Brazil: Orange juice inventories in the 19-20 crop increase, but that in 20-21 should decrease up to 49 %

Orange juice inventories ended the 2019-20 season (on June 30, 2020) on the rise, as already expected by agents from the Brazilian citrus market. According to CitrusBR (Brazilian Association of Citrus Exporters), the volume stocked by then totaled 471.138 thousand tons, a staggering 86 % up compared to that in the previous season, due to the higher orange production.

However, although the 2020-21 crop started with high volumes stocked, production is forecast to be low in São Paulo State and the Triângulo Mineiro, which is keeping firm the demand from processors for oranges. This scenario should lower inventories by the end of the current crop.

A report released by Citrus BR in late August estimates that, on June 30 2021, the inventories of Frozen Concentrate Orange Juice (FCOJ) Equivalent from the 20-21 crop will total from 240 to 280 thousand tons, 49 % down compared to that in the previous season.

These estimates consider that around 238 million boxes of 40.8 kilos of oranges will be processed (with 50 million boxes left to be sold in the in natura market), average yield of 268 boxes to produce a ton of FCOJ Equivalent and stable sales, at 1.15 million tons. These results are similar to that estimated by Cepea in May, at 250 thousand tons. It is worth to mention that both estimates (from CitrusBR and Cepea) take into consideration the fact that there may be adjustments in industrial yield, due to the multiple flowerings registered in 2020-21.

According to agents from processors, yield has been low, and much more than the 268 boxes are needed to produce a ton of juice, as estimated by CitrusBR. Although this number tends to decrease along the season, it is concerning, since the prices paid for the fruits have been higher this season, meaning that remuneration for lower quality oranges is currently higher. In this scenario, the only processors that has been purchasing oranges in the Brazilian spot market is bidding prices according to yield: when more than 290 boxes are needed for a ton of juice, prices average 21.60 BRL/box, while for the fruits with higher yield, prices reach 24.00 BRL/box.

BRAZILIAN MARKET IN AUGUST – Despite the weak demand, due to the colder weather, orange prices remained firm in August, underpinned by the lower supply of higher quality fruits in the in natura market. Besides, the fast crushing pace at the large-sized processors in SP helped to reduce availability in the market. Thus, between August 1st and 31, the average price for pear oranges closed at 30.01 BRL per 40.8-kilo box, on tree, 11.8 % higher than that in July.

TAHITI LIME – Tahiti lime supply was low in the Brazilian market in August, forecast to increase only from mid-September. The fruits that were on tree had not reached the ideal size and maturation to be harvested, since the weather was dry in the last months.

Thus, prices were firm last month, which limited deals in the in natura market of São Paulo State. In August, the average price for tahiti lime was 85.15 BRL per 27-kilo box, harvested, 40 % up compared to that in July.