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Tag: Orange Oil Brazil

  • Global Citrus Update 2023-2024

    Fundecitrus Report
    December 2023

    Fundecitrus recently published its second forecast of the 2023-2024 orange season within Brazil’s citrus belt, updating its total production estimate to 307.22 million boxes.

    This update represents a 0.7% reduction, or around 2.12 million fewer boxes, compared to previous estimates. One of the primary contributing factors behind this reduction is the overall decline in fruit sizes – lack of rainfall between May and November restricted citrus fruits during a key growth period within Brazil’s citrus belt. Citrus greening also remains a concern within these estimates, as smaller fruit sizes are often associated with issues stemming from the disease’s spread.

    Fruit sizes were smaller than average throughout 2023, though fruit droppage rates decreased compared to previous seasons.

    Despite these challenges, Fundecitrus reported that fruit droppage rates decreased this year, which softened some of the initial impact of these effects, though it did not completely offset the decline. Farmers have also recently accelerated the rate at which they harvest citrus fruit, which leads to a shorter period for fruit development.

    Moving forward, the El Niño weather pattern has taken effect within the region and will likely remain dominant throughout the first half of the 2024 season. El Niño often brings higher temperatures and drier weather conditions to Brazil, which has the potential to disrupt new citrus blooms. This pattern, combined with the UN World Meteorological Organization’s (WMO) predictions that 2024 will be another year with record-breaking temperatures, seems to indicate that the orange market will remain high throughout the early months of 2024.

    Regional Update: Argentina

    Argentina re-entered the EU citrus market in November after more than 20 years of absence due to export restrictions.

    As one of the largest citrus producers in South America, Argentina plays a vital role in the fresh and processed fruit market. The reopening of the EU citrus market to Argentina marks an important economic milestone for the future of citrus production within the nation. As exports of citrus grow, so too does commerce and employment opportunities for those operating within Argentina. Production of organic citrus in Argentina is also expected to expand in-tandem with the rising global demand for organic products.

    The citrus industry plays a key role within the Argentinian economy, and citrus orchards are expected to grow in tandem with newfound demand from EU buyers.

    In 2023, Argentinian citrus production was around 10% lower than the previous season. This recent dip in production is mainly attributed to poor weather conditions, which resulted in harvest delays near the beginning of the season.

    Regional Update: Brazil

    Researchers at the Center for Advanced Studies on Applied Economics (CEPEA) have predicted that a new heat wave will envelop São Paulo state in early 2024. These heightened temperatures are expected to linger throughout the 2024-2025 growing season, which has the potential to affect citrus production within Brazil’s citrus belt.

    The region has already endured higher-than-average temperatures throughout November 2023, resulting in early blooms. Fields and orchards with strong irrigation systems can often mitigate the worst of these effects, though they become increasingly difficult to manage as heat waves and droughts persist.

    Regional Update: USA

    The California Department of Food and Agriculture (CDFA) has recently established an expanded quarantine area for citrus greening after new research and damage assessments were conducted alongside the U.S. Department of Agriculture (USDA) and San Diego County authorities.

    Citrus greening is the leading factor behind Florida’s 70% reduction in orange production since 2005, making it one of the most destructive agricultural diseases in the USA.

    This quarantine marks the first time the greening disease (HLB) has been confirmed in Valley Center, California, making it the third area within San Diego Country to test positive for HLB. The disease is a tree-killer that has already caused a 70% reduction in Florida’s orange crop since 2005, as well as widespread fruit loss in other regions such as Mexico and Brazil.

    Quarantined areas prohibit residents and commercial operations from removing any plants hosted within that area, and all fruits grown within quarantined regions are subject to additional testing and examination before they can be cleared for exiting the quarantined region’s borders.

    Regional Update: Mexico

    Prices for orange fruit, orange oil, and its various derivatives continue to remain near all-time highs, as demand for NFC (not from concentrate) juice and fresh citrus remains strong. Poor weather conditions and the persistent presence of citrus greening within key growing regions of Mexico have resulted in year after year of difficult growing seasons for farmers. As such, prices for orange oil and its derivatives are expected to remain consistent throughout early 2024.

