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Global Outlook 2017

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Foodnews | Global Outlook 2017 3www.agra-net.com

Editor Neil Murray Tel: +44 20 7017 7553 Email: [email protected]

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Contents Highs and lows of 2016This has been a year of extraordinary gluts and shortages in the food commodities covered by Foodnews. In an industry that is known for volatility, partly due to the weather, partly due to changing consumer tastes and partly due to politics, this past year, like the one before it, has been notably unstable.

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Specialist Reporter Cristina Nanni Tel: +44 20 7017 5174 Email: [email protected]

The fruit juice sector is facing a massive orange crisis. Disease has ravaged harvests in Florida and Brazil, and there simply is not enough fruit for processing. Retail orange juice prices will soar just as soon as supplies delivered under earlier, cheaper contracts are exhausted. Pineapple juice is also in short supply and expensive, but at least that sector has the ability to recover in late 2017. Apple juice prices are being kept high in Europe because the Polish apple farmers are in total control of the raw material supply.

Canned tuna is going to get more expensive, as skipjack prices are climbing again. Canned pineapple is also hampered by the raw material shortage in Thailand, while canned peaches have been very competitive thanks to cheap southern hemisphere supplies.

The processed tomato industry in Italy has suffered from over-production, which has resulted in the imposition of a financial penalty on processors who exceeded their planned production, while the farmers have been extremely dissatisfied at the low contracted payments for their fruit. Meanwhile China has come roaring back into world markets with extremely low offers for its tomato paste.

Turkey’s hazelnut industry has seen supplies stop, start, restart and stop again, which has sent prices jumping up and down, and business occasionally halting altogether. At the time of writing, it is still stalled. The cashew market has been almost as uncertain, due to a shortage of raw cashew nuts. Only the almond market seems to be following the path set for some years, with an ever-expanding US production matched by equally buoyant demand (the same goes for US pistachios). At least the dried fruit sector seems relatively settled.

And against all this, there has been the violent effect on currency markets of the UK’s declared intent to quit the EU (‘Brexit’), and the continued Russian embargo on imports of European fresh fruit and vegetables, which has resulted in various lifelines being thrown to farmers (especially in Spain) by the EU.

With all this in mind, trying to make realistic forecasts for what will happen in 2017 sounds like a futile exercise, but actually, Foodnews has a pretty good track record in this department. Enjoy the supplement, and please feel free to contact us if you agree or disagree with any of our assessments and predictions.

A Happy New Year and a prosperous 2017.

04 Slow motion crash

12 Run out of juice

17 Pining for pineapple

21 Best of the rest

26 Facing the challenges of a very choppy market

30 Poised to purchase pecans

32 Rough sailing ahead

35 More canned apricots, not less

38 A lesson to learn

40 Small fruits with big ambitions

44 Red tide





4 www.agra-net.com4 www.agra-net.comGlobal Outlook 2017 | Foodnews

5Foodnews | Global Outlook 2017

Polish, and other European processors, are learning the same lesson that China’s apple juice industry was forced to learn several years ago. If you give apple farmers the power of timing and choice, then you must not be surprised if they decide they do not necessarily want to go along your business model of cheap raw material.

This happened in China when the country’s network of fresh fruit coldstores grew

rapidly. Previously, farmers had the choice of the fresh markets or the processors for the same product – sweet apples, as China grew very little high-acid fruit – and the country’s logistics industry was previously not up to the task of shifting relatively perishable products quickly around the country.

The new coldstores changed all that. First, farmers could store the fruit and wait until the price reached an acceptable

Watching the apple juice debacle has made Foodnews wince, and more is yet to come.

By Neil Murray

Slow motion crash

China’s AJC industry is unlikely ever to return to its glory days of over one million tonnes of production.

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6 www.agra-net.comGlobal Outlook 2017 | Foodnews

(to them) level, and secondly they could distribute their fruit, in prime condition, over much greater distances.

European logistics being what they are, there is no part of the continent that is really out of reach of fresh fruit, but all those shiny new (and EU-financed) coldstores in Poland have given farmers the same ‘wait-and-see’ ability as their Chinese counterparts. And they are using it.

China’s AJC industry is unlikely ever to return to its glory days of over one million tonnes of production, and, belatedly, the industry is accepting that (although it still does not know what to do with all that surplus juice production capacity). What we have seen last season, and so far this season, is that Poland’s AJC industry may have a big change forced upon it also. The days of ultra-cheap AJC may well be numbered.

Last season, China managed to seize back the market share it lost to Poland in 2014/15, because Poland’s harvest was delayed while the farmers waited for rain to swell the fruit, which was seriously below size after a very long dry summer. China’s harvest was early, though, and Polish fruit went straight into coldstores and was only grudgingly released to processors while the farmers waited to see if they were going to be bailed out by the EU or their own government (they weren’t). Poland missed the chance to sign long-term contracts with the US, and only started selling there very late in the season when the farmers accepted that they were not going to be thrown a lifeline, and released apple stocks.

And the same thing is happening this season. Poland’s record harvest of over 4.0 mln tonnes at first prompted a slide in the processing apple price, down to as low as five euro cents per kilo – barely worth picking – so the farmers refused to sell the fruit and watched the price rise. This had a knock-on effect: China was waiting for Poland to announce its season AJC prices before going public with its own, and Turkey was waiting for both countries before it too started offering in earnest.

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Chinese monthly AJC exports (tonnes)

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The other problem affecting the European apple juice industry is the lack of high acid juice. This is partly because the farmers are throwing everything into their coldstores and partly because the new Polish orchards are all growing low-acid dessert apples. The lack of high acid fruit is not a problem for AJC exports, but is a problem for European consumers because Europe tends to prefer a more acidic drinking juice, and in Germany this is actually mandated by law – drinking apple juice must be not less than 3.5% acid.

At the China Juice conference in September 2015, it was announced that China intended to make some 450,000 tonnes of AJC this season, 50,000 tonnes more than in the 2014/15 season, and that its carry-over into the new season would be around 80,000 tonnes.

At that time, it was assumed that Poland would once again be competing in the North American markets, but that did not happen. Even if China was underestimating its carry-over by 20,000 tonnes (bringing it to 100,000 tonnes) and has produced 50,000 tonnes more AJC than it originally planned, then it was still going to have to make more AJC than originally intended in order to make up for the business lost by Poland. In the event, it appears that China’s carry-over was indeed close to 80,000 tonnes, and China dipped into that to the extent of some 50,000 tonnes, and made another 15,000-20,000 tonnes of product in late production.

At this year’s China Juice conference, to Tim Yang of Hengtong said that China would produce no more than 500,000 tonnes of AJC this season. Yang estimated

that China will export 520,000 tonnes in the next 12 months, which will leave it with a carry-over into the 2017/18 season of 30,000 tonnes, again.

With this reduced output, Hengtong did not expect to have a spring production of AJC, as it did in early 2016, when it manufactured another 20,000 tonnes, because the original production estimate proved to be too small.

Yang acknowledge the threat from Poland this season. “We are faced with fearsome competition in the market,” he told delegates. “The competition from EU fruit will exist for the long term. At our present fruit cost, AJC output will remain steady”.

At the time of writing, it looks like China will actually export more AJC than it Yang predicted in September, and will therefore need to manufacture more. If China exported about 552,000 tonnes of AJC last season, then it should be able to export at least the same quantity this season. A lot depends on demand, and especially competition from Chile and Argentina (both of which found it difficult to compete with Chinese and, later on, Polish, prices last season).

This was realistic speaking from a Chinese processor. Foodnews would only argue with Yang’s assertion that the recent resurgence in Chinese sales is due to an increase in the US apple juice market. It is more down to an absence of Polish competition last season and the growth of the US hard (alcoholic) cider market.

Because of the Russian embargo on Polish fresh fruit imports (circumvented to some extent by diverting supplies through countries such as Belarus), as at June 1, Poland still had 152,000 tonnes of apples in storage (one-third more than it held on June 1 2015). The figure for all the major European countries was some 783,000 tonnes (about 725,500

Chinese AJC exports to USA (tonnes)

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At the time of writing, it looks like China will actually export more AJC than it Yang predicted in September, and will therefore need to manufacture more.

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tonnes). France and Italy, in particular, hold large inventories compared with last year: 115,535 tonnes (96,200 tonnes) and 262,000 tonnes (257,600 tonnes) respectively.

Poland actually started processing before China this season, in a neat reversal of the previous situation. It was starting to look like a re-run of the 2014/15 season, with the prospect of Poland being able to offer juice at prices way below anything that China, let alone Latin America, was able to match.

“One issue could be the fruit price in Poland. If it is too low (below five euro cents per kilo), there is a risk that farmers will not bother to harvest it,” we said in August. Prophetic words, because the fruit price did indeed tumble to this sort of level, and Polish farmers were restive. Piqued, they locked their fruit away into their new coldstores and there it mostly remains.

At the time of writing, it is early November, and Poland’s AJC processors still have no coherent pricing policy. The farmers are releasing fruit in relatively small amounts, to keep the price where they want it, and Poland simply cannot offer buyers in the crucial (because it is the only volume market left to China) US market any sort of price quotes to cover

the season: not even between a maximum and a minimum figure.

At the same time, Polish fruit prices have been climbing and China’s have been decreasing and now Polish apples are more expensive. Foodnews has warned several times that if the US buyers are not given a seasonal price they can work with, they will simply turn back to China, even if Chinese AJC is more expensive, simply because they will know the numbers they can work with over the season.

And there we have an impasse. The industry – buyers, processors, everyone – believes that Poland has a large volume of apples, knows that Poland is unlikely to be able to sell them all on the fresh domestic and export markets, strongly suspects that the EU and the Polish government will not step in to buy more than a token amount of fruit, and sees no reason why it should pay more than (say) EUR800 per tonne (USD850/tonne) for AJC.

But the farmers don’t mind. Unless they have a sudden urgent need for cash, they can happily wait until next spring and start releasing fruit then. Poland, as it did in the past season, may enjoy a small late

processing season with some cheap(er) fruit, but it will not shift large volumes. It is not as if Europe needs AJC either: it is basically a spot market. The only problem concerns high acid juice – there is a definite shortage there, and prices will remain firm whatever happens to the raw material.

One hope is that the soaring price of orange juice will drive consumers to apple juice. Historically, an increase in the price of one has generally led to increased consumption of the other. However, fruit juice is just not fashionable these days – look at what has happened with orange juice – and any switch may not be very big. But there may well be more new product development in juice drinks and blends that use apple as a base.

For this reason, Foodnews thinks that Chinese exports will be slightly higher than they were between September 2015 and August 2016 (553,187 tonnes). Foodnews thinks that 562,000 tonnes sounds about right. As for Poland, buyers, if they don’t see much cheap AJC early in the season, can be reasonably confident of availability later, so around 260,000 tonnes for Polish exports.

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Source: GTIS At the time of writing, it is early November, and Poland’s AJC processors still have no coherent pricing policy.


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The train has hit the buffers. It has taken longer than originally forecast for Brazil to whittle down its FCOJ inventory, which was equivalent to about one year’s full production, but it has finally happened, and there is a global shortage of orange juice. FCOJ prices have jumped from around USD2,000/tonne cfr duty unpaid Rotterdam to just under USD3,000/tonne, and look certain to break through that psychological barrier soon.

There is no relief in sight. Florida’s next harvest is forecast at around 70 million boxes; perhaps as low as 60mln boxes, compared with 244mln boxes in the boom season of 1997-98. Even in 2003-4, Florida harvested 242 mln boxes of fruit. Brazil’s is about 250 mln boxes, down from 428 mln boxes in 2012/13.

