Citrus Semi-annual 2012

An Expert's View about Citrus Fruits in Brazil

Posted on: 28 Jun 2012

The Agricultural Trade Office (ATO)/Sao Paulo projects the total Brazilian crop for MY 2011/12 (July-June), at 467 million 40.8 kg boxes (Mbx).

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 05/30/2012 GAIN Report Number: BR12007 Brazil Citrus Semi-annual 2012 Approved By: Frederick Giles, DirectorAgricultural Trade Office, Sao Paulo Prepared By: Sergio Barros, Agricultural Specialist Report Highlights: In U.S. MY 2011/12, the Brazilian orange crop is estimated at 467 MBx, down 63 MBx from U.S. MY 2010/11. The Sao Paulo and western Minas Gerais commercial areas should produce 365 MBx. Total FCOJ production (65 Brix equivalent) for U.S. MY 2011/12 is projected at 1.26 mmt (65 Brix), down 215,000 compared to the previous season. FCOJ equivalent exports for MY 2011/12 are projected at 1.23 mmt (65 Brix), up 20,000 mt compared to the previous marketing year. There is a one year lag between the Brazilian (BR) Marketing Year (MY) and the U.S. Marketing year (MY). For example, BR MY 2012/2013 is equivalent to U.S. MY 2011/12. As such and to ensure data continuity, the current Brazilian MY 2012/13 will be referred to as U.S. MY 2011/12 throughout this report. Commodities: Oranges, Fresh Production: PS&D Tables The following tables provide revised data for Sao Paulo and total Brazilian fresh orange production, supply and demand (PS&D) for Brazilian (BR) marketing years (MY) 2010/11, 2011/12 and MY 2012/13 (July-June), which are equivalent to U.S. MY 2009/10, 2010/11, 2011/12, respectively. Note: There is a one year lag between the Brazilian marketing year and the U.S. marketing year. For example, BR MY 2012/2013 is equivalent to U.S. MY 2011/12. As such and to ensure data continuity, the current Brazilian MY 2012/13 will be referred as U.S. MY 2011/12 throughout this report. Brazil: Fresh Oranges PS&D (Jul-Jun) (1,000 ha, million trees & million 40.8 kg boxes) Item/U.S. Marketing Year US MY 09/10 US MY 10/11 US MY 11/12 Item/Brazilian Marketing Year BR 2010/11 BR 2011/12 BR 2012/13 Area Planted 800 810 808 Sao Paulo 600 610 608 Others 200 200 200 Area Harvested 724.6 734.6 732.6 Sao Paulo 532 542 540 Others 192.6 192.6 192.6 Bearing Trees 219 223 222 Sao Paulo 167 171 170 Others 52 52 52 Non-Bearing Trees 40 40 40 Sao Paulo 36 36 36 Others 4 4 4 Total Trees 259 263 262 Total Production 378 530 467 Sao Paulo 275 420 365 Others 103 110 102 Exports 1 1 1 Sao Paulo 1 1 1 Domestic Consumption 118 149 152 Delivered to processors 259 380 314 Sao Paulo (FCOJ + NFC exports) 247 360 298 Others 12 20 16 General The Agricultural Trade Office (ATO)/Sao Paulo projects the total Brazilian crop for MY 2011/12 (July-June), at 467 million 40.8 kg boxes (Mbx), down 63 MBx compared to the previous marketing year. The commercial area of the state of Sao Paulo and the western part of Minas Gerais are expected to produce 365 Mbx, down 55 MBx from the previous crop (420 MBx). Note that this figure takes into account the four major varieties of citrus used for processing orange juice (Hamlin, Pera Rio, Natal and Valencia) plus a limited volume (12 million boxes) of other citrus varieties such as Lima, Bahia, Murcorte and Poncan which are used for processing juice. The likely drop in production for MY 2011/12 in the Sao Paulo and Minas Gerais commercial areas is mostly related to the off-year of the biennial cycle for some orange varieties. Note that good citrus prices during last season