lower-priced Mexican oranges, demand for California oranges remained strong. The upcoming season, expected to begin in October, is anticipated to bring better quality, larger sizes, and increased availability.

2. Weekly Pricing

Weekly Orange Pricing Important Exporters (USD/kg)

Yearly Change in Orange Pricing Important Exporters (W37 2023 to W37 2024)

South Africa

In W37, South African orange prices stood at USD 1.38/kg, reflecting a 4.55% WoW increase and a 42.27% month-on-month (MoM) rise. This continued price increase is due to ongoing effects from earlier supply shortages and the delayed impact of adverse weather conditions. Additionally, the rise in prices is influenced by the recent EU reports of increased citrus black spot cases from South Africa, which have heightened concerns about phytosanitary risks and may impact export volumes. The heightened scrutiny and potential trade restrictions could limit supply, contributing to the upward pressure on domestic prices.

Egypt

In W37, orange prices in Egypt increased by 30.77% WoW to USD 0.34/kg from USD 0.26/kg in W36, with a 36% MoM rise. This sharp price increase is due to a reduction in oversupply and a gradual tightening of the market, which has alleviated some of the downward pressure seen in previous weeks. However, despite this recent uptick, prices have fallen by 19.05% YoY compared to USD 0.42/kg in W37 2023. The YoY decline reflects the lingering impact of a large harvest from the previous season, which has maintained a higher overall supply and kept prices lower than last year.

United States

In the US, orange prices increased by 2.75% WoW to USD 1.87/kg in W37, up from USD 1.82/kg in W36. This rise is accompanied by a 7.47% MoM increase and a 36.50% YoY surge. The continued price escalation is mainly due to ongoing concerns about the spread of HLB disease, which has increased production costs and reduced supply. Additional expenses related to disease management, including quarantine measures and pest control efforts by the California Department of Food and Agriculture (CDFA), contribute to the upward pressure on prices.

3. Actionable Recommendations

Strengthen Collaboration to Improve Citrus Production in Veracruz

Orange farmers, the academe, and government bodies must enhance collaboration to address the dramatic drop in orange production in Veracruz due to droughts and yellow dragon disease. They should implement targeted disease management strategies, such as integrated pest management and disease-resistant varieties. To further adapt to the challenging climate, they must invest in drought-resistant crops bred to withstand severe dry conditions and advanced irrigation systems, such as drip irrigation and soil moisture sensors, to optimize water use. This approach will help recover citrus yields and ensure the long-term sustainability of the region's orange industry.

Implement Supply Adjustment Measures to Manage Price Volatility

To address the recent price increase for oranges in Brazil, driven by a drop in production and supply issues, citrus producers should optimize inventory management and adjust harvest schedules. By carefully managing current inventory levels and adjusting harvest timings based on the revised production forecast, orange producers can better align supply with market demand. This approach will help stabilize prices and reduce the impact of the severe drought and high temperatures on the market. Additionally, exploring alternative sourcing strategies can further mitigate price volatility.

Prepare for Increased Demand in California Orange Exports

California orange exporters should prepare for the upcoming 2024/25 season by increasing production and optimizing supply chain operations. With extreme heat and thrips damage impacting the current season, there is optimism for improved quality and larger sizes in the next season. Exporters should focus on enhancing production efficiency and streamlining supply chain logistics to capitalize on the anticipated boost in availability and strong demand in price-sensitive markets like Mexico, Costa Rica, and El Salvador. This approach will ensure timely delivery and competitive pricing, strengthening their market position despite competition from lower-priced Mexican oranges.

Sources: Tridge, Freshplaza, MXFruit, Reuters, Elbuentono, Portaldelcampo, Fundecitrus, Revistamercados, Mercados, Portal Do Agronegocio