To a degree, the industry has been shielded from the blow by the switch from orange juice reconstituted from FCOJ and NFC juice. Demand has also been weak, irrespective of price. US retail sales of orange juice have been in decline for a decade, and all pure

juice consumption is weak in the big developed markets (which basically means Europe, North America and Japan). This weakness has been responsible for the extra time needed to whittle down Brazil’s inventory, of course.

Whether the new high price of orange juice will damage demand even further is an open question. The evidence from the US retail figures is that price increases or decreases make very little difference: people are not drinking as much OJ in the US because they are drinking other beverages (energy drinks and bottled water, mainly). But a 50% increase in the raw material price has got to have an effect, and so it’s safe to say that global demand will suffer.

If one looks for origins that could fill the orange juice gap, where would one look? Ten years ago, China was supposed to be producing 1.5 mln tonnes of single strength juice in 2015 (around 275,000 tonnes, FCJ equivalent) and 3.0 mln tonnes in 2020, but the country’s Three Gorges citrus

There simply is not enough orange juice being made to meet present world demand.

By Neil Murray

Run out of juice

China was supposed to be producing 1.5 mln tonnes of single strength juice in 2015 (around 275,000 tonnes, FCJ equivalent) and 3.0 mln tonnes in 2020, but the country’s Three Gorges citrus project has proved an embarrassing failure.

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project has proved an embarrassing failure. Yields are nowhere near as good as they are in Florida or Brazil (even allowing for the depradations of disease there) and what citrus is produced there is going for fresh sale.

Most of the fruit for processing is mandarins that go for canning, leaving little for orange juice. China will only produce 46,000 tonnes of FCOJ this season, according to the USDA. This compares with 50,000 tonnes last season, and 55,000 tonnes in the season before that. Reportedly, the juice is of poor quality, fit for soft drinks but not as ‘drinking’ orange juice.

Nor is China turning increasingly to imported FCOJ, as the USDA reckons that imports this season will fall to 48,000 tonnes from 50,000 tonnes last season and 57,000 tonnes in 2013/14. This decline is backed up by GTIS data, which records a 13% decline in Chinese FCOJ imports for full-year 2015 to 45,661 tonnes from 52,805 tonnes in 2014, 58,995 tonnes in 2013, 56,237 tonnes in 2012 and 73,324 tonnes in 2011.

Chinese domestic consumption of FCOJ, then, is falling. The USDA predicts that it will fall to 90,700 tonnes this season, compared with just under 100,000 tonnes last season and 111,265 tonnes in 2013/14. Fundamentally, orange is not a popular flavour in China where the most popular juice flavour is snow pear.

And greening has hit China, too. The country’s top orange grower, Asian Citrus, is having to close one of its three orange plantations, which has been devastated by greening. The firm said the disease was first detected on its 37 sq km Xinfeng plantation in Jiangxi province in April 2015, when approximately 18% of orange trees were visibly infected.

Infection spread to about 60% of Xinfeng’s fruit trees by November. Consequently, the firm estimated that its 2015 H2 production would be just 11,000 tonnes of fruit, down from 103,847 tonnes the previous year.

Infection is forecast to spread to 70-80% of the trees, meaning further plantation is no longer economically productive, said the company. “The plantation will close permanently after completion of the winter orange harvest,” it added.

Resulting losses could hit CNY850 million (USD129 mln) in the fiscal year to June, 2016, Asian Citrus said, adding that its insurance policy does not cover damage from the presence of any diseases.

The company blamed the infection’s rapid spread on inaction by local government and neighbouring growers to control transmission, which “diminished the effectiveness of the protections implemented by the group.”

Asian Citrus oranges are grown mainly for the fresh market. Tianyi Summi, China’s

second largest orange supplier, and which grows oranges mainly for processing into orange juices and concentrates, said its plantations are free of the disease.

“Xinfeng’s closure won’t affect prices overall in China because the shortfall in supply is still comparatively small. However, there may be an effect on local orange prices,” Alan Lee, financial controller at Tianyi, told Foodnews. “Orange prices this year are lower than last year,” he added.

Argentina grows citrus: Coca-Cola sources a lot of its lemon juice there. Coke is now extending its commitment in the country: it buys about USD44.0 million worth of Argentine citrus and derivatives per year, accounting for about 60% of Argentina’s orange juice production, 12% of its lemon juice and 27% of its grapefruit juice. However, investment in orange growing in Argentina is only likely to be spurred on by companies like Coke and PepsiCo: the farmers are not investing on their own account.

Australia will only produce about 9,000 tonnes of FCOJ equivalent orange juice in the 2015/16 season, 500 tonnes less than in the two preceding seasons, according to the USDA. All Australian juice is actually chilled NFC: Australian juice manufacturers do not compete in the shelf-stable and reconstituted juice sector, because these products are much cheaper and are generally made using imported FCOJ.

The USDA expects that strong export prices for fresh Australian oranges will further constrain supplies to processors. Generally, the Australian citrus industry is export-oriented and has a competitive advantage in northern hemisphere markets such as Indonesia, China, Japan, Korea and the US. As these exports are counter-seasonal, they do not compete with locally produced fruit. Exports for 2015/16 are forecast to reach a record of 190,000 tonnes due to higher production, increasing demand and lower tariffs in key markets such as Japan and China.

Prodalim, the Israeli trader turned processor, has moved into Italy, Spain and Brazil. It has signed an exclusive marketing agreement with Frucamp Indústria e Comércio Ltda, a Brazilian cooperative in the state of Sao Paolo. The cooperative consists of 41 orange growers, who agreed to unite in order to build the factory.

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It came into being in 2013, when its products were handled by a Hamburg-based company.

The factory now has 12 JBT extractors, and is equipped with the latest technology. It started production in July 2014, and is expected to process 4.0 million boxes of fruit (equivalent to more than 15,000 tonnes of FCOJ) annually.

Prodalim Group, in line with its strategic plan to increase its presence in the orange market, has made investments and entered joint ventures with various orange processors, including Gota Doce Citrus.

Sunprod has been doing something similar: it has been signing deals with a multiplicity of small citrus processors all around the Mediterranean basin, as well as in Bolivia (for lemon juice). Chief executive Walter Ansorge, at the SIAL trade show in Paris in October, was wearing a broad smile, because his strategy has paid off. “Two years ago, I could see that there would be a global shortage of orange juice, and started looking for new suppliers,” he said.

North Africa is coming under the spotlight. There are already considerable citrus plantings in several countries, and small juicing operations in a few, such as Morocco and Egypt. Morocco mostly produces NFC orange juice, and not much of that, but Egypt is a different matter. Juice and dairy companies from the Gulf States have set up operations there, and (again at SIAL) El Marwa Food Industries, one of Egypt’s largest orange juice

producers, was being approached by a number of large bottlers and blenders, according to director Amr Madany.

The company launched tangerine juice this season, is moving into lemon juice, and is adding citrus oil recovery lines to its processing plants (as citrus oil is also becoming scarce and expensive) and expects to produce about 150 tonnes this season. El Marwa will also process some 60,000-70,000 tonnes of oranges into juice this season, which runs until May/June. Its yield is from 11-13 tonnes of fruit per tonne of 65 brix FCOJ, so this implies a total production of about 5,500 tonnes of FCOJ. Egypt’s orange season runs from December to June and Egyptian orange ratios range from eight-nine at the beginning of the crop and up to 18-21 by the end, said Madany.

Finally, a new orange peel drying plant is being installed to produce dried peel to be sold to pectin manufacturers.

Mexico has great potential. It has a reasonably-sized orange juice industry already and it produces very sweet juice, which is massively in demand for blending. It is also being seen as a potential source for sweet NFC juice, which presently is the domain of Florida. Mexico’s orange production is forecast to drop over 600,000 tonnes to 3.5 mln tonnes this season, as a result of drought that has lowered yields and fruit size. Consumption is also down over 600,000 tonnes on reduced production of fruit. Fruit for processing is up slightly, though, and looks certain to grow, especially given the high prices now commanded by FCOJ and NFC orange juice.

South Africa’s orange production is forecast virtually unchanged at 1.7 mln tonnes. Exports are expected to be down 50,000 tonnes but still account for over 25% of global trade. The EU and Russia remain its largest markets. South Africa does produce FCOJ, but it tends to be relatively low ratio and slightly bitter, and is thus deemed more suitable for soft drinks manufacture.

Spain is Europe’s orange juice powerhouse, and the country mainly produces NFC orange juice, which it exports successfully to a number of EU countries, most notably France and the UK. Anywhere further afield is costly to transport, and Greece tends to take care of orange juice sales east of Germany. Spain is forecast to produce 3.58 million tonnes of oranges in the 2016/17 season, and it seems inevitable that more fruit will go for processing. Spain has reportedly even been buying (quite expensive) Moroccan fruit to process into juice.

Morocco’s production is forecast up 6% to 920,000 tonnes on higher area and yields (improved irrigation). Consumption and exports are forecast up on greater supplies.

What can be seen from this is that collectively, there may be enough orange juice to replace a significant part of the lost Brazilian and Floridian production, but bottlers and blenders’ costs will be increased by the need to conclude contracts with a greater number of suppliers, and it is also possible that supplies of varying ratio and quality from so many different sources will require careful blending, which will also increase costs.

In short – there isn’t enough orange juice in the world to meet current demand.

And finally, let us look at the US retail figures, assiduously collected each month by the Florida Department of Citrus. For the season just ended, US retail sales were 463.41 mln gallons, compared with 489.80 mln gallons in the previous season. In value terms, sales were worth USD3.037 billion, compared with USD3.209 bln. Foodnews thinks that the decline will continue into next season. A 5% drop would bring the end-of-season total to about 440 mln gallons, but the malaise seems deeper-rooted, and the inevitable retail price increases will have an effect, so Foodnews’ estimate for next season is 425 mln gallons.

Florida orange production (million boxes)

1 2 3 4 5 6 7 8 9 10 11 12 13

Source: FDOC, Mintel Period

30

32

34

36

38

40

42

44

46

48

50

52

54

56 2011/12 2012/13 2013/14 2014/15 2015/16

0

25

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75

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125

150

175

200

225

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275

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120

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220

02-0

320

03-0

420

04-0

520

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620

06-0

720

07-0

820

08-0

920

09-1

020

10-1

120

11-1

220

12-1

320

13-1

420

14-1

520

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620

16-1

7

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boxe

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It has been painful watching the chaos in (principally) the Thai pineapple industry these last 24 months. A deadly combination of adverse weather, a low point in the planting cycle, over-eager farmers and excessive nitrate levels in the fruit has resulted in the smallest pineapples Thailand has seen for years, and the highest prices ever recorded for pineapple juice concentrate.

Thai PJC has come off its peak of around USD4,000 per tonne fob, recorded a year ago, but it’s still expensive. The juice has been pulled from supermarket shelves in Europe and tropical and multivitamin juice blends have been reformulated to contain the barest minimum of pineapple.

The boom-and-bust cycle of Thai pineapple is well known, but this time the low point (little planted because farmers had switched to other crops) coincided with the appearance of a particularly vicious El Niño event. It has been said that

a harvest of about 2.2 million tonnes of pineapple represents a market in good balance. If the harvest is 2.5 mln tonnes, then there is over-production and it’s a buyer’s market. If it falls to 2.0 mln tonnes, then it’s a seller’s market and prices are high. Thailand’s harvests have fallen to around 1.8 mln tonnes, which is a seller’s market squared; cubed, even.