contributed to good crop management, therefore, partially offsetting the expected drop in the crop size. Approximately 70 percent of the crop should result from a large second blossoming and the bulk of harvest should start in July. Production from other states is projected at 102 MBx, according to updated information provided by the Brazilian Geography and Statistics Institute (IBGE). The Sao Paulo and the western Minas Gerais production estimate for MY 2010/11 has been revised to 420 MBx, up 20 MBx from the previous number, based on updated industry information. According to industry, the size of the fruit was larger than previously expected and the harvest season extended further than initially predicted. The National Supply Company (CONAB) at the Ministry of Agriculture, Livestock and Supply (MAPA) has not released the first orange crop survey for the 2012/13 crop. In May 2012, the Brazilian Association of Citrus Exporters (CitrusBR) announced that the 2012/13 orange crop in the citrus belt of the state of Sao Paulo and Minas Gerais is projected at 364 million 40.8 kg boxes, down 64 MBx compared to the revised figure for 2011/12 (428 MBx). CitrusBr reports that the projection was individually made by each associate and the final result was consolidated by an independent audit company. Area, Tree Inventory and Yields In MY 2011/12, the Brazilian citrus yield is estimated at 2.1 boxes/tree, down 12 percent relative to MY 20010/11 (2.37 boxes/tree). The Sao Paulo commercial grove yield for MY 2011/12 is projected at 2.14 boxes/tree, down 13 percent from the previous crop (2.46 boxes/tree). Total citrus area for MY 2011/12 is estimated at 808,000 hectares (ha), similar to MY 2010/11 (810,000 ha). Total Brazilian tree inventory for MY 2011/12 is estimated at 262 million trees. Tree inventory in the Sao Paulo and Minas Gerais commercial areas are estimated at 206 million trees (170 million bearing and 36 million non-bearing trees). Sao Paulo is the only state that compiles data on trees planted and tree inventory. ATO/Sao Paulo estimates report stable areas and tree population for “Other” states based on uniform production figures provided by IBGE. Producers’ Prices The Orange Index price series published by the University of Sao Paulo’s College of Agriculture “Luiz de Queiroz” (ESALQ) for the fresh domestic market in the state of Sao Paulo follows. The series tracks orange prices from September 1994. Prices for the fresh market are for fruit on the tree. Orange Prices received by Producers in the Domestic Market (Pera Variety, average prices in Reais - R$, 40.8 kg box, fruits on the tree). Month 2007 2008 2009 2010 2011 2012 Jan 15,08 15,38 10,00 10,89 22,86 8,43 Feb 17,10 16,95 9,82 17,22 25,33 8,41 Mar 19,02 17,03 11,13 19,17 26,32 12,72 Apr 16,60 14,65 10,46 16,50 19,62 12,82 May 13,82 12,04 9,13 14,49 14,78 Jun 11,28 11,39 7,66 15,13 12,17 Jul 10,98 11,38 6,48 14,90 11,05 Aug 11,06 11,01 6,47 14,94 10,15 Sep 10,48 10,64 7,04 16,83 9,75 Oct 11,48 10,83 7,58 19,17 10,20 Nov 13,45 10,24 8,48 19,93 9,92 Dec 14,10 9,70 8,94 20,15 9,13 Source : Center on Advanced Studies on Applied Economics (CEPEA)/ESALQ. The vast majority of growers have not set contracts with the juice processors for the upcoming crop. Citrus growers have been under pressure due to the beginning of the harvest for the early season varieties, especially Hamlim. According to post contacts, orange juice processors have been slow to purchase a good part of the Hamlim production, which caused