ARGENTINA
Lemon Oil Harvest: May - July
As reported previously, Argentina’s 2019/2020 fresh fruit production is estimated to be 1.6 million MT, i.e. 11% lower than the previous crop. This is primarily due to lower cyclical production combined with unfavourable weather conditions, especially high temperatures and the lack of rain in January, February and March. This resulted in a delay in the maturing of lemons and therefore smaller fruits, reducing weight and crop size. This reduction in crop size, together with the newly opened export markets for fresh fruit, will result in a reduction of fruit for processing of approximately 18% to an estimated 1.15 million MT. Annual fresh fruit exports are predicted to grow by 25% to 300,000 MT encouraged by the growth of new markets in India, Vietnam and China, although the EU still takes over two-thirds of fresh exports.
There is no doubt that the outbreak of COVID-19 will have both positive and negative impacts on the sector. The increased demand for vitamin C sources around the world could be beneficial for lemon producers in Argentina. However, supplying the demand could represent a problem in terms of fruit picking and processing due to the social distancing that pickers and processors may have to follow, delaying both the harvesting and processing of fruits. Moreover, the concentration of Argentinian lemon production in the Tucumán region could be a positive, neutral or negative factor depending on the relative regional impact of COVID-19 and when cases peak in Argentina. Nevertheless, the COVID–19 pandemic has added further to the problems being faced by the Argentine economy, which was already in recession and facing reduced international competitiveness as well as major structural problems that have been pushing up production costs.
On a positive note, despite COVID-19, it is hoped that the current season will be less challenging than the previous year. In 2018/2019, heavy rains led to a delay in harvesting while an increase in the global supply of lemons combined with reduced global demand for lemon oil led to a price collapse. As a result, the incomes of growers and processors were substantially reduced and an estimated 130,000 to 140,000 MT of fruit was discarded because it did not meet export standards and was not processed. The gradual increase in prices expected during the 2019/2020 year should create a more favourable market opportunity for Argentinian producers.
BRAZIL
Brazil’s total orange production for the new 2020/2021 crop, starting in July, is expected to be 22% lower than the current crop ending in June 2020. It is estimated at around 370 million boxes (15.1 million MT) compared with the final forecast for the current season of 475 million boxes (19.4 million MT) for all production regions in Brazil. This estimated decrease is mainly a result of alternate bearing (discussed below) and weather-related problems such as warmer than usual temperatures and below average rainfall after the first two blossoms and fruit set in São Paulo State, the dominant growing area.
The latest Fundecitrus report released in early May confirms a reduction of 25.6% for the 2020/2021 crop to 287.76 compared to the previous crop of 386.79 million boxes. This forecast is for the São Paulo and West-South west Minas Gerais citrus belt, which accounts for approximately three-quarters of Brazilian production. The expected 287.76 million boxes include:
· 45.53 million boxes of Hamlin, Westin and Rubi
· 13.05 million boxes of Valencia Americana, Seleta and Pineapple
· 87.04 million boxes of Pera Rio
· 106.16 million boxes of Valencia and Valencia Folha Murcha
· 35.98 million boxes of Natal
Some 85% of production will come from the first and second blooms, while 12% and 8%, respectively, will come from the third and fourth blooms.
Apart from the adverse weather conditions affecting the crop, this season is also experiencing a significant reduction in the number of fruits per trees compared to that in the previous crop. This is due to the large production in the last season which increased the consumption of nutrient reserves in plants. As a result of this phenomenon, known as alternate bearing, average yield is estimated to drop to 790 boxes per hectare and 1.65 boxes per tree, compared to 1,045 boxes per hectare and 2.22 boxes per tree last season. The average drop rate of oranges is projected to be 17%, slightly higher than previous seasons. This projected increase is mainly due to the increased intensity of citrus greening.
With this reduction in total orange production, fresh fruit consumption is predicted to fall while the amount of oranges for processing is also expected to drop 95 million boxes (3.9 million MT) to 254 million boxes (10.4 million MT). With fewer oranges for processing then production of orange oil, terpenes and juice will decline. Production of CPOO (cold pressed orange oil) is predicted to fall from 42,000 MT in 2019/2020 to 31,000 MT in 2020/2021 while CPOO exports are forecast to rise 31,000 MT to 41,000 MT during the same period, leading to a significant reduction in inventories. Similarly, during the period, d’limonene production is forecast to fall from 34,000 MT to 25,000 MT while d’limonene exports are predicted to fall by a similar amount from 34,000 MT to 24,000 MT. On the positive side, this increase in demand, together with the expected lower crop, is likely to push prices up after the significant decrease in 2019 when the industry experienced record historical low prices for orange oil and terpenes.
In addition, processing may be delayed by two to three months and yields and quality affected by multi-blossoming. Orange juice production is expected to drop 25% to around 24.3 million boxes (992,000 MT). Even though exports of orange juice are forecasted 27% lower, Brazil remains the largest producer and is expected to account for over three-quarters of global exports with slightly higher consumption and stocks.
The outbreak of COVID-19 is generating both positive and negative impacts on the industry with an outcome hard to predict. Global demand for fresh oranges, for example, has increased due to their high content of vitamin C, but has also decreased due to restaurants, schools and food services being closed. Meanwhile labour availability throughout the supply chain is likely to fall as people are affected by the virus and possible lockdown. In addition, there are some reported issues relating to plant maintenance and the availability of spare parts and equipment. At the national level, the volatility of the Brazilian real combined with political instability are adding to the sector’s problems
ITALY
News from this crop is rather upsetting. Farmers were already struggling with a meagre crop due to erratic weather conditions, clocking a production of below minus 80% of usual output. With the coronavirus spreading fast, there is a dearth of workers for harvesting. Though everyone was waiting for the lockdown to re-open, it is next to impossible to revive the blood orange crop.