The 2016 summer harvest brought little relief, and the winter crop is also dismal. Thailand’s farmers are now-re-planting pineapple, fast, because raw material prices are still around THB13 per kilo (equivalent to around USD370 per tonne) and they want to enjoy the bonanza while it lasts.

Buyers have been turning to Costa Rica for supplies, and Costa Rican exports of concentrate have soared. This, of course, will mean less fruit available for NFC production. Buyers are also securing as much NFC juice as they can, because the

The world’s favourite tropical fruit juice has been in very short supply and super-expensive for two years now.

By Neil Murray

Pining for pineapple

The boom-and-bust cycle of Thai pineapple is well known, but this time the low point (little planted because farmers had switched to other crops) coincided with the appearance of a particularly vicious El Niño event.


thinking seems to be that if it’s expensive, you might as well buy the best quality you can.

Although export demand for fresh MD2 pineapples continues to rise, Costa Rica appears confident that this will not constrain supplies for processing.

Jorge Zamora, director of Procomer (Costa Rica’s export promotion officiate) told

Foodnews at the Fruit Logistica exhibition in Berlin earlier this year: “We are now the world’s leading fresh pineapple exporter in terms of volume. The brix we offer the market is 13 or even higher.”

Zamora pointed out that while there are several ‘multinational’ companies in Costa Rica, supplying fresh pineapple, the country still has a solid base of smaller domestic companies. “There are five or six

here, on this pavilion, looking for export opportunities,” he said.

Costa Rica is continuing to expand its area under pineapple cultivation, and therefore fresh production is rising all the time. The present situation is an anomaly (prices at an all-time high and historic low production for Thailand). Is there enough fruit for everyone? asked Foodnews.

“Processing fruit might be affected, but not strongly,” replied Zamora. “Right now, we have enough volume to supply both industries. In the long run, if the fresh industry continues to grow, there could be a shortage, but then there will also be more growing under contract for processing.”

The cost of Costa Rican NFC juice has not risen as much as PJC, in percentage terms, in the last 12 months. It stands at USD750-800 per tonne fob. Costa Rican PJC, though, is frighteningly expensive at around USD2,800/tonne, though this price is comparable to Thai when the higher brix of Costa Rican juice is taken into account.

Like Thailand, Costa Rica has been having problems with rain, weather-affected fruit deliveries and nitrate levels, and its PJC exports have dropped this year. It looks as if Costa Rica has made a conscious decision to rein back concentrate production in favour of NFC, because it is easier to monitor and control nitrate levels in the NFC product. Certainly, exports of

THAI PINEAPPLE: area, production , yield per rai, farm price and farm value 2005-15 (Agricultural Statistics of Thailand)

Year 1,000 rai planted

1,000 rai harvested

1,000 tonnes harvested

tonnes/rai yield

THB/kg farm price

THB mln value

1,000 tonnes processed

1,000 tonnes fresh & etc

1,000 tonnes can export

1,000 tonnes pjc export

El Nino La Nina

2006 652 614 2,183 3.557 3.69 8,056 2,380 ? 591,713 181,116 Jul-Dec Jan-May

2007 648 632 2,705 4.28 2.45 6,628 1,688 1,017 522,145 132,598 Jan-May Jun-Dec

2008 606 590 2,185 3.702 4.41 9,637 2,106 79 563,057 143,483 Jan-May

2009 612 567 1,895 3.344 5 9,474 1,880 15 473,279 140,621 Jul-Dec

2010 616 596 1,966 3.299 5.51 10,833 1,535 431 484,624 131,316 Jan-May Jul-Dec

2011 660 646 2,593 4.012 4.92 12,759 2,358 235 610,697 140,669 Jan-Nov

2012 625 620 2,400 3.874 3 7,921 1,890 510 574,931 136,325 Jul-Dec

2013 544 533 2,068 3.88 4.53 9,368 1,794 274 555,300 136,853 Mar-Nov

2014 476 452 1,916 4.237 7.15 13,275 1,335 581 518,565 102,527 Sept-Dec

2015 450 450 1,784 3.966 1,446 338 428,896 85,328 Apr-Dec

blue=ministry of agriculture red=TFPA green=Thai custom house *processed figure=frm TFPA data *fresh n etc=harvested volume -processed *figure of TFPA is based on declared figure per each packers and figure of some years may not be accurate especially during 2006-2009


PJC have roughly halved this year (the nitrate level issue may well have something to do with this) whereas NFC exports have risen by around 13%.

The global supply situation for pineapple juice should improve next year, according to a presentation made at the recent China Juice 2016 conference, but it will be 2018 before Thailand’s pineapple harvests return to anything like normal levels.

Willem Byloo of Tradex Asia told delegates that due to improved supply from Indonesia and the Philippines, global production should return to the 2014 levels of some 24.7 million tonnes. Thailand, he reminded people, had endured four consecutive small harvests and it would take time to recover due to the reduction in the planted area.

Thailand’s pineapple harvests in 2013, 2014, 2015 and 2016 were around 1.81 million, 1.35 mln, 1.45 mln and 1.60 mln tonnes respectively. The 2017 harvest is forecast to be 1.80 mln tonnes as Thailand moves out of the El Niño phenomenon and into La Niña, but this will still be below the 2.0 mln tonnes that is considered to be the point of a balanced market – anything above that is a buyer’s market, and below is a seller’s market.

However, to reach that tonnage, the planted area needs to increase by no less than 16% from its present level. Farmers switched from pineapple to other crops after the two bumper harvests of 2011 and 2012. This, as much as the adverse weather conditions, was responsible for the successive small harvests. If the farmers do not return to pineapple cultivation, there will be another small harvest next year.

Thailand’s winter crop is expected to be a month late, and then have good fruit supply through November, December and January, though nitrate concerns remain. The growing conditions are presently good for the 2017 summer crop and the harvest should start in March.

After a supply reduced by 20% this year, Indonesia is expected to recover from the end of the year, again aided by La Niña, and is expected to enjoy a good 2017. The Philippines is also expected to have a good 2017. “This means that all three Asia-Pacific producers are in good fruit supply situations in 2017,” commented Byloo.

Elsewhere, Klaus Boecker’s pineapple planting and processing operation in South Africa is gathering momentum. It started with the Queen variety, but is now moving towards the Cayenne variety. The aim is to have 50 hectares planted to Cayenne by the end of the year and a further 100 ha by the end of 2017: a growing area that will not frighten Thailand, but once the growing area reaches 200 ha in early 2018, that is enough to justify a stand-alone processing line.

“It all depends on how much planting material we can source within South Africa,” Stefan Keppler of Boecker told Foodnews this year. “To import is out of the question due to the 12-month quarantine period in South Africa. With MD2 we would like to proliferate, but the cost of the planting material in South Africa is six times more than Cayenne – this makes it uneconomical. We will thus focus on Cayenne.”

The AIJN recently raised the nitrates limit in pineapple concentrate from 25 parts per million to 50ppm (half the maximum

Thai PJC price, 60 brix, USD/tonne FOB

USD/

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B

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-16

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permissible nitrate content allowed by the US). Opinions on this are divided: on the one hand, it should mean a drop in PJC prices, but on the other hand there is a chance for processors and blenders to dispose of poor quality juice which has issues additional to high nitrate levels, such as poor colour or brix.

“If you lift the limit, you are not helping the fruit at all,” said another source. “You have unripe fruit with no flavour, no colour, and a high nitrate level: it all prevents pineapple products from becoming a major item again. I am not sure if the juice they are processing now will find a home, especially if the quality is low.”

According to a Foodnews source, the Thai Food Processors Association (TFPA) has not yet commented on the reduction of the permissible limit. The problem remains the high price of raw material. If the price of canned pineapple suddenly climbs higher, then PJC might become slightly cheaper, but that does not appear likely.

“Some clients are sticking to 25ppm,” said another source. “The French prefer a limit of 25ppm. I understand that Greenpeace and the World Wildlife Fund are against the higher limits, though.”

The big European blenders have apparently been holding talks with Thai processors for the last month, and the blenders are most likely to benefit from this: they will be able to buy out-of-specification PJC cheaply and blend it to come below the 50ppm limit. If they were able to secure, or have options on, cheap PJC over 25ppm before the AIJN announced it was relaxing the limits, they will be able to benefit on both sides of the transaction: suddenly, they have a product they can sell.

However, they will have to be extremely careful with the blending in order to ensure a palatable product.

Meanwhile, keep an eye on Colombia, which provided one of the big surprises of the SIAL trade show in October. Riopaila Catilla, an agri-industrial combine founded in 1918, intends to build an entire pineapple business cluster in the country. The company is already active in sugar

(growing 80,000 tonnes of sugar cane annually), ethanol (400,000 litres per day with another 480,000 litres/day soon to come from a new plant) and fresh pineapple (it started exporting fresh fruits to France last year).

The company took seeds from Costa Rica to ensure that it would grow the right, and certified, pineapple variety.

Director Belisario Caicedo Capurro told Foodnews that Riopaila Catilla is now growing 24,000 tonnes of fresh MD2 pineapples annually, and exporting 800 containers, or some 16,000 tonnes, per year. It is also putting in a line to produce fresh cut pineapple, packed in plastic tubs, for the US market.

Riopaila Catilla will produce MD2 concentrate and single strength juice. The exact production volumes are still uncertain.

So, finally, what will happen to the PJC price in 2017? Foodnews thinks it will drift down over the year. If the 2017 crops in Thailand show a recovery – especially the winter crop – then prices should be something around USD2,250/tonne in late 2017, ready for a continuing drift down to USD2,000/tonne some time in 2018.

Meanwhile, keep an eye on Colombia, which provided one of the big surprises of the SIAL trade show in October.

http://www.tradecos.com.ar/eng/#


While all the attention has been on the chaos surrounding supplies and pricing of the three major fruit juices (apple, pineapple and orange), there have been some market disturbances. Weather issues, political concerns, and simple shifts in consumer demand are all playing their part.

Lemon juice has been another upset. Foodnews thinks that as a fruit juice, lemon has considerable potential for the next few years. Not only is it a popular flavour in its own right, but it is untainted by the sugar scare. Nobody has ever accused lemon juice of being too sweet. Nobody drinks lemon juice as a pure juice either; at least not in large quantities.

Prices of lemon juice concentrate are rising again, just when everyone thought the shortages were over and prices were drifting down. This is mostly due to poor harvests in Italy and Spain. For some reason, processors in Argentina failed to read the runes properly, and just as everyone (including Foodnews) was expecting them to raise their prices, even

only slightly), they cut them. Buyers probably could not believe their luck, and stripped Argentina dry of stocks.

Foodnews is reasonably sure that some of these purchases were speculative; that they were bought with the expectation of turning a swift and easy profit. Certainly the ex-dock price in the US has risen by several dollars per gallon in the last few months and now stands at around USD18/gallon; what it was a year ago, before the price decline began.

Spain’s citrus production is forecast to bounce back next season, and so Spanish lemon juice prices can be expected to weaken again, unless there is another unexpected weather event.

MangoIndian mango is an unusual beast: it is one of the few major fruits whose cultivation is increasing, so at least there is plenty of raw material, no matter what happens to the weather. The vast majority of India’s mango harvest is eaten as fresh. India

What has been happening with the ‘minor’ fruit juices?