prices to drop to R$ 7.00/box in the last couple of weeks. Citrus growers have requested that the Brazilian government, through the Ministry of Agriculture, Livestock and Supply (MAPA) mediate a new agreement to set a reference price for the 2012/13 crop and also double the resources used in the Special Credit Line (LEC) to finance storage for juice industry suppliers. Total funds available in 2011 were R$ 300 million. The proposals have been under discussion. In mid-April, representatives of the Brazilian Rural Society (SRB) and the Brazilian Association of Citrus Exporters and CitrusBR created the Brazilian Council of Orange Producers and Orange Juice Processors (Consecitrus). The Consecitrus statute will set the reference price for oranges in the future taking into account orange juice and byproduct prices, production costs to grow oranges and process orange juice, technical coefficients of agricultural and industrial efficiency along the production chain, and investments made by the citrus chain. However, Consecitrus will have no influence on contracts for the upcoming season. Consumption: Total Brazilian orange consumption for MY 2011/12, is estimated at 152 MBx, slightly above MY 2010/11 (149 MBx). These figures include actual domestic consumption plus losses from natural drop, harvesting, transportation and packing. Fruit delivered to processors for “not from concentrate (NFC)” orange production for the domestic market is also included in these figures. Domestic consumption estimates are taken as the difference between production and the volume of oranges delivered to processors for FCOJ and NFC production for exports. Trade: The total fresh orange export estimate for MY 2011/12 is estimated at 1 Mbx, similar to the previous crop. The table below shows official fresh orange exports (NCM 0805.10.00) by country of destination, according to the Secretariat of Foreign Trade (SECEX). Brazilian Fresh Orange Exports (MT and US$ 1,000 FOB) Jan-Dec2011 July2010-April2011 July2011-April2012 Country Value Quantity Value Quantity Value Quantity Netherlands 5,092 10,772 4,167 9,103 4,324 8,997 Spain 4,201 8,363 5,061 12,306 4,201 8,363 United Kingdom 2,801 5,942 1,746 4,906 2,585 5,557 Portugal 1,628 3,205 1,722 3,764 1,628 3,205 Saudi Arabia 653 1,319 489 1,017 158 417 Russia 363 893 67 149 336 844 Thailand 331 7 359 8 69 2 Ireland 254 549 455 1,220 254 549 Italy 248 469 0 0 248 469 Denmark 238 434 0 0 167 304 Others 557 1,356 246 706 638 3,186 Total 16,364 33,311 14,312 33,178 14,607 31,892 Source : Brazilian Foreign Trade Secretariat (SECEX), NCM 0805.10.00 Production, Supply and Demand Data Statistics: PS&D Orange, Fresh - Official Oranges, Fresh Bra US MY 2009/2010 US MY 2010/2011 US MY 2011/2012 zil Market Year Begin: Market Year Begin: Market Year Begin: Jul 2010 Jul 2011 Jul 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 800,000 800,000 810,000 810,000 0 808,000 Area Harvested 724,600 724,600 734,600 734,600 0 732,600 Bearing Trees 219,000 219,000 223,000 223,000 0 222,000 Non-Bearing 40,000 40,000 40,000 40,000 0 40,000 Trees Total No. Of 259,000 259,000 263,000 263,000 0 262,000 Trees Production 15,422 15,422 20,645 21,624 18,155 19,053 Imports 0 0 0 0 0 Total Supply 15,422 15,422 20,645 21,624 18,155 19,053 Exports 41 41 41 41 41 41 Fresh Dom. 4,814 4,814 6,365 6,079 5,384 6,201 Consumption For Processing 10,567 10,567 14,239 15,504 12,730 12,811 Total 15,422 15,422 20,645 21,624 18,155 19,053 Distribution HECTARES, 1000 TREES, 1000 MT