Despite higher estimates for inventories, supply is still low

Although estimates for orange juice inventories at the end of the 2016/17 crop (in June 30, 2017) were revised up in February, new forecasts may continue below the strategic levels at processors from São Paulo State, only enough for three weeks of consumption.

According to data released on February 13 by the Brazilian Association of Citrus Exporters (CitrusBR), ending stocks may be only 70.29 thousand tons of FCOJ, much higher than the 2 thousand tons indicated in August/16, but 80 % lower than that in the same period last season (2015/16). This would be the smallest ending stock in all times for CitrusBR, which reinforces expectations for limited global supply of orange in 2017.

This increase of the estimates may be linked to possible sales reduction (domestic and international) of orange by processors in this 2016/17 season in order to keep enough volume to, at least, make blends with juice from the new season. Another possibility would be the larger volume processed compared to that previously forecast, mainly considering oranges from other states.

In this scenario, prices paid to citrus growers might be high again next crop, for trades in the processing industry and the in natura market.

This possible lack of fruits was confirmed when processors from SP advanced trades of fruits from the 2017/18 season to mid-October/16, in order to replenish part of juice inventories. Since January, however, sellers stopped closing contracts; trades may start again near the beginning of the crop.