By Neil Murray

Best of the rest


10 Year Comparison by Crop Year

Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Beginning Inventory

Barrels Unfrozen: 0 0 0 0 0 0 0 0 0 0

Barrels in Freezers: 2,654,030 2,564,083 2,365,693 1,724,262 1,497,412 1,897,212 1,897,270 1,425,766 1,292,950 1,375,747

Barrels in Process Form: 1,834,928 1,903,560 1,632,929 1,683,773 1,000,914 1,123,944 2,447,058 1,529,801 1,687,510 1,614,077

Barrels in Concentrate Form: 3,182,138 3,041,141 1,795,073 1,159,770 1,584,245 1,590,050 0 0 0 0

Inventory Before Adjustments: 7,671,096 7,508,784 5,793,695 4,567,805 4,082,571 4,611,206 4,344,328 2,955,567 2,980,460 2,989,824

Adjustments: 45,440 -10,786 391 -53 18,961 -612 112,416 10,980 71,984 45,013

Adjusted Beginning Inventory: 7,716,536 7,497,998 5,794,086 4,567,752 4,101,532 4,610,594 4,456,744 2,966,547 3,052,444 3,034,837

Sources

Massachusetts, Rhode Island, Connecticut: 2,190,416 1,894,483 1,866,242 2,157,436 2,358,481 1,892,382 1,817,060 2,374,353 1,521,894 1,879,610

New Jersey: 438,289 570,842 508,805 536,014 494,979 548,889 544,066 508,247 521,905 465,741

Oregon: 546,949 492,649 425,491 403,639 360,533 286,830 429,645 399,348 491,505 465,745

Washington: 196,085 149,883 147,891 136,653 123,072 118,367 179,225 108,205 188,094 121,368

Wisconsin, Michigan, Minnesota: 4,663,294 4,923,580 5,861,014 4,702,938 4,416,223 3,950,192 3,955,284 4,463,818 3,823,669 3,847,157

Other states: 131 27,308 9,169 569 1,304 900 7,599 6,282 580 652

Total Domestic Acquired: 8,035,164 8,058,745 8,818,612 7,937,249 7,754,592 6,797,560 6,932,879 7,860,253 6,547,647 6,780,273

Foreign Acquired - Fresh: 70,420 70,446 111,920 156,194 126,708 34,936 61,804 183,934 65,866 145,138

Foreign Acquired - Processed: 1,742,388 1,776,010 1,403,545 1,341,308 905,021 862,256 1,051,965 752,660 936,935 963,792

Foreign Acquired - Concentrate: 9,728 1,067 32,022 45 0 1,597 3,786 0 0 0

Total Barrels Acquired: 9,857,700 9,906,268 10,366,099 9,434,796 8,786,321 7,696,349 8,050,434 8,796,847 7,550,448 7,889,203

Barrels in Transit: -28,070 48,006 92,883 -6,901 -6,859 -283,660 -43,553 -131,688 -61,613 -86,023

Sales

Fresh: 270,229 258,767 270,383 265,364 258,980 257,012 241,219 252,694 291,587 258,454

Processed & Sold: 5,006,238 4,835,007 4,584,764 4,355,998 4,571,098 4,714,664 4,671,454 4,701,831 5,172,241 4,909,571

Sold to Processors in District: 301,008 498,375 273,032 173,659 145,475 273,307 259,963 92,018 283,580 310,372

Sold to Processors outside of District: 450,867 398,582 440,386 656,476 558,707 685,912 560,864 487,560 370,248 643,674

Sold to Government: 431,573 432,967 257,528 51,270 40,034 43,127 43,387 46,594 50,015 46,138

Total Domestic Sales: 6,459,915 6,423,698 5,826,093 5,502,767 5,574,294 5,974,022 5,776,887 5,580,697 6,167,671 6,168,209

Foreign Sales Fresh: 47,906 55,952 53,581 56,275 58,847 48,267 50,667 48,313 54,899 75,240

Foreign Sales Processed: 2,319,994 2,073,404 2,069,341 1,593,483 1,653,538 1,503,215 1,768,079 1,789,979 1,519,065 1,485,823

Foreign Sales Concentrate: 649,211 597,483 591,427 676,828 548,418 697,415 36,064 0 0 0

Total Sales: 9,477,026 9,150,537 8,540,442 7,829,353 7,835,097 8,222,919 7,631,697 7,418,989 7,741,635 7,729,272

Shrinkage: -30,174 611,795 250,150 422,249 520,394 336,822 297,724 181,597 -38,459 130,008

Total Sales & Shrinkage: 9,446,852 9,762,332 8,790,592 8,251,602 8,355,491 8,559,741 7,929,421 7,600,586 7,703,176 7,859,280

Ending Inventory

Barrels Unfrozen: 0 0 0 0 0 0 0 0 0 0

Barrels in Freezers: 2,773,027 2,654,030 2,564,083 2,365,693 1,724,262 1,497,412 1,897,212 1,897,270 1,425,766 1,292,950

Barrels in Process Form: 2,024,414 1,834,928 1,903,560 1,632,929 1,683,773 1,000,914 1,123,944 2,447,058 1,529,801 1,687,510

Barrels in Concentrate Form: 3,508,002 3,182,138 3,041,141 1,795,073 1,159,770 1,584,245 1,590,050 0 0 0

Total Barrels in Inventory: 8,305,443 7,671,096 7,508,784 5,793,695 4,567,805 4,082,571 4,611,206 4,344,328 2,955,567 2,980,460

Source: Cranberry Marketing Committee Cranberry Marketing Order


presently grows about 15 million tonnes of mango, up from 12 mln tonnes a few years ago) but only processes about 7% of its fruit into juices and purées. Another 4% goes to pickle manufacture, and the rest is eaten fresh. As the harvest size grows, there should be more fruit for processing.

Also, there has been some serious consolidation in India’s mango processing industry in the last few years. The small processors, who could not afford to upgrade their facilities, have been squeezed out, leaving much of the business in the hands of more efficient (and probably more responsible) businesses. Also, there has been a very pronounced shift away from packing in

cans to packing and shipping in bulk, which is a good way of cutting costs.

Some Indian processors are trying to wean buyers and consumers away from the ‘traditional’ mango varieties (Alphonso, Totapuri, Kesar, Sindura…) onto new varieties and also blends. This is a development that has some mileage in it. Traditional Indian consumers, be they in India or abroad, will always swear by their favourites and tolerate nothing else, but the rest of the world’s consumers are not so discerning.

Latin American mango has been largely locked out of Europe this year, because Indian product has been cheap, but the

processors in Mexico, Colombia and Peru have an advantage in that they are close to the colossal US beverages market and probably better able to react to changing trends there. If (for example) a lemon/mango blend becomes popular, these are the countries that will benefit from it first.

GrapeWhite grape juice prices are rising again in Europe, due to unsatisfactory harvests there, which have meant that more grape juice than usual has been taken up by the wine industry.

Grape juice has been overshadowed by apple for most of the last couple of years. Apple juice has been very cheap, and although the Polish raw material price this season is (so far) higher than expected, in real terms, apple juice is still a very cheap product, likely to stay that way, and it will be some time before grape juice supplants it as the main ingredient in some juice blends.

Other juicesThere is little to say here. Cranberry juice is still unfeasibly cheap, as is blackcurrant, and no great changes can be expected there in 2017. Passion fruit juice concentrate should be cheaper in 2017 as well. Raspberry juice will probably still be expensive. Peach and apricot purée prices should also be higher than they were this year: over-production by Chile has kept prices low, but Chilean stocks should be sufficiently reduced by January when the new season southern hemisphere production starts. It is far too early to tell what the harvests in Spain and Greece will be like: Europe has the winter to get through.

Passion Fruit JuiceNFC & [email protected]


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“We have a structurally strong product; but more importantly, we help companies save costs through our rental program,” said George McFarlin, president of the Goodpack Global Food and Liquids Division. Because Goodpack owns and operates the world’s largest fleet of IBCs, this allows them to provide one-way trip rentals to most export destinations.

The inherent inefficiencies of steel drums, such as the high cost of storage, disposal and transit, make Goodpack bulk packaging the best option. Goodpack IBCs reduce labour costs for container handling, lower packaging and shipping costs, minimise disposal costs and require less warehouse space.

Greener supply chainCompared to other conventional IBCs and drums, returnable Goodpack IBCs have the lowest environmental impact and lowest carbon footprint, which makes them a truly superior packaging solution. According to McFarlin, “Every year, the Goodpack IBC fleet saves the equivalent of over seven million trees from being harvested to make disposable IBCs.” Goodpack IBCs reduce the impact of expendable

packaging and eliminate waste for a greener supply chain, helping Goodpack customers gain a competitive advantage.

The Goodpack model has shown that cost efficiency does not have to be achieved at the expense of sustainability. Goodpack offers a solution that satisfies today’s environmental concerns through:

• Waste minimisation (no bins, drums or pallets to dispose of)

• Reusable packaging (no recycling needed – Goodpack containers are collected and reused)

• Lower carbon emissions and environmental impact (no energy required for recycling, disposal or landfill)

“Reusing is a step ahead of recycling,” said McFarlin, highlighting that if both practices are aimed at reducing landfill waste, reusing containers also cuts down on the energy and water required for recycling. The life cycle of the IBC is much longer, since it can simply be used again and again.

Convenient and efficient Goodpack IBCs can be easily integrated into a customer’s supply chain system. The IBCs are made of galvanised steel and feature a convenient built-in pallet with four-way entry for forklift handling. They can be collapsed within seconds to maximise warehouse space; and unlike wood and corrugated bins, they do not require structural strapping. The stackable, interlocking design when full or empty offers efficiency in storage, especially over drum containers. One MB5 is equivalent to seven 200-liter drums, creating inherent efficiencies throughout the supply chain. Goodpack IBCs offer other advantages as well:

• Suitable for shipping in both dry and refrigerated 20-foot and 40-foot containers

• Stack four units high (laden/filled with product)

• Delivered directly to the food processor

• Empties are collected anywhere in the world

• Flexible and cost-efficient term and trip lease options

About GoodpackGoodpack owns and operates the world’s largest fleet of patented, steel Intermediate Bulk Containers (IBCs). This multimodal, reusable metal box system provides packaging, transporting and storage rental solutions to the Food & Beverage industry. Headquartered in Singapore, Goodpack operates through a global network of subsidiaries and regional offices in more than 70 countries. With over 3.4 million IBCs and more than 7,700 collection and delivery points, customers can hire and de-hire Goodpack IBCs practically anywhere in the world.

For more information, visit: www.goodpack.com

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Global Outlook 2017 | Foodnews 26 www.agra-net.com


It seems ironic now that at the International Peanut Forum in Madrid this May, a panel discussion indicated that overall supply should be reasonable this year.

Although there were concerns over the forthcoming crop in Argentina, the general consensus was that world availability was likely to be adequate.

However, this theory was overturned in subsequent weeks and months as the full extent of the problems with Argentina’s crop and hence the country’s flow of supplies became clear.

It has been described as one of the longest and most complicated seasons in the history of Argentine peanut crops. The country suffered continued weather delays and other crop problems. Traders expect losses to increase due to a higher

percentage of damaged and mouldy nuts.

The crop was severely delayed, with harvesting running from April to late August. The country’s 2016 crop has been estimated at 22% lower than last year at 928,000 in-shell tonnes.

Argentina will be left with a severely reduced export availability.

There is positive news, though, on the size of the latest crop in the US. At the time of writing (early November), the latest USDA estimate put this crop at 6.24 billion lbs (3.12 million short tons). The new figure was 4% up from the 2015 total of 6.00 bln lbs, and, if realised, would be the second highest crop on record.