Commodities: Orange Juice Production: PS&D Tables The following tables provide revised data for Sao Paulo and total Brazilian orange juice production, supply and demand (PS&D) for Brazilian marketing years 2010/11, 2011/12 and MY 2012/13 (July-June), which are equivalent to U.S. MY 2009/10, 2010/11 and 2011/12, respectively. The tables include Not From Concentrate (NFC) production for exports converted to Frozen Concentrate Orange Juice (FCOJ) 65 Brix equivalent using the following conversion factor: 1 metric ton of FCOJ 65 Brix equals 5.6 metric tons of NFC 11.6 Brix. Brazil: FCOJ PS&D (Jul-Jun) (Million 40.8 kg boxes, TMT, 65 degrees brix) Item/U.S. Marketing Year US MY 09/10 US MY 10/11 US MY 11/12 Item/Brazilian Marketing Year BR 2010/11 BR 2011/12 BR 2012/13 Delivered to Processors 259 380 314 Sao Paulo (FCOJ + NFC exports) 247 360 298 Others 12 20 16 Beginning Stocks * 128 15 240 Total Production 1095 1475 1260 Sao Paulo FCOJ 870 1205 1000 Sao Paulo NFC (FCOJ equiv) 185 190 195 Others 40 80 65 Total Supply 1223 1490 1500 Exports 1173 1210 1230 Sao Paulo FCOJ 948 940 970 Sao Paulo NFC (FCOJ equiv) 185 190 195 Others FCOJ 40 80 65 Domestic Consumption 35 40 42 Ending Stocks 15 240 228 Total Distribution 1223 1490 1500 * Sao Paulo FCOJ equiv stocks only. Production General ATO/Sao Paulo estimates total Brazilian FCOJ 65 Brix equivalent production for MY 2011/12 (July- June) at 1.26 million metric ton (mmt), down 215,000 metric tons from the previous season, due to expected lower availability of fruits for processing. The Sao Paulo industry is projected to process 298 MBx of oranges for FCOJ and NFC production, yielding 1.195 mmt of juice (1 mmt and 195,000 metric tons of FCOJ and NFC, respectively). Other producing states are expected to deliver 16 MBx for processing. Processing plants began operations in June, but the bulk of processing should start in July. ATO/Sao Paulo has revised total Brazilian FCOJ 65 Brix equivalent production estimate for MY 2010/11 to 1.475 mmt, up 380,000 metric tons relative to the previous marketing year, due to higher availability of fruit for processing. The Sao Paulo industry has crushed 360 MBx of oranges for FCOJ and NFC production, while other states contributed 20 MBx. Note that orange juice figures include NFC production for exports converted to FCOJ 65 Brix equivalent. There is no official estimate for NFC supply and demand in Brazil. Consumption: The ATO/Sao Paulo estimate for FCOJ domestic consumption for MY 2011/12 is 42,000 mt, 65 Brix, slightly up from MY 2010/11 (40,000 mt, 65 Brix). Trade: Total Brazilian FCOJ exports for MY 2011/12 are projected at 1.23 mmt(65 Brix), up 20,000 metric tons compared to MY 2010/11 (1.21 mmt), due to relatively stable world demand for orange juice. The Sao Paulo industry is expected to contribute 970 mmt of FCOJ (65 Brix) and 195,000 mt of NFC (converted to FCOJ equivalent), whereas other FCOJ producing states are expected to export 65,000 mt. Major destinations include Europe and the United States. The tables below show official FCOJ exports (NCM 2009.11.00, NCM 2009.12.00 and 2009.19.00) by country of destination, according to the Secretariat of Foreign Trade (SECEX). Note that the “Others” category includes both FCOJ and NFC exports. Post considers the average monthly price by country of destination for the “Others” category as a criterion to distinguish between FCOJ and NFC exports. Brazilian Frozen Concentrated / Non-Concentrated Orange Juice Exports (MT and US$ 1,000 