  • ICBC 2023 Recap

    Brazil

    According to the latest “Brazilian Citrus Overview” presentation given by Vinícius Trombin from Fundecitrus/Markestrat at the ICBC Conference, held in Clearwater FL on Sept 20th, 2023, citrus greening (HLB) has become an increasingly difficult problem for farmers to manage within Brazil’s key growing regions.

    Greening rates have increased from 24% in 2022 to over 38% in 2023. The citrus belt has been hit especially hard by the increasing intensity, forcing many farmers to move or expand their operations outside their normal territories. As these farming operations reorganize, the overall cost of citrus increases – beyond the initial investment required to expand or construct orchards, the cost of transportation is much higher outside of Brazil’s citrus belt.

    Other citrus growers have switched to other, more profitable crops rather than navigate the challenges presented by citrus greening. Popular alternatives to orange production include sugarcane, eucalyptus, and pastures for livestock.

    Despite these recent issues, Brazil’s orange production metrics remain unchanged at 309.34 million boxes. There is no carryover from previous seasons, and demand for NFC (not from concentrate) Juice continues to rise. As such, prices for orange oil are expected to remain firm. The crop has been slightly delayed, and new imports are expected to arrive in October.

    Mexico

    Based on the presentation “Marketing the Lime Industry in Mexico” given by Leo Espinoza from Rio Grande Juice Co. / Wonderful Citrus during the ICBC Conference, the fresh fruit market in Mexico is expected to remain strong. Around 60% of Mexican limes are consumed fresh domestically, while the remaining 27% and 13% is allocated for fresh fruit exports and processing respectively.

    Due to the high demand for lime, many farmers in Mexico have started to expand their planting and production operations within key growing regions. However, new lime trees require 2-3 years of maturation before they are ready for harvest. As such, we expect these new planting initiatives to have little to no effect on short-term price fluctuations.

    New lime oil out of Mexico will become available in December, as the nation enters its winter crop, though this harvest is significantly smaller than the summer crop and will likely not provide much relief for current demand. Prices for lime oil are expected to remain firm, but it’s quite possible that they have also reached their peak.

    Orange production in Mexico typically totals around 5 million MT, as compared to Brazil’s 18.7 million MT. Mexico typically has no carryover for orange oil and always sells out every season, and we currently see no reason that this will not be the case again this year.

    Areas reserved for grapefruit production in Mexico have declined 30% this year, as groves were uprooted to make way for sugarcane production. Citrus greening played a role in this decision, as the disease mainly affects oranges and grapefruit. The market for grapefruit oil is expected to begin firming, depending on demand.

    Peru

    Domestic demand within the fresh fruit market is strong in Peru – 80% of fresh limes are consumed domestically, and very few are exported. However, unlike Mexico, the remaining 20% are allocated for processing juice and oil. Despite this, the volumes produced in Peru are nowhere near what Mexico produces each year.

    Due to increasing demand, many growers in Peru have started to expand their production areas, much like in Mexico. These trees take 2-3 years to mature, but recent El Niño forecasts have the potential to disrupt this growing process, as well as other groves around Peru. If the effects of El Niño are moderate, it will likely have little to no effect on lime groves. However, if the effects are severe, then the weather conditions surrounding it have the potential to greatly impact volumes for the upcoming lime season (November – April).

    New lime trees require approximately 2-3 years before they reach maturation. This means that recent planting initiatives in regions such as Mexico and Peru will likely have little to no impact on the short-term price fluctuations within the current lime market. However, as these groves mature and fruit becomes more available, prices should improve accordingly.

    Argentina

    Lemon oil production in Argentina has experienced difficulties this year due to a combination of currency inflation and extreme weather conditions. This is the second year in which the blooming period for lemons was interrupted by poor weather, impacting the overall yields for both fresh fruit and processed material. Argentina is now losing ground against competing lemon-producing nations such as Spain and South Africa. Much like Mexico and Peru, Argentina is also converting some of its citrus production to sugarcane, which will likely reduce future yields. As of September 2023, around 6,000 hectares of lemon orchards have been cut and replaced by sugarcane plantations.

    Lemon trees require very little water in comparison to other fruits and can survive in extremely dry conditions. However, excess rain can cause damage to root systems within orchards, resulting in long-term issues with fruit production.