It is interesting to see that the USDA’s November estimate is only 1% down from

The peanut market has been a very difficult one this year, with numerous supply issues.

By Julian Gale

Facing the challenges of a very choppy market

Although there were concerns over the forthcoming crop in Argentina, the general consensus was that world availability was likely to be adequate.


its previous estimate of the peanut crop in October. This would seem to suggest that recent fears over the final impact of Hurricane Matthew were largely unfounded. Whilst it is true that heavy rains and other adverse weather from Hurricane Matthew hit peanut growing areas in North and South Carolina, Virginia and Florida, the net result in terms of overall lost tonnage looks to be minimal. This does, of course, assume that there were also no additional issues with quality created by the adverse weather conditions.

Georgia, the biggest producing state, escaped damage to peanuts (but pecans were badly hit there). Of course the key difference is pecans are grown on trees and therefore more susceptible to wind and other weather damage than groundnuts.

The outlook is also good for China’s next crop: plantings are said to be 15-20% up from 2015 and trade estimates suggest a crop of 15-18 mln tonnes.

The main questions now are will US peanut exports be enough to help top up global supplies and will Chinese export volumes be of any significance?

Some say no on the latter on the basis that domestic demand is very high in China, particularly for crushing into peanut oil.

Europe has been buying a lot of US peanuts in the last few months, partly due to the absence of Argentina. In theory then, the US should remain a very important origin.

However, it is not quite that simple.

There are concerns in the US over potentially high incidences of aflatoxin and this is expected to put more pressure on US blanchers.

These American fears over aflatoxin are linked to earlier hot, dry weather from June and July onwards.

The dry land regions are said to be particularly affected. According to some reports up to 50% (dry lands) of the crop will be affected.

As a result of this, it is rumoured that most blanchers are already fully booked up to April or May next year.

Ironically, the better the American quality at harvest, the worse it is for the American domestic buyer because more would end up being sold to the EU.

A quality problem for the American new crop would mean less American peanuts for the EU and a higher price on American material for the EU, but a better supply in the American domestic market.

Quality is also proving to be problematic from Argentina’s 2016 crop. Argentine sellers are afraid that they will receive aflatoxin rejections in Europe. In terms of their supply status in general, trade reports in November were indicating that they were already sold out on 2016 crop.

Most of China’s new crop peanuts are said to be of a smaller size and there are also reports of a lot of sprouted kernels due to rains during harvest. Hence, processing costs of Chinese peanuts will increase and there is a bigger risk of aflatoxin, it is claimed.

India is expecting a good winter crop of about 5 mln tonnes.

Indian exporters are hopeful that with crop issues in Argentina and Brazil and a larger crop in their country they are in a stronger position to supply to markets such as Russia, Mexico, Algeria and the EU in terms of quality, volume and prices.

Looking ahead to 2017, sources in Argentina have warned that the initial phase of plantings for the country’s next crop has not gone well as rains have again interrupted operations. This is of course early days, but there is no doubt a heightened degree of nervousness after the experiences of the 2015/16 season.

US PEANUT CROP ESTIMATE Peanut area harvested, yield and production - states and US: 2015 and forecasted, November 1, 2016

Area harvested (acres) Yield per acre (lbs) Production (1,000 lbs)

State 2015 2016 2015 2016 October 1

2016 November 1 2015 2016

Alabama 196,000 173,000 3,250 4,000 4,000 637,000 692,000

Florida 180,000 146,000 3,600 3,900 3,900 648,000 569,400

Georgia 777,000 710,000 4,330 4,400 4,200 3,364,410 2,982,000

Mississippi 41,000 39,000 3,500 4,100 4,100 143,500 159,900

North Carolina 87,000 101,000 3,480 3,800 3,800 302,760 383,800

Oklahoma 9,000 12,000 3,400 3,800 3,800 30,600 45,600

South Carolina 82,000 106,000 3,200 3,800 3,800 262,400 402,800

Texas 165,000 250,000 3,200 3,000 3,300 528,000 825,000

Virginia 19,000 20,000 3,650 3,600 3,600 69,350 72,000

Other states * 4,900 30,000 3,130 3,690 3,690 15,337 110,700

US 1,560,900 1,587,000 3,845 3,976 3,934 6,001,357 6,243,200

= 3,121,600 short tons

* In 2015 other states include New Mexico. For 2016, other states include Arkansas and New Mexico.SOURCE: USDA


Advice for buyersBuyers are urged to be on time in covering their needs from the US, China and India as attention is on these new crops. The need to be timely in covering from the US, China and India is influenced by lack of availability from those origins that have already had their 2016 crops, these being Argentina, Brazil and South Africa.

It is also logical to be flexible on choice of origin, where it is possible/feasible to be so.

Based on the anticipated good crops in the US, India and China, some industry analysts are already predicting a decent level of global supply for 2017 and possibly even a surplus.

In October, Indian peanut exporter Agrocrops revealed that it views the market as heading into a supply surplus for 2016/17 and predicted that record crops in India and normal to good crops in China, Brazil, the US and Senegal might signal a price war. Agrocrops believes that India could gain strength with its spot in Asia and its prices could drift gradually to historical lows to tempt buyers.

A potential surplus certainly looks feasible in principle, but experience has shown that nothing can be assumed in this sector. For example, the actual outcome in terms of supply flows is also likely to be influenced once again by what happens with the crop in Argentina. Any issues with the country’s 2017 crop could stifle availability from this key South American origin – even if the effect is only temporary – and this in turn could prompt rival origins to command high prices for their produce and/or hold back on offers to fuel any scarcity and upturn in prices.

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This potential buying spree could gain further momentum from the fact that South Africa is sold out of its 2016 crop. Most of this went as in-shell to China.

China is keen to acquire the first available new crop material from the US because Chinese New Year is early in 2017.

Mexico has been shipping a lot of in-shell to China recently. Mexico’s pecans are also used by US pecan shellers.

The demand pressure is also building up from elsewhere.

US pecan output has averaged 277 million in-shell lbs in the last 10 years, compared with 255 mln in-shell lbs in the previous 10 years.

Looking further ahead, the US is expected to face increasing competition over the

coming years from rival origins, according to a July 2016 report from Rabobank.

Rabobank recalled that the 2015/16 Mexican pecan crop was around 250 mln in-shell lbs, despite heavy rains during harvest. An estimated volume of about 60% of this is exported to the US, 20% to China, while the remainder is consumed domestically.

Mexico’s pecan harvest is expected to increase by more than 30% within the next 10 years.

South Africa’s pecan production is booming, amounting to nearly 20 mln in-shell lbs this year, and many industry observers expect production to increase as much as four-fold within the next decade, significantly improving the country’s competitiveness. Australia’s average pecan crop is no more than 15 mln in-shell lbs.

With the last shipments of the US’s 2015 pecan crop now gone global buyers are poised to acquire the first material from the new crop, which is being harvested now (November 2016) and into December.

By Julian Gale

Poised to purchase pecans

South Africa’s pecan production is booming, amounting to nearly 20 mln in-shell lbs this year, and many industry observers expect production to increase as much as four-fold within the next decade, significantly improving the country’s competitiveness.


US new cropThe 2016 US crop is forecast to be higher than last year. The National Pecan Shellers Association indicated a likely volume of 306.25 million in-shell lbs compared with 254.30 mln lbs in 2014.

However, the picture has changed somewhat since this estimate was released.

In October, the crop in Georgia was badly hit by Hurricane Matthew. The full extent of the crop losses remains to be seen but US industry sources expect a downward revision to the overall crop estimate.

Deborah Walden Ralls, vice president of risk management at Arizona-based Green Valley Pecan Company, told Foodnews at the SIAL food exhibition in Paris, that the main impact from Hurricane Matthew was to the southern part of Georgia. She was aware of a number of growers that had lost mature trees. One grower in Valdosta, Georgia had reported losing 1,000 trees from his orchards.

Ralls said that, based on all the reports coming through, she was now expecting a downward revision to the previously high estimate for the forthcoming US pecan crop.

Walls explained that Georgia was the main state impacted by Hurricane Matthew, although south and north Carolina were also affected.

Green Valley Pecans’ Arizona farm is in Sahuarita and the main impact for the company was high winds. “Overall, it didn’t affect my particular farm like it did some others,” Walls stated.

Not surprisingly, the spot market for 2015 crop pecans is becoming increasingly tight.

Dutch broker Antares Commodities warned that this reduced availability in pecans is expected to continue until the end of this year. “Last shipments of current crop are shipped and harvesting of new crop started recently,” the company added in a November 9 report.

Shipments of new crop will start at the earliest by mid-December.

Most crop harvested in November is already under contract or will be used to fulfil old contracts, Antares Commodities explained. As of November 9, fob prices were between

USD6.00-6.50 per lb, depending on packer and region, it noted.

Mexican pecansWith effect from October 2016 Antares Commodities has also been able to supply Mexican pecans.

“Prices are currently around the same level as USA pecan. Mexico is shipping a lot of pecan in-shell to China. Therefore, there has been a lot of pressure on new crop availability which was available earlier. Besides shipping in-shell Mexico is also used for USA pecan shelling operations,” the company explained.

In its July 2016 report Rabobank explained that US pecan exports have been increasing 9% annually over the last decade. By volume, most of the growth has been occurring in China, the EU and Vietnam. These regions have, respectively, raised their consumption by 40 mln, 24 mln, and 19 mln in-shell equivalent lbs.

“While most markets use pecans as an ingredient, the Chinese typically consume them as a snack,” Rabobank explained. “They import them in-shell and pre-crack, roast, and flavour them for sale as individual nuts. China has created some additional competition for US pecan processors by directly buying larger, higher quality pecans from US growers. South African pecan growers enjoy a competitive advantage over US exporters, since their crop is harvested counter cyclically, making it easier for Chinese buyers to supply their markets for the mid-autumn and Chinese New Year’s festivals.”

The company suggested that if pecan growers and processors fail to successfully augment their marketing of pecans, average prices will decline as production continues to increase, particularly in Mexico and South Africa.

“Production below the Equator will moderate the price spikes enjoyed by US growers prior to the Chinese holidays. At the same time, the lower, more stable price will increase consumption in the US and abroad,” the report added.

As a general observation, Rabobank noted that growers and processors will find it necessary to collaborate more on new research and marketing programmes. In addition, it feels that the US will experience more competition for the Chinese market, as Mexican and South African production increases.

US new crop salesFirst new crop shipments from the US are committed and sellers/processors are working for shipments from January onwards now.

The combination of this large US crop and anticipated imports from Mexico should lead to a good overall supply into 2017, which means there will be some relief from historically high prices by early 2017.

The extent of any pricing downturn remains to be seen of course and it is likely that its scope will be limited at least to some degree by demand from China and elsewhere.

Buyers have been advised that they should be covered for first new crop shipments and be prepared for strong buying competition from China.

There is also a need to be patient in covering the later positions from February shipments onwards. Moreover, buyers are urged to take the opportunity to purchase on expected lower prices in early 2017 and not to hesitate.

In October, the crop in Georgia was badly hit by Hurricane Matthew. The full extent of the crop losses remains to be seen.


Slightly just a week before this year’s Global Outlook went to press, the price of frozen round skipjack tuna cfr Bangkok rose by 50 dollars to USD1,450 per tonne. And yes, Foodnews broke the story. To Foodnews’ devoted readers, you will now understand that running the same headline – Expected price fall fails to happen – for longer than the month of October was not due to this reporter’s lack of creativity but because the tuna market was again smelling familiarly fishy.