FOB) Jan-Dec2011 July2010-April2011 July2011-April2012 Country Value Quantity Value Quantity Value Quantity Belgium 260,963 137,598 200,599 127,925 256,457 128,992 USA 152,768 77,817 47,378 27,830 136,668 69,297 Japan 133,645 62,712 110,813 60,860 119,253 51,278 China 113,886 53,948 94,423 55,529 82,433 36,627 Netherlands 74,106 37,266 34,799 21,751 96,018 46,017 South Korea 31,385 15,339 22,147 12,594 17,999 8,121 Switzerland 20,127 10,261 19,070 12,267 38,946 18,939 Israel 13,420 5,953 3,904 2,019 24,451 10,873 Chile 12,447 5,107 9,753 4,432 11,736 4,719 Australia 10,419 5,099 9,789 6,192 12,635 5,251 Others 64,505 29,831 50,617 29,326 68,625 30,203 Total 887,673 440,930 603,293 360,724 865,221 410,317 Source : Brazilian Foreign Trade Secretariat (SECEX), NCM 2009.11.00 Brazilian Orange Juice Exports, Not Frozen and Brix under 20 (MT and US$ 1,000 FOB) Jan-Dec2011 July2010-April2011 July2011-April2012 Country Value Quantity Value Quantity Value Quantity Belgium 191,730 494,491 132,019 390,555 151,259 372,752 Netherlands 124,602 296,785 95,874 228,644 81,124 198,874 USA 96,258 249,501 92,143 258,082 97,182 249,299 Australia 102 139 102 139 0 0 Greece 59 26 0 0 59 26 Japan 45 43 72 76 11 10 China 20 26 0 0 41 52 French Guyana 11 11 9 9 10 10 Paraguay 5 4 2 2 6 5 Morocco 2 2 0 0 0 0 Others 0 0 1,856 5,836 2,655 6,932 Total 412,834 1,041,028 322,077 883,342 332,347 827,960 Source : Brazilian Foreign Trade Secretariat (SECEX), NCM 2009.12.00 Brazilian Orange Juice Exports, Others (MT and US$ 1,000 FOB) Jan-Dec2011 July2010-April2011 July2011-April2012 Country Value Quantity Value Quantity Value Quantity Belgium 506,502 247,671 383,384 236,819 454,984 204,408 Netherlands 303,157 148,883 332,334 167,588 201,479 103,545 USA 95,158 44,349 30,199 19,826 81,171 36,123 United Kingdom 94,474 47,370 73,908 41,539 82,576 39,537 Australia 23,041 11,635 11,716 9,012 16,954 7,029 Japan 18,266 7,705 3,974 2,208 26,416 10,549 Switzerland 16,729 7,858 7,833 4,019 18,770 8,980 Puerto Rico 12,904 6,127 8,085 5,387 10,879 5,033 Ireland 664 374 0 0 1,122 631 Venezuela 816 344 70 12 741 332 Others 3,953 2,230 3,063 1,880 1,263 804 Total 1,075,663 524,546 854,565 488,289 896,355 416,969 Source : Brazilian Foreign Trade Secretariat (SECEX), NCM 2009.19.00 Carbendazim The Environmental protection Agency (EPA) has not registered carbendazim for use in U.S. oranges since June 2009. The Food and Drug Administration (FDA) tested samples of Brazilian orange juice, both FCOJ and single strength (not from concentrate – NFC) as of late December 2011 and detained some shipments with carbendazim levels of 10 ppb or greater. Carbendazim is a fungus-killing chemical used in Brazil and some other countries to preserve agricultural crops. In Brazil, the fungicide is particularly useful to control the “black spot” disease in oranges groves, which is endemic, and occurs virtually in all citrus areas of the Sao Paulo commercial citrus belt. On January 26, 2012, the Brazilian citrus industry requested that the limit of 10 ppb of carbendazim be applied solely to the single strength juice, which is how it will be consumed. The request was rejected by FDA. The citrus industry commenced a voluntary ban of the product in Brazil in order to regain normalized orange juice export levels to the U.S. in the shortest possible timeframe. The current processing season for orange juice (2011/12) is over and the majority of orange juice stocks are likely to have carbendazim at levels greater than 10 ppb. Therefore, only