MEXICO
Lime Oil Harvest: May - August
The two best known varieties of limes are Citrus aurantifolia, normally called Key lime, and Citrus latifolia, normally called Persian lime. About 52% of lime production in Mexico is Persian and 48% is the Key variety and approximately 15% to 20% of the total Mexican lime production is processed to produce lime oil. The primary product of Key lime is the distilled oil for use in beverages, while for Persian lime it is the cold expressed oil and juice.
Mexico’s 2019-2020 lime production is forecast to increase slightly to 2.422 million tonnes thanks to improved yields. An estimated 395,000 MT will be processed. While some drought conditions during late 2019 affected the main crop from Michoacán, where the production season has already finished in February, leading to a shortfall in fruit volumes of Key limes and firm prices, prices are expected to soften around the peak of the Colima season which started in April and will continue until September/October. So, at the moment Key lime oil supply is tight but should improve by June with fruit volumes for processing returning to normal levels. While the beginning of 2020 has been good for processors with an increased demand of Key lime oil, the fresh fruit market has also continued to be firm. However, the outbreak of COVID-19 represents a challenge for the fresh fruit market since restaurants, bars and food services are closed due to the lockdown in most countries.
As a result of shortfalls in 2019 and smaller fruits than the previous year, fruit prices for the Persian variety were high. As a consequence, in order to have expressed oil to offer in the market, this year processors have been processing what they could from smaller bloom. Therefore, there are challenges ahead but there is positive expectation of better weather resulting in multiple blooms.
SOUTH AFRICA
Grapefruit Oil Harvest: December - April
Grapefruit production has escalated by 8% to touch 420,000 MT, with an estimated 124,000 MT processed. The weather has been good for the plants, consumption has increased significantly, and demand is to be driven by the higher supplies.
Lemon Oil Harvest: July - September
With the weather being a strong ally, the South Africa lemon forecast has increased by 6% to a high of 530,000 MT of which an estimated 130,000 MT will be processed. Another key contributor is the full blooming of existing plants and the increased area of cultivation added last year.
Good weather, additional areas of plantation, and robust demand augurs well for the South African orange crop. Production estimates are 1.6 million MT, a marginal climb of 4%. Accounting for around a quarter of the world’s trade, exports are forecast to be at 1.3 million MT.
USA
California dominates US lemon production, with the USDA forecasting Californian production in 2019-2020 of 21 million boxes out of US production of 22.9 million boxes, Arizona accounting for the remainder. This represents a 9% fall in output compared with 2018-2019.
The unique growing conditions of the Ventura coastal region of California have resulted in producing lemons of a distinctive size that primarily supplies the food service sector. The USA also imports increasing quantities of lemons, which in 2019-2020 were predicted to slightly exceed domestic production. Traditionally over half of production goes to the food service sector but this has been badly impacted by the COVID-19 pandemic and in April lemon growers were reported to be losing between $4 – $5 million per week as food sector sales fell considerably. More lemons will now be available for processing, which in recent years were approximately equal to a quarter of domestic production.
In early April the citrus growers of California, Florida and Texas requested support from the USDA arguing “We have reason to believe that based upon damages to date that the immediate COVID-19 impact to certain varieties of citrus will be over $200 million dollars. The citrus industry impacts have varied greatly by region and variety. To date, the biggest challenges we are seeing across the industry are due the shutdown of schools and restaurants. Additional movement in the retail sector have not compensated for losses in food service for lemons, grapefruit juice, and most specialty varieties, and it is too early to tell what the net impact will be for orange juice.”
Orange Oil Harvest: February - May
Total USA orange production in 2019-20 is expected to be 120.45 million boxes. If realised, this will be around 4% less than last season’s final production. The forecast for non-Valencia oranges (early, midseason and navel varieties) in all USA production regions is 71.45 million boxes. This breaks down with Florida’s production at 29.45 million boxes, with its harvest over for this season, California’s production remaining at 40 million boxes and Texas dropping to 1.8 million boxes. Regarding Valencia oranges, the forecast is a total of 49 million boxes, with Florida dropping 1.45 million boxes from the previous season to 40 million boxes, California remaining at 8.5 million boxes and Texas decreasing from 610,000 to 500,000 boxes.
With regards to fruit size, non-Valencia oranges remain unchanged from last report, requiring 316 pieces to fill a 90-pound box. Valencia oranges’ size, however, is considerably below average, requiring 252 pieces to fill a 90-pound box. Moreover, final droppage, at 30%, is close to the maximum.
Due to the outbreak of COVID-19 the demand for fresh orange and orange juice by consumers has increased because of their high vitamin C content, being a way of trying to stay healthy during the current pandemic.
According to the Florida Department of Citrus (FDOC) Economic and Market Research Department, USA orange juice sales increased by 46 percent for the four-week period ending April 11. However, according to the citrus growers’ associations in the three major states, speciality varieties such as blood oranges, Cara navels, Valencia oranges and gold nuggets have suffered reduced sales due to COVID-19. While demand initially increased in the retail sector, the shutdown of restaurants and schools has impacted negatively. As discussed above the US citrus growers have requested support from the government.