This is the first price increase since September, when the price stalled at USD1,400/tonne cfr BKK, and it means that, at present, raw material is priced USD400/tonne above last year’s price during the same period. The increase

took industry players aback as they were counting on prices to follow the historic trend of easing towards the end of the year.

“It is going up and USD1,450 tonne cfr will be history,” an executive working with one of the three main fishing trading firms stressed. He dismissed speculation that prices would ease, asserting that they will strengthen further, based on supply and demand.

In this regard, one American buyer noted that the increase in price could also be related to fish traders trying to squeeze buyers thinking there is hidden demand, while a fellow countrymen noted that “one of the unfortunate parts of this price

As volatile as ever, the latest price movement of skipjack raw material landed in Bangkok still resonates across the industry; with all professionals involved in the trade looking everywhere to make sure it is not they who take the blow as the usual ‘someone is going to lose lots of money’ spreads like the plague.

By Lorena Ruibal

Rough sailing ahead

“It is going up and USD1,450 tonne cfr will be history,” an executive working with one of the three main fishing trading firms stressed.”


increase is that it continues to fuel the belief that the market is being manipulated as opposed to responding to actual supply and demand.”

But supply is short. The main driver for the upward price move was the poor catches in practically all oceans.

The price of skipjack tuna caught in the Eastern Pacific Ocean and landed in Manta is quoted at USD1,500 cfr.

At present, around 67% of the Ecuadorian fishing fleet has tied up for the second fishing closure in the Eastern Pacific Ocean, which started on November 19 and lasts for two months. The FAD ban on the Western Central Pacific Ocean ended in November 1 and as one contact noted: “The fish catch usually improves after the FAD ban though it does not always happen right away”.

The current shortage of fish is keeping prices above last year’s level and packers are impatient for lower prices to boost sluggish canned tuna sales. So far, packers are bearing the brunt – Thai Union reported that net profit in Q3 was hurt by high tuna raw material pricing compared with a year before.

One Philippine packer noted that even if

fish prices go up in December due to a lower supply this year, prices should start to fall in January or February, when catches should start to improve.

The truth is there is no easy prediction. The rise of the raw material price alone has already trumped all media forecasts and industry’s general consensus suggesting that the price would fall for the upcoming deals. And, honestly, that could easily be the case for any forecast on the price of canned tuna.

The million dollar questionTuna packers in Thailand, Ecuador and Philippines concurred that rising costs of raw material should and would reflect on the price of end product, whereas European and American buyers stressed that most of the deals have already been done and that there was no comeback.

“Some orders have been booked at prices of two weeks ago, so it may translate to a higher price for canned tuna,” observed the Philippines source. However he noted that: “Big tenders or orders have not been closed yet and most importers/buyers are still in a wait and see mode”.

Ecuadorian packers also hinted that there were still ongoing negotiations, with buyers pushing the price down. “Typically,

demand is high in the first months of the year, so if catches do not improve, the price could rise,” the Ecuadorian packer observed, although he noted that there is a delay between what happens in this market and what happens to consumption.

Conversely, one European importer of canned tuna observed that most European retailers have already covered.

“It’ll be very painful for any retailer that hasn’t covered. They’ll be in a competitive disadvantage against the majority,” he noted, adding that political events such as Italy’s constitutional referendum could plunge the euro against the dollar further, which has surged recently against the euro. This would make purchases of canned tuna more expensive.

Meanwhile, buyers in the US held a similar view. “This is most surprising, at least for the US market,” said an American importer, adding: “There is no demand here. Everybody I know is already bought into the first quarter.

“There is too much supply for too little demand these days – at least for ‘store brand’. I feel that there is overcapacity on the supply side in the world.”

Asked whether he expected the price of canned tuna to appreciate after the news, he answered: “We don’t care. Our buyers are covered. No one is asking for tuna. Pineapple demand is strong, artichokes are getting going, and mandarins are happening... but not tuna.”

Yet some canners maintain that will see prices of canned tuna appreciate between December and February. This time Foodnews will let you sail alone: we just showed you where the waves break. Watch out!

Skipjack price c&r BKK in (2013-2016)

Source: FOODNEWS

USD/

tonn

e

500

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2500

Janu

ary

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-Jan

uary

Febr

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Mid

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ruar

y

Mar

ch

Mid

-Mar

ch

April

Mid

-Apr

il

May

Mid

-May

June

Mid

-Jun

e

July

Mid

-Jul

y

Augu

st

Mid

-Aug

ust

Sept

embe

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2013 2014 2015 2016

The current shortage of fish is keeping prices above last year’s level and packers are impatient for lower prices to boost sluggish canned tuna sales.


Right before the start of the apricot packing season in the northern hemisphere, Foodnews projected that the share distribution of the export market was set to change this year if production forecasts came true. Some did, whereas others differed hugely from initial estimates.

Spain’s forecasted 25% decline in output against last year was far from accurate, whereas Greece’s latest production figures are in line with its initial 8% decrease forecast. As for China, it is not clear whether Chinese exports will eventually be down by 10% owing to a poor crop and weak demand as they claimed. California’s bumper apricot crop did result in higher canned apricot volumes, although it did not lead to smaller imports from other producing countries into the US, one of the largest markets for canned apricots.

Further, it is still early to foresee what volumes the South African apricot crop will deliver, yet if the country’s canned output were to fall to its lowest level in the last six years, at 916,233 basic cases, this year’s global canned apricot production would still exceed last year’s volume by 5% to 3.90 million basic cases. So far, it is not looking like South Africa is expecting a smaller crop, given that all the reports from the country are optimistic.

Spanish apricot seasonDespite an expected bumper apricot crop this year, Spanish canners told Foodnews that end product production will shrink by 25% to 186,000 odd basic cartons of 24x1kg. It now turned out that production is estimated at 248,000 basic cartons, the same volume as last year, of which practically the majority is destined for foreign markets.

Apricot processors in the northern hemisphere saw the canned apricot market stable regardless of a potential decrease in supply from practically all origins, except for California, compared with last year. The feared shortage did not take place and, even so, prices moved up.

By Lorena Ruibal

More canned apricots, not less

Despite an expected bumper apricot crop this year, Spanish canners told Foodnews that end product production will shrink by 25% to 186,000 odd basic cartons of 24x1kg.

36 www.agra-net.comGlobal Outlook 2017| Foodnews

Packers said, as the season unfolded, that over-ripe fruit caused by high temperatures during the harvest rendered the fruit unsuitable for canning, forcing Spanish canners to finish packing earlier than anticipated. The discarded fruit was eagerly taken by the purée industry, given the strong demand by the sector. Around 75% of Spanish processed apricot exports under HS code 200850 are purée, as opposed to other rival producers which log mainly canned apricots under this code reference.

The price of raw material settled between EUR0.45-0.50 (US$0.4800.53) per kilo ex-field, similar to last year’s average price of EUR0.48/kg.

It now appears clear that Spain will at least match last year’s total canned

apricot production, which represented a surge in output of 81% compared with 2013, the earliest date for which there is data available.

In terms of pricing, Spain is selling the carton of 12 cans of one kilo each, choice quality easy-open fob Cartagena at EUR13.50. The same product non easy-open cans would cost EUR0.15-0.20 less per carton.

Californian apricot seasonThe Californian apricot crop was forecast at 50,000-55,000 (short) tons, an 11-22% surge compared with last year. Of that, 17,000 tons (15,422 tonnes) found their way to the three main apricot processors in the state: Del Monte Foods, Seneca Foods and Pacific Coast Producers (PCP).

Yet the latter observed: “the canning apricot industry ended the season with a total of 12,800 tons”.

This year’s bumper crop is linked to better yields rather than a significant increase in planting area devoted to apricots. California has seen a 30% decrease in bearing surface since 2005 to 4,170 hectares in 2015.

The increase in supply depressed the price of raw material, which was reportedly set at USD625 per (short) ton or USD689 per tonne. This is USD83/tonne cheaper than last year.

As a result, California doubled canned apricot output to 950,000 basic cases of 24 cans of 2½, this season against last year, which was the lowest in the last 10 years. Although it marks a steep rebound from last year’s output, this season’s canned apricot production fell below the one million-case mark, level at which production had stabilised since 2008. The figure is 50,000 cases below Foodnews’ estimates at the beginning of the season.

The price of canned apricots also went down this year, with the price of foodservice size canned apricots (6/A10) unpeeled in light syrup as well as unpeeled and packed in pear juice fob West dropping to USD36.00 per case, which represented a price fall of USD4.00 and USD3.25 per case respectively, compared with the same month the year before.

The US imported 2,985 tonnes of canned apricots (HS code 200850) in 2015/16 marketing year, which posted a 51% increase against 2014/2015. Season to date data (from June to September this year), shows that US purchases of foreign canned apricots increased by almost

Total canned apricot production (Basic cartons of 24xA2½)

Year Greece Spain China South Africa California TOTAL

2011/12 820,000 1,166,700 1,008,618 1,100,000 4,095,318

2012/13 600,000 1,208,400 988,380 1,020,000 3,816,780

2013/14 450,000 136,000 1,375,100 1,529,896 900,000 4,390,996

2014/15 700,000 144,000 1,125,100 916,233 1,030,000 3,915,333

2015/16 650,000 248,000 1,208,400 1,092,027 500,000 3,698,427

2016/17 600,000 248,000 1,184,200 950,000 2,982,200

Source: Cancon


13% year-on-year. Foodnews anticipated that any substantial surge in domestic production could reduce the volume of imports, which has not happened so far, based on the aforementioned customs data.

China was practically the only supplier of canned apricots during the period, with just some 23 tonnes received from Spain in July and 47 tonnes from South Africa in August, which unlike Spain was not in season, as the African country starts production in December or so.

Greek apricot seasonEKE’s president Costas Apostolou confirmed that this year’s total apricot canned production matched the forecasted output of 600,000 cartons of 24x1Kg with 13,000-14,000 tonnes of apricots going into canning. This is 8% down against the 650,000 cartons of 24x1kg produced in 2015.

There are around five canners packing apricots in Greece, which are paying a significantly lower price for raw material than last year. EKE’s president Costas Apostolou told Foodnews that the raw material for canning has been set at EUR0.32-0.34 per kilo ex-field and at EUR0.20/kg for purée. This is EUR210 per tonne less than last year, when the price was fixed at EUR550/tonne.

Foodnews learned before the apricot season started that asking prices were EUR20.5-21 for a carton of 24x1Kg choice non easy-open can ex-works, and the

standard quality same spec at EUR18.50-19.0/carton. Yet Costas noted through the season that the carton of 24x1kg choice quality easy open was selling at EUR21.00 ex-factory. The price has reportedly gone up to EUR23 for the same product. Greece has still some limited stocks available.

Chinese apricot seasonSources in the country have projected exports of canned apricots to slide by 10% during the 2016/17 marketing year.

An industry source in China told Foodnews that crop volumes are projected to be similar to last year’s, yet the price of raw material is likely to be lower due to weak demand from Europe.

This view was challenged by a different packer in the country, who noted that the price of raw material was the same as last year’s CNY2,000/tonne despite the crop being shorter than in 2015.

Both canners agreed, however, that the canned apricot production is set to be smaller than last year and that demand is slack. Yet the first source attributed the lower output of end product to “fewer orders with canners not wanting to produce more without firm orders to avoid risks” rather than to a smaller crop.

Like in Greece, just a few Chinese packers can apricots compared with peaches, as the packing period is shorter and they prefer to process other products instead, one of the sources explained.

