Brazil orange harvest down 15%

Commodities , Food Jan 22, 2013 No Comments

OrangeThe Brazilian orange harvest will be completed soon. Started last July, it should finish at the end of January, with a declining production. A Jan. 8 report from the Center for Advanced Studies on Applied Economics (CEPEA) in Sao Paulo, which monitors Brazilian agriculture, put the 2012-13 orange crop at 364 million boxes, a 15 percent decline from the previous season. Despite the smaller crop, Brazilian farm prices fell.

The 2012-2013 marketing year, which ends on June 30, was marked by storage issues. Due to a great harvest in 2011-2012 and decreased demand on the international markets, storage spaces have not been released. Last year, the United States had blocked imports of oranges from Brazil, after finding traces of fungicide.

Lacking warehousing space to store their oranges, many producers have been not been able to complete their harvest. So, the equivalent of 40 million boxes of oranges (1.8 million tonnes) were left on the trees this year. As a consequence, the 2012-2013 campaign has been characterized by lower selling prices in Brazil.

In addition, for the 2013/14 crop (early varieties will be ready for harvesting from the second quarter of the year onwards), there are no perspectives of prices or schedule to start crushing. Initially, players expected Consecitrus (Council of Orange Producers and Orange Juice Industries) to start operating. However, in late November last year, Cade (Administrative Council for Economic Defense) did not authorize the industry to close contracts based on Consecitrus in the upcoming season. Cade may not approve the current proposal considering that producers do not have yet an ideal representation. Therefore, it is still uncertain if Consecitrus will be implemented in the 2013/14 season.

In this scenario, independent producers (without long-term contracts) should await purchase proposals from the industry. There are rumors that some processors are already interested in closing contracts for 2013/14, but without defined prices. However, producers surveyed by Cepea expect quotes to be more profitable compared to the 2012/13 crop, characterized by historically low prices.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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