By Mark Greenberg
US: Strong market for clementines
Week 33, clementine prices remained robust with prices on the transactional (spot) market at US$ 34 – 36 for bagged-up (value-added) fruit, up from last week's prices on solid demand and relatively light inventories. Pre-committed programs had sales as low as US$ 28-30 which will serve to bring average prices down, though most sellers will work hard to minimize their commitments at these prices.
Clementine prices will stay strong as arrival volumes decline and as demand increases with the end of Summer and school shortly back in session. The Chilean W. Murcott harvest got underway in Week 32 and these late mandarins should begin to arrive in the market in Week 36, by which time there should be no more clementines around.
The W. Murcott market is expected to open up at US$ 42 or more for larger sizes and at US$ 38 for the smaller calibers as retailers refill the easy peeler pipeline. The question is: How sustainable is this price? From the supply side of the equation, we expect total W. Murcott volumes coming to the US to be similar to last season. The prevailing belief is that the July freeze wiped out a volume of fruit that is roughly equal to the growth that had been expected from production new plantations coming into production.
From the demand side, though, there are a few differences from last season. First, the W. Murcotts will arrive into a near empty market – not the case last season.
Second, easy peeler demand in the US is more robust and stable than it was last season. Finally, in mid-August last season, retailers were able to buy clementines in August in the US$ 22 – 26 range. This season they are paying over US$ 10 more.
Accordingly, chain-stores should not find this season’s anticipated US$ 6 per case premium for W. Murcotts especially shocking when compared to the US$ 12 premium demanded (and generally achieved) last season. Consumers too, now acclimatized to paying a higher retail price for clementines, will feel less sticker shock than they did last season as we transition from clementines to W. Murcotts.
But only time will tell if this combination of forces will allow sellers to achieve the values in the market that their growers and exporters need.
Navel Oranges:
Since our last report (in Week 31), the navel orange market has taken a step down.
South African navel oranges continue to arrive in the market with the fourth bulk vessel off-loading on the East coast at the end of Week 33. Chilean navel arrivals are also stepping up as the heavier loadings from Weeks 29 and onward are now arriving.
Nonetheless, inventories remain moderate and product movement is good, In the face of this, the very strong market that we reported in Week 33 has softened, and the price structure has been compressed into the US$ 18 – 22 range, with a few sales lower and some higher.
In mid-Week 33, 88's were selling at US$ 18 - 19, 72's at US$ 18 – 20 (mostly US$ 19 – 20) and 40's, 48's, 56's and 64's were selling at US$ 20 – 24 (mostly US$ 22).
Chilean navel loadings have increased steadily since Week 29 creating increased arrivals from Week 33 onward. Loadings in Week 32 were especially high as exporters worked hard to get as much fruit onto the water for arrival in the US before the September 1 start of the USDA/AMS Marketing Order for Oranges. The 3,930 tonnes of navels loaded to the East coast in Week 32 (roughly equivalent to 260,000 15 kg cases) is the heaviest volume of navel oranges ever loaded in a week to the East coast. The 6,252 tonnes loaded to the East and West coast combined also represents the largest volume of navel oranges loaded to the US in any week.
Accordingly, we expect to see steadily increasing arrivals from Week 33 with, perhaps, one week of light arrivals in Week 36 owing to packing delays as a result of rain as well as Marketing Order pressures. Nonetheless, we do not expect to see navel prices decline further. The combination of a generally good industry inventory position, a dearth of easy-peelers in the market until the mandarins arrive, good product quality from all origins and healthy demand for citrus, should keep the navel market stable.