According to data presented by China’s Canned Food Industry Association (CCPIA) in Cancon13, total apricot production totalled 1.88 million tonnes in 2015/16, of which 27,400 tonnes went into canning producing 1.18 million of cartons of 24x1Kg. Of that, 656,000 cartons were exported to foreign markets. This equates to around 12,938 tonnes.

As projected by Foodnews, China did compete aggressively in pricing. The Asian country traded the case of 6xA9 canned apricot in light syrup at USD12.0 fob Quingdao, this is two dollars cheaper last year. The price of the 24x1kg case settled at USD18.0 also fob Quingdao.

This year’s slightly larger output in the northern hemisphere (+300,000 basic cases y-o-y) has not depressed pricing. Any later buyers seeking product before South Africa comes on stream may find it difficult and will pay higher prices. Yet, overall, the market is and will be stable.

In terms of pricing, Spain is selling the carton of 12 cans of one kilo each, choice quality easy-open fob Cartagena at EUR13.50. The same product non easy-open cans would cost EUR0.15-0.20 less per carton.

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Last year’s 2016 edition of the Global Outlook on the canned peach market headlined ‘Canned peaches all over the place’ and it couldn’t have got it more wrong. The much trumpeted projections of colossal outputs have once again failed to happen.

The market is short. Demand for canned peaches is outstripping supply, especially after output from Greece, the world’s largest producer, plunged this season to 8.5 million basic cases of 21 1kg (850gr, dw 480gr) the second lowest volume in the last eight years.

Coming from an also tight supply in 2015-16, Foodnews suggested in our half year Global Outlook that the price of canned peaches could start in the higher end for the 2016 season and continue to rise along the marketing year as shortage started to bite. Sellers took positions in the market very early in the season by offering at very competitive prices in order to maintain market share and compete against cheaper supplying rivals. When the reality of a crop volume much lower than expected emerged, packers found a strong opposition by buyers to acquiesce to higher prices.

Unlike last year, South Africa and Chile are

reportedly not holding any unsold stocks from the last season. And it appears that the northern hemisphere output is around 2.0 million basic cases short, currently standing at 55.5 mln basic cases. The southern hemisphere produced slightly over 10 mln basic cases in 2015. (See chart)

The market is set to tighten throughout the end of this year to the next season, potentially even if production in the southern hemisphere is good.

Tightened up Somehow Greece’s shortage came as a surprise. “I attended the Summer Fancy Food show in the US, willing to sell aggressively,” a Greek canner told Foodnews, adding that he just learnt when the packing season started that raw material would be even shorter than that of last year. Among the main reasons cited by Greek packers for the bad crop included not enough chilling time and rain that caused fruit drop. This source claimed his company is out of stock and that there could just be some small volumes of very specific products, if any.

According to EKE’s latest data, canned peach production went down to 8.5 mln cases. This is the second lowest volume in

Most of the canned peach packers in the northern hemisphere are reportedly sold out of this year’s really short canned peach production, with both Greece and Spain rumoured to be keeping some stocks. Optimistic crop forecasts encouraged sellers to offer aggressively early in the season, some now regret (off record) to not have sold product at the higher end.

By Lorena Ruibal

A lesson to learn


the last seven years, just behind the annus horribilis of 2013, when production plummeted to 7.8 mln basic cases.

“I think we should stop talking about ‘bad year’. We’ve have four bad consecutive years; perhaps bad is the new normal,” one canner claimed. He explained that buyers who have never bought from his company came knocking his door, which means they can’t get product from their normal suppliers either.

Asked how this is affecting the price of end product, he noted: “It’s not a year to speculate. I have to stick to my traditional buyers.” However, in October, at SIAL, European canners gave the impression that, officially, all packers are sold out, yet Greece and Spain may be holding up some volumes to speculate on the global short supply of canned peaches, should the output in the southern hemisphere not make up for the shortfall.

New season Greek canned peaches packed with early varieties were sold at EUR16.00 (USD17.16) per case of 24x1kg standard grade non easy-open ex-factory. This is more expensive than last year but fell short of Greek canners’ price target of EUR16.60-17.00/case for the same product and spec, a price that was finally reached in transactions in October.

The price of canned peaches choice quality in heavy syrup easy-open ex-factory has moved to EUR18.96 per case at present from EUR18.24 per case at the end of August or beginning of September.

Greece is said to be reducing contracted volumes of canned peaches to the US and customers are not happy. Most of them are

now seeking product from China, Chile and South Africa to make up.

Unlike Greece’s, Spain’s shortage turned out to be just smoke. Spanish packers pointed out at SIAL that canned peach production was down by 15% against last year, as they estimated the industry canned less than 90,000 tonnes of raw material. According to Agrupal’s latest figures as of mid-November, the industry canned between 95,000-96,000 tonnes of peaches, producing some 3.8 million basis cases. This is a 3% increase against last year’s volume.

The case of 24x1kg choice quality in light syrup easy-open cans amounts to EUR21.5-22.50 ex-works, with some sellers claiming that there were some transactions at prices between EUR23-24 per case same spec.

China has reportedly maintained output and export levels. One source confirmed that the country has some unsold stocks. He observed that “the previously strong South American market has submerged and that currencies have been hammered”.

Chinese prices for canned peaches stand at USD18 for the 24x1kg case of choice peach in light syrup Quingdao and USD16 for the A10 case some spec.

Everybody is saying that the price of canned peaches is going through the roof, yet Foodnews has so far seen slow, small advances. As one source noted, it could be that the volumes traded now, if any, are so small that they make no difference in the market, as most of the bookings were closed at the beginning of the season at the lower end.

Rubbing hands with gleeThe uncovered demand has turned south to source product. For Chile, South Africa and Argentina Christmas has come early, yet they need good crops to benefit from the opportunity, which leaves just two countries in the game as Argentina has been badly hit by bad weather.

“We’re seeing an enormous demand for product. Many shows have passed since we last saw this demand,” stressed a Chilean contact at SIAL. “We’ve already closed a sizable dispatch in January, right as we got the packing season started.”

Chilean packers have confirmed that the country is still on track to have a good harvest in terms of both quality and quantity. The packing season is set to start in around January.

Chilean sources noted that they will serve first loyal customers and then they will take bookings on a first-come first-served basis. Foodnews understands from several informants in the country that canners will reach December with no carry-over stocks, which are rumoured to have found its way into the US.

Based on several sources, Chilean canned peaches good standard easy-open fob are priced at USD25-26 per case.

South Africa is the first country in the southern hemisphere to start packing peaches. Despite some factors against, conditions have improved and the harvest could be good. Argentina is still trying to cope with a particular challenging year characterised by hailstorms and heavy rainfall, which have so far curbed raw material supply by 30%, according to early estimates.

One source noted that this year buyers will cover until September 2017, not waiting until the new pack comes on stream in July from Greece. “The country is likely to have to deal with a backlog of contracts from this year. Also, Greece’s output has been failing for too many consecutive years to date,” he noted.

For some packers as well as buyers in the northern hemisphere this has been season many would like to forget, as the first sold too early too cheap and the latter waited so long that ended up paying more.

Global canned peach production

2014-15 2015-16 2016-17

Spain 3.65 3.68 3.80

China 27.00 31.10 31.1*

California 12.30 12.25 12.10

Chile 4.07 4.00

Argentina 5.10 3.50

Greece 12.80 10.50 8.50

South Africa 3.01 2.78

TOTAL 67.93 67.81

Source: Cancon and country’s processors associations *unconfirmed


The king of the superfood may lose his crown. Blueberry’s exponential fame among farmers, traders and food processors is creaking under the weight of the production volumes and prices’ dip.

The variety that experienced the deepest downward movement is the wild blueberries. These saw a 15-17% drop in the ex-works price. In Europe, they opened the season at EUR2.20-2.40 (USD2.32-2.54) per kilo and fell to EUR2.05/kg in November, well below EUR2.90/kg recorded the year before.

Overseas, the combined output of Canada and North America was estimated at about 300 million lbs, just below the 320 mln lbs of last season, but prices fell by 15% over the

past year. Given these figures, some sources speculated that a stabilising demand failed to meet the expanding supply.

The first sign of a market surplus came from the US highbush blueberry’s crop, which is mostly earmarked for the fresh market, following the overlapping of a delayed season in Florida with the early varieties in Georgia and North Carolina.

Cultivated and wild blueberries are different markets with separate mechanics and prices trend, but some processors said that buyers looking for IQF frozen were switching from cultivated to the cheapest wild wherever possible. The dropping prices for both frozen and fresh is an issue that US producers’ organisations are addressing

Considered an El Dorado for both farmers and processors, the berries segment has been through a tough year characterised by low prices and slow demand growth, but the near future could not be much brighter.

By Cristina Nanni

Small fruits with big ambitions

The first sign of a market surplus came from the US highbush blueberry’s crop, which is mostly earmarked for the fresh market.


through the launch of a series of campaigns promoting the consumption of frozen berries.

The situation is not expected to improve in future as not all plantings were fully bearing and an increasing number of countries are investing in blueberries. The 2016 year was a rough one for growers, and 2017 and 2018 may not be better unless there is a major change, of course.

There are no signs of a consistent recovery for wild blueberry prices in 2017 and it is unlikely that they would bounce back at the same level of 2015. Cultivated blueberry output could be helped by a higher demand for fresh. The industry has shifted the focus from European to Asian consumers, a market which is expected to revive the fortunes of this crop.

The raspberry riddleRaspberry’s popularity is increasing hand in hand with that of blueberry. Peruvian farmers have recently planted some acreages. Peru is just starting and we will need to wait three or four years to see the first results. The country has a favourable climate, but it needs to gain experience and improve the logistics for processors. In addition, Spanish strawberry growers are switching to raspberries, whose bearing area is now 1,932 hectares, a 6.5% increase year-on-year.

Raspberry is China’s distress. The Asian country aims to increase production from its current volume, which is estimated at

around 30,000 tonnes. The planted area is estimated at 15,000 ha by Chinese sources, but Western producers believe that it is not more than 7,000 ha. The planted area will have a reduced impact on the final figures for the output because “due to climate conditions few of them will have a good crop”, one source said.

For the time being, Chinese production will be focused on the domestic market as it will not be easy to export given the health and safety issues buyers faced in the past.

The Chinese venture could become an opportunity for foreign processors, as it is believed that domestic production should not be able to meet increasing demand for berries. The price of raspberry, which has been steady for the past season, has started to decline.

At the time of writing (November 22), the Chilean 2016 crop is not on the market yet, while IQF whole raspberries from

Serbia are on the market at EUR2.10/kg, a 12.5% decrease from the beginning of the season and EUR1.30/kg below the prices reached in the same period in 2015. There is a similar prices level for Poland, which had a bumper summer crop, but most of the autumn crop went for crumbles and concentrate.

Lower prices were requested by buyers and were due after three or four years of high prices, according to some sources contacted by Foodnews.

Global production is expected to recover from last year’s downturn and could top 460,000 tonnes, despite the smaller Serbian crop, which should be around 110,000 tonnes.

Strawberry paybackThe shortfall of the long dry autumn reduced the Polish crop by 5% to 196,000 tonnes. A small crop in the world’s largest producer of frozen strawberries kept prices as high as EUR1.55/kg (US$1.66). After a low profile start to the season, raw material ex-field prices increased to EUR0.65-0.70/kg. The IQF uncalibrated went from EUR0.95-1.00/kg at the beginning of the season to EUR1.40/kg ex-works. Morocco and Spain could not offset the lower Polish production for both volumes and production timing.

