All major citrus growing regions in Florida were indeed affected by Hurricane Irma which devastated our state for more than 24 hours September 10th and 11th. At this time there are no precise reports giving an accurate measure of the full impact. Please keep this in mind as you read and hear those that are surfacing.

RC Treatt continues to provide contingency for the US operation should it be required, however the good news for our customers is that Treatt USA are already back up and running. We are also happy to remind our customers that we source raw materials from all over the globe, and operate in this manner to provide the best possible quality and service, continuity of supply, and risk mitigation.

Unfortunately we cannot yet say with any certainty exactly how much of Florida’s orange and grapefruit crops were lost or how many trees have been damaged. We do know there will be a reduction in the crop, which was previously forecasted to increase for the first time in five years. We have heard losses for oranges as low as 30 % and up to 80 %. Only time will tell. We anticipate the crop now being somewhere in the neighborhood of 40-55 million boxes, a huge decrease from last season’s 68.7 million boxes.

While we certainly appreciate everyone’s anxiety over the crops, we also recognize that our Florida growers have not only groves to rebuild but also lives, and we offer heartfelt sympathies to these men and women who have an unbelievable amount of drive and resilience.

We must also consider that Mexico was hit by not only Hurricane Katia, which will have an impact on both grapefruit and orange crops, but also with an incredibly strong earthquake measuring 8.2 on the Richter scale. Damages from these natural disasters are also still being assessed.

Confirming initial expectations of Cepea, ending stocks of orange juice at processors from São Paulo State should be recovered by the end of the 2017/18 season (June/18), but the levels stored continue to indicate low orange juice supply.

Data from CitrusBR (Brazilian Association of Citrus Exporters) indicate that inventories at Cutrale, Citrosuco and Louis Dreyfus should total only 207.6 thousand tons of frozen concentrate orange juice (FCOJ) Equivalent on June 30, 2018. That amount, however, is 93 % higher than the 107 thousand tons observed at the end of the 2016/17 season.

This increase of inventory is based on crushing forecasts of CitrusBR at 314.47 million boxes, with an average processing yield at 267.33 boxes to produce one ton of FCOJ Equivalent, and sales (domestic and international) at 1.107 million tons of the product. All these items are forecast to recover from the scenario observed last season (2016/17); however, yield should remain at levels below the historical average.

A significant recovery will only be possible due to a large crop in the citrus belt (São Paulo and Triângulo Mineiro), forecast by Fundecitrus (Citrus Defense Fund) at 364.47 million boxes. However, the possibility of replenishments of inventories (greater than 200 thousand tons) in June 2019 will depend, once again, on a large production at the citrus belt in the 2018/19 season. According to Cepea data, if sales, yield and volume from other states continue stable, processors will need to crush around 290 million boxes in 2018/19, meaning a crop in the citrus belt from SP + Triângulo Mineiro similar or greater than 340 million boxes (in natura consumption forecast at 50 million).

The replenishment of inventories at processors from São Paulo is a relief in light of the very low supply in the previous crop, when the Brazilian exportations of FCOJ Equivalent dropped 17 %. Therefore, forecasts for a higher orange juice supply may increase the Brazilian exportations in the 2017/18 season.

DOMESTIC MARKET – Pear orange quotes increased in the domestic market in the first fortnight of August, due to higher demand for the in natura fruit (favored by warmer weather in SP and the return of school classes) and crushing intensification in processors from São Paulo, which gradually reduced the volume available in the market. Between August 1 and 15, pear orange quotes averaged 16.54 BRL per 40.8-kilo box, on tree, 1.4 % up compared to the first fortnight of July (3-14).

Close to 300 representatives of the international apple and pear sector met at the Prognosfruit Conference on 10th August 2017 in Lleida, Spain. During the Prognosfruit conference, the World Apple and Pear Association (WAPA), released the 2017 European apple and pear crop estimates. The 2017 apple production in the EU will decrease by 21 % compared to last year’s crop, standing at 9.343.000 T. The pear crop is predicted by European growers to be relatively stable at 2.148.000 T and to only decrease by 1 % compared to 2016.

The figures released at Prognosfruit leave room for careful optimism for the coming season, with a more balanced situation between supply and demand after the last three years, which registered in particular for apples, a peak crop.

The 2017 European forecast for apple is 9.343.000 T, which is 21 % down to last year’s figure, and 23 % less than the average of the last three years. This figure is based on the estimates from the top 21 Member States of the EU-28, having contributed to this report. In regard to varieties, Golden Delicious production will decrease by 18 % to 1.982.000 T. Gala is also estimated to decrease, by 3 % to 1.276.000 T. Idared will be down by 30 % to 679.000 T, while the production of Red Delicious is estimated at 576.000 T, which is a 9 % decrease compared to last year. Also, other new varieties (i.e. club varieties) will decrease by 15 %, from 157.000 T to 133.000 T. A particular point of concern this year was the intense frost during blossoming, and the drought during spring and early summer. In other non-EU Northern Hemisphere countries, significant decreases were noted: Russia (-37 %), Mexico (-30 %), Switzerland (-21 %), Belarus (-19 %), Ukraine (-10 %), and Canada (-5 %), while the USA is expecting a stable crop around 4.800.000 T. Additionally, China is expecting a further growth by 3 % compared to last year’s crop of 43.800.00 T. The US apple forecast will be updated after the US Apple Outlook conference in Chicago 24-25 August.

