Uruguay - Citrus industry to see 10% lower volumes as it recovers from drought

17.05.2023 290 views

Uruguay’s citrus industry is relieved to be out of the worst drought in nearly 100 years, with volumes in the current 2023 season expected to be around 10% less than last year according to a producers survey.

“This year producers declared in a poll the official estimate is to harvest 10% less, including 10% less mandarins too. My guess is that it is early in the season and at the end we will only have about 5% less. So we will reach similar volumes to last year,” says Alejandro Buratovich, Vice-president of Upefruy and CEO of Frutura Uruguay, part of Frutura, a company with operations in US, Chile and Peru as well.

Last year’s Uruguayan lemons exports was 13,600 tons, this year around 8,000 tons is estimated. Last year’s orange exports was 21,000 with this year’s estimation at 23,000 tons. The mandarins exports was 38,000 tons last year, this year around 32,000 tons is estimated.

“I’m almost convinced we’ll end up with 37,000 tons. The season only ends in September. Many young trees are growing and adding new volumes, which will compensate a lot. We had a very important drought that started in winter, when we were still harvesting in the season before this one and ended two months ago, although it is still raining less than expected. It is hard to tell about late mandarins for they can recover in size and we may have bigger tonnage,” explains Buratovich.

While it was the most important drought in the last 60 to 100 years in Argentina, and was very bad for agriculture says Buratovich: “In citrus, most hectares planted for exports are irrigated. It was not that bad. In Uruguay citrus irrigation is not designed to cover 100% of the needs of trees. There are supplementary systems with typically 4-5mm equivalent a day provided, so we had some impact nevertheless.”

“The droughts impacted our industry, maybe we have one size smaller, that would have a 5-10% impact in tonnage. We have a similar amount of oranges and a 5-10% less mandarins. There is a higher impact on lemons, where the difference is around 40% less exports estimation, but this is due to a different strategy decided by the largest lemon producer regarding fresh vs processing this season.”

Citrus market pricing in US and Europe
“The message we are receiving for mandarins is that pricing is similar to last year. Peru’s volumes are still growing while Chile will recover and have 25-30% more. So the market seems to be well covered. The message in US is that we have stable prices similar to normal, maybe a little bit lower than last year. As shipping costs went down, we will have better FOB prices.”

“Oranges are very tight all over. Mainly in Europe, everyone calls and are asking for oranges. South Africa now faces cold treatment protocol in Europe and that is a barrier for they need cold storage infrastructure that is very difficult to get from one year to the other. Prices are around €15-€16 Euros a box. We will see how this continues also with the Valencia’s into Europe later in the season. We are not sure. For the moment it looks tight. Also the processing market for orange is very tight. It’s a broad worldwide issue,” says Buratovich.

He says lemons are still over supplied in Europe with low prices expected there. “The US is also well supplied, and some of the big players in Argentina announced they are not going into the fresh market this season. The expectations are low prices in Europe and US, maybe worse in Europe.”

Input costs lower but still higher than pre-Covid times
“Although we had a drop in shipping costs, we did not go back to pre-Covid values. For shipping to Philadelphia in the US, we paid around $4,500 to $4,800 before Covid, now we are around $5,500 to $5,800. It dropped, but not back to where it was. In Europe the values are close to what it was before Covid. It is a different situation for different markets. Russia is very expensive because a few shipping companies are going there. However, in the US we are still 15-20% above pre-Covid prices. We still see higher costs of production, although shipping costs are down, fertiliser are still higher than before the pandemic. All expenditure on fertiliser was done when the prices for them were still very high,” concludes Buratovich.

Source - https://www.freshplaza.com

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