In addition, the outburst of a strain of Hepatitis A in the US caused by frozen strawberries exported by the Egyptian company ICAPP, marginalised all processors of this country. In Egypt, prices dropped from EUR1.50/kg c&f to EUR1.10/kg c&f.

In the US the acreage for the 2016 crop was cut from 37,438 acres to 36,039 acres, but the total production, frozen plus fresh, should be 16% higher than in 2015 when it finished at 1.7 bln lbs, due to higher yields.

The decision to reduce planted areas is due to the particularly high production costs of growing strawberries in California compared with other areas such as Florida and Mexico. Labour, pest control, regulatory compliance and water shortages weigh heavily on Californian farmers’ revenues.

Consumption of strawberries is expected to shrink in future as alternative berries are taking over. In the province of Huelva,

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Global production is expected to recover from last year’s downturn and could top 460,000 tonnes, despite the smaller Serbian crop, which should be around 110,000 tonnes.


south Spain, the largest exporter of fresh strawberries in the world, farmers are converting strawberry fields into alternative crops.

Blackberry an endangered species?Blackberries prices have never been so low. In November, Serbian IQF whole Thornfree, confitura max. 20% Bordeaux, was quoted to Foodnews around EUR0.80/kg, a 33% dip compared with the price recorded at the beginning of the season (EUR1.2/kg) and more than 50% less than in the same period last year.

In addition, the farmgate prices in July went down by 50% y-o-y. Growers were paid as little as RSD30/kg (USD0.24/kg). The harvest was interrupted in some areas of Bosnia-Herzegovina and the latest varieties were left on the bushes. A sensible reduction in output is expected for the coming season in Europe.

The agricultural sector is mostly composed of small farmers and their discontent could easily lead to pulling out plants; feast to famine: such is the cycle. However, industry sources believe that blackberry producers are not ready to move in this direction yet.

In the US prices for IQF went down by more than 20% in a year-to-year comparison. Most of the production is concentrated in Oregon and it should result in about 33.2 mln lbs.

Sour cherries production likely to be cut US sour cherries production increased by 39% y-o-y, topping 341.3 million lbs as a result of exceptionally high yields in Michigan. The output in this state increased by 66%, going from 134 million lbs to 222.5 mln lbs.

The estimated surplus nationwide calculated on the processed volume is 91 mln lbs. In September, the price of sour cherries IQF for 30lbs cases was quoted by the Food Institute at USD0.84/lb against the USD0.96/lb of the past year. The Cherry Industry Administrative Board (CIAB), the marketing order created to regulate the production, recommended that the USDA restrict 29% of the 2016/17 tart cherry crop that cannot be placed on the domestic market, but it has to be exported or donated to charities.

In Europe, total cherry production (sweet and sour) in the 2016/17 marketing year should be around 623,664 tonnes, 11% less than the same period last year partially due to a lower production in Italy and Greece due to temperatures dropping during the blossoming period.

Frosts damage in late spring set the total production in Hungary to 60,000 tonnes from the 65,000 tonnes of 2015. Poland, which represents almost 40% of the total cherry in the EU, harvested 185,000 tonnes of sour cherries and 50,000 tonnes of sweet. The crop was high, but the quality of fruits varied due to a lack of soil moisture and inadequate protections

against pests and diseases, due to the crop’s low profitability. For the second consecutive year, farmgate prices were as low as PLN1.60-1.75/kg (USD0.38-0.41) while the IQF Polish Lutofwka 0.05% stonecount were quoted at EUR0.70/kg in November, a 22% dip compared with the season’s opening price at EUR0.90/kg. The USDA suggested in a report that farmers are abandoning cherries for more profitable crops. However, some sources pointed out that farms are relatively large and the investments substantial, so any radical change can damage the farmers. So production is not expected to change much.

In the meantime, the Polish growers’ organisation is working on a possible agreement to reopen the Russian market which was the main destination of sweet cherries. Foodnews suspects that Polish fresh cherries are still reaching the Russian market through the back door. While the exports to Russia fell by 60%, the movements of cherries toward the Belarus market increased by 344% in the past three years and the export of cherries from Belarus to Russia soared by 220%.

In the meantime, the Polish growers’ organisation is working on a possible agreement to reopen the Russian market which was the main destination of sweet cherries.


The documented high level of inventories in the US and the alleged ones in China, has set off the season on the wrong foot with low prices for both processors and farmers. The year 2017 could mark a first recovery, but the size of it will depend on the planned production for major players.

China and the US’s output amount to almost half of the global total and their figures weigh heavily on a market where in the last six years the compound annual growth rate (CAGR) has been flat, growing only by 1%.

At the beginning of 2016, an announced 12% cut in production for the US and 4% for China were not enough to reduce the stock and boost prices. This situation was exacerbated by processors trying to sell to secure contracts and cash-flow to be invested in the coming season and set spot-market prices to a level considered “just above production’s costs” by most of the sources interviewed by Foodnews between May and August.

As a result, the value of tomato paste 28/30 brix went down by 11% compared with the same period last year, while growers’ incomes shrank by 12% in the US and China. The effects were felt across the whole market: Spanish farmers were paid 4-5% less, while Italian farm-gate prices dropped by 7-8% year-on-year.

This was despite the announced 4.8% cut to the global production volume that was projected at 39.3 mln tonnes in March against the 41.3 mln tonnes totalled the season before. The final production went further down and it was confirmed at 38 mln tonnes, 7.3% less than 2015. The volume’s dip was offset by high inventories in the US and China affecting prices fluctuation in Europe.

Rain in Spain boosts prices in EuropeIn spring, adverse weather resized European production forecasts. In May, heavy rain lashed the south of Spain with over 100 litres of waters fallen per square metre. In Andalusia, the transplanting was

The processed tomato industry has been dogged by low prices.

By Cristina Nanni

Red tide

As a result, the value of tomato paste 28/30 brix went down by 11% compared with the same period last year, while growers’ incomes shrank by 12% in the US and China.


postponed and about 5% of the fruits to be harvested were damaged.

The situation was worst in Extremadura, a region that accounts for almost 58% of the national production and that lost 10% of the crop. Spain had to recalculate downward its final figures from the 3.2 mln tonnes announced in March to 2.95 mln tonnes. The announcement boosted the prices so 28/30 brix went from EUR700-720 (USD741-762) per tonne of the spring to EUR760/tonne in October, while canned chopped tomatoes 24x400g can easy-open (EOL) were offered at EUR0.29 per unit against the EUR0.27/unit of the beginning of the season.

The difference between pre and post-season prices was not so deep in other countries. Portugal could recover from the delayed start of the season hitting the 1.5 mln tonne initially announced, while Italy surpassed the 5 mln tonnes forecast by 180,000 tonnes.

The chopped tomato 24x400g can easy-open (EOL) moved up after 11 months of impasse going from EUR0.260/unit to EUR0.27/unit, but still below the level reached by their Spanish competitors. The variation was lower because a 6.4% decline of the production in the south was offset by a 13.6% in the north. Italy outperformed China in term of volumes by only 30,000 tonnes, but still enough to become the world’s second largest producer of processed tomato.

Chinese tomato’s feet of clayThis season, China lost more than just a ranking position. From 2017, farmers are expected to switch to more profitable cultivating, such as cotton, as ex-field prices in 2016 declined by 5% in Xinjiang and up to 12% in Mongolia.

“China entered the market with the aim of weakening Italy, Spain and Portugal producers by selling at low prices and then increasing them once it conquered a predominant position on the market. It has done for other sectors, but this time it didn’t work”, a source said adding that Chinese producers are bearing the brunt of not closing contracts and leaving 80% of their production to the spot market.

Some Chinese processors defined their profit margin as “unsustainable”. The future of the Chinese tomato industry looks bleak with operators leaving the segment or reinventing themselves as food importers to fulfil the increasing demand for Western food of the growing Chinese middle class.

With a bullish move last September, big producers retained their stocks and raised the asking prices for new crop tomato paste by 6% compared with August. Fob prices of tomato double concentrate (28/30) bounced back from USD700-800/tonne to USD750-820/tonne. Producers trading with Africa kept prices low and in September the cheapest tomato paste was sold out.

The real question for the market operators is if China will actually reduce the production. A contraction of output could help other processors to gain terrain on the global market. China has a privileged relationship with Russia which absorbs between 90,000-100,000 tonnes of tomato paste per year.

Fewer Chinese tomato deliveries to Russia could advantage Spain and Italy, with respectively 11,165 tonnes and 7,130 tonnes shipped from the beginning of the year until September, are the second and third largest exporters of tomato paste in the country. The outcome is not foregone: Russia is investing in a domestic tomato industry. In 2016, two new factories opened and the total national production grew by 33%, going from the 90,000 tonnes of 2015 to 135,000 tonnes this year. Some sources suggested that Turkey could be a potential substitute of China both for its geographic position and for the reconciling attitude of Erdogan toward Putin.

The second largest target-market for Chinese shipments is Africa, considered among the most promising markets of the future for the tomato industry. In this case, Italy could be advantaged as Libya is the fourth largest importer of Italian tomato paste, but other competitors selling at lower prices, like Ukraine, could fill a few gaps left by China. This market is not an option for the US as its currency has surged to a 13-year high.

A long wait ahead of US tomato sectorUnlike their European counterparts, Californian processors have not experienced any significant prices’ increase during the season.

At the time of writing (November 2016), the price of a double concentrate (28/30 brix) is about USD700-800/tonne and its level has been stable since March, despite the fact that California’s production

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The future of the Chinese tomato industry looks bleak with operators leaving the segment or reinventing themselves as food importers.


forecast, which accounts for 95% of the nationwide output, was reduced from the forecasted 13 mln short tons to the actual 12.64 mln short tons.

In June, the US was sitting on a stock of 7.0 mln short tons of tomato paste in bulk, about 39% more the volumes totalled last year while the monthly disappearance went down by 6% in a year-on-year comparison.

Tomato paste exports decreased by 14% from the previous year. They went from representing 23.7% of the total trading movements recorded in 2014-2015 and the 25.3% in 2013-2014 to an estimated 21.7% share of the total movement for last year.

This is partially due to the fact that the main production in the US is composed of tomato paste to be sold in bulk containers for remanufacturing. It is mostly “hot break”, a thick sauce used to produce ketchup. The by-product has restrictive market options toward countries that have a tomato processing or repacking industry, while few shipments of cold break 30/32

brix were directed to the Asian market is mostly Japan and Korea.

The situation of Californian growers is not much better as the raw material price paid to them was USD72.5 per ton farm-gate, a 12% fall over the last two years. Tomato is becoming a costly crop and some traders speculated that farmers in California could

switch to more rewarding cultivating such as cotton or almonds.

High levels of stock and currency value, low farmers’ incomes and increasing production costs narrowed processors’ range of options to a production cut. In addition, the announced intention of the newly elected president of the US, Donald Trump, to withdraw from the Trans-Pacific Partnership trade deal, could hurt further US exports of tomato-based products in Asia, Australia and Canada.

Given the actual situation and assuming that the US production will remain steady, Rabobank analysts calculated that the inventories should return to normal level within the next two to three years. Some overseas producers told Foodnews that they are ready to produce 10% less tomato. If the stock (to be confirmed at the time of writing) is at the same level as last year, supposing a contraction of output around 10%, the country could be able to empty its warehouses within one year. However, no one of the sources interviewed by Foodnews hazarded any forecast on the final level of production for the US.

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