samples of orange juice that are tested negative for the fungicide will be shipped the U.S. The industry estimates that during the January-August 2012 period, Brazil will not be able to supply approximately 60,000 metric tons of orange juice (FCOJ equivalent) to the U.S. given that shipments will be sporadic and mainly NFC. Concurrently, the industry has already identified and segregated citrus groves that did not receive any spray of the fungicide. The amount of fruit under these conditions should be sufficient to supply the U.S. market as of September 2012 and reestablish normalized levels of exports. Fundecitrus, a well known research institution on citrus diseases with a very broad extension program in the state of Sao Paulo, has banned carbendazim from their Citrus Integrated Production (PIC) list. The list includes all chemicals allowed to be used in citrus with an integrated system of production. Although, MAPA has the official and sole authority to include/exclude the use of any chemical in agricultural products, the PIC list is well respected and adopted by citrus growers. Stocks: Total ending stocks for U.S. MY 2011/12 are estimated at 228,000 mt, 65 Brix, down 12,000 mt relative to the revised MY 2010/11 stocks. Note that these figures include only stocks in the storage tanks of orange juice processing facilities. Actual stocks data for the aforementioned inventories are not available. In May, CitrusBR announced that global Brazilian orange juice inventories were 932,000 metric tons, 65 Brix, in December 31, 2012. Global Brazilian inventories include stocks in the tanks, at the port, on vessels and juice processors’ storage facilities worldwide. Note that the aforementioned figure includes 311,000 metric tons of FCOJ contracted under the Special Credit Line (LEC) and that cannot be sold before June 30, 2012. Production, Supply and Demand Data Statistics: PS&D Orange Juice – Official Orange MY 2009/2010 US MY 2010/2011 US MY 2011/2012 Juice B USrazil Market Year Begin: Jul Market Year Begin: Jul Market Year Begin: Jul 2010 2011 2012 USDA O New USDA Post New USDA Post Post fficial Official Officia Newl Deliv. To 10,567,20 10,567,00 14,239,20 15,504,00 12,729,60 12,811,00 Processors 0 0 0 0 0 0 Beginning 128,000 128,000 15,000 15,000 205,000 240,000 Stocks Production 1,095,000 1,095,000 1,440,000 1,475,000 1,245,000 1,260,000 Imports 0 0 0 0 0 0 Total Supply 1,223,000 1,223,000 1,455,000 1,490,000 1,450,000 1,500,000 Exports 1,173,000 1,173,000 1,210,000 1,210,000 1,245,000 1,230,000 Domestic 35,000 35,000 40,000 40,000 42,000 42,000 Consumptio n Ending 15,000 15,000 205,000 240,000 163,000 228,000 Stocks Total 1,223,000 1,223,000 1,455,000 1,490,000 1,450,000 1,500,000 Distribution MT Exchange Rate Exchange Rate (R$/US$1.00 - official rate, last day of period) Month 2006 2007 2008 2009 2010 2011 2012 January 2.22 2.12 1.76 2.32 1.87 1.67 1.74 February 2.14 2.12 1.68 2.38 1.81 1.66 1.71 March 2.17 2.05 1.75 2.25 1.78 1.62 1.82 April 2.09 2.03 1.69 2.18 1.77 1.57 1.89 May 1/ 2.30 1.93 1.63 1.97 1.81 1.57 2.01 June 2.16 1.93 1.64 1.95 1.80 1.56 -- July 2.18 1.88 1.57 1.87 1.75 1.56 -- August 2.14 1.96 1.63 1.88 1.75 1.59 -- September 2.17 1.84 1.92 1.78 1.69 1.85 -- October 2.14 1.74 2.12 1.74 1.70 1.69 -- November 2.17 1.78 2.33 1.75 1.71 1.85 -- December 2.14 1.77 2.34 1.74 1.66 1.88 -- Source : Gazeta Mercantil and BACEN (as of October 2006) 1/ May 2012 refers to May 18.
Posted: 28 June 2012

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