More specifically about the EU apple market, it is to be reminded that, over the last years, the market suffered the consequences of the Russian embargo and were more recently confronted by lower export volumes to North African markets. The new crop could therefore lead to a better balance of the supply. The market will start clearing stocks for most varieties, with expected good hand over from the Southern Hemisphere. Overall, the new season is due to start with two weeks earlier than average. There might be different market trends for each of the varieties, with better balance for Gala and more reduced volume for Golden or Jonagold, and Elstar. In the coming weeks, growers will closely monitor the quality, which could still influence the balance of the market between fruit destined for the fresh market and the fruit destined for processing. It is currently forecasted that ca 6.200.000 T will be moving on the fresh market and 3.200.000 T for processing.

In regard to pear, the total European pear crop in 2017 is estimated to reach 2.148.000 T, which is 1 % lower than last year, and 8 % less compared to the average of the last three years. This figure relates to the production of the top 19 Member States of the EU-28 growing pears and contributing with their data to this report. In 2017, the Conference variety will see its production decrease by 7 % to 844.000 T, and William BC will decrease by 6 % to 247.000 T. Abate F, on the other hand, is estimated to increase by 12 % to reach 332.000 T. Elsewhere in the Northern Hemisphere, crops increased, compared to last year, in Turkey (+11 %), Canada (+20 %) and Moldova (+50 %), whilst decreases are estimated for the production in Russia (-37 %), Belarus (-20 %), Switzerland (-34 %), and the US (-3 %).

In regard to the specifics, the market will be experiencing different trends between the Southern and Northern EU markets, reflected as well in higher volume of Abate and Rocha, while the Conference pear will be down. The pear season will start with less pressure than last year. There has been some positive development in the exports to new markets during the last years, but the effects of the Russian embargo will still be felt by the growers.

Overall, the European apple and pear sector stays committed to the best quality produce to be placed on the market and continues to adapt the orchards to varieties with taste and crunchiness adapted to evolving consumers’ expectations.

WAPA will continue to monitor the development of the Northern and Southern Hemisphere crop, and will issue updates whenever feasible and necessary.

The smaller volume of oranges allocated to processors in the 2016/17 season (due to one of the smallest crops in the citrus belt, with only 245.3 million boxes of 40.8 kilos) has affected not only orange juice exportations, but shipments of orange by-products as well. While in the 2015/16 season exportations of these products increased, shipments of all items from the crop that officially ended in June (July/16 to June/17) had the worst individual performance, mainly in terms of volume.

The revenue from by-products exportations in the 2016/17 season, however, was 390.08 million USD, 22 % up compared to the previous crop (Secex). Except for lemon and lime oil, prices of all the other by-products increased significantly in the season. These exportations include citrus pulp pellets, citrus terpenic, D-limonene, lemon, lime and orange essential oils and other citrus products.

As for the individual performance, only two by-products had higher shipments compared to the previous season: D-limonene and lemon essential oil. On the other hand, the volume of citrus pulp pellets exported decreased a staggering 68 %, totaling 68.6 thousand tons.

FCOJ – Exportations of frozen concentrate orange juice equivalent (FCOJ Equivalent) decreased 17 % compared to the previous crop. From July/16 to June/17, exportations of FCOJ Equivalent totaled 950.92 thousand tons, according to Secex. Revenue totaled 1.73 billion USD, 6 % down compared to the same period last crop. In Real, revenue totaled 5.57 billion BRL, 18 % down in the same comparison.

Brazilian exportations should increase next season, based on the partial recovery of the orange juice inventories.

BRAZILIAN MARKET – Demand for in natura oranges weakened in the second week of July, due to the mild temperatures in São Paulo State and the school vacations period. Thus, pear orange quotes averaged 16.30 BRL per 40.8-kilo box (on tree) between July 3 and 14, 7.1 % down compared to the same period in June.

Purchases from processors were limited as well. Receiving previously purchased fruits, processors from SP State did not trade much in the spot in the first fortnight of July, mainly due to maturation out of the ideal period for some fruits, mainly the mid-season ones. Thus, bidding prices continued between 16.00 BRL and 18.00 BRL per 40.8-kilo box, harvested and delivered at the processor, and between 18.00 BRL and 20.00 BRL per box for the mid-season fruits.