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Juice Supplement 2017
IEG Vu | Juice Supplement 2017 / 3www.iegvu.com
Contents Volatile marketsIt’s hard to recall such a contradictory period in the juice industry’s recent history.
Juices either seem to be in general over-supply, with weak prices and little signs of them increasing, or else in incredibly short supply with suitably stratospheric offers from producers.
The remorseless rise in orange juice prices seems to have halted, at least for the moment. Brazil has had a reasonable orange harvest – a very good one by recent standards, but historically speaking, nothing special, and while Brazil could prop prices up by diverting relatively large quantities of FCOJ to rebuild its inventories, it appears to have taken a decision that keeping prices high in Europe would be counter-productive at a time of very fragile consumption figures, and so FCOJ prices have come down. It will be interesting to see what offers are floated at Anuga.
Apple juice is a complete mess. Poland’s farmers have had a wildly successful season (from their point of view) by managing their fresh fruit stocks to keep the price relatively high and supplies to juice makers relatively short. They were also incredibly lucky, and the juice industry was unlucky, in the timing of the European frosts that damaged so many fruit crops.
Even so, the reduction in Polish apple production this season will do no more than bring supply and demand closer in
balance – Poland has simply been producing too much fruit, as has Europe in general, especially when Russia still has its embargo in place. But the juice processors somehow have to get round a table with the Polish farmers and thrash out some sort of supply agreement for raw material next season, or the low-volume stop-start pattern of manufacture will repeat itself.
There are also major problems with red fruit juices. It is too early to determine just how badly production of raspberry and strawberry concentrates will be affected: all that we know right now is that prices are rising on almost a daily basis. Even blackcurrant juice concentrate is going up, which is actually not a bad thing, considering that it has been stupidly cheap in recent years. Lemon juice is also expensive this year, of course.
All told, the increase in prices of some juices is good news. It is probably better to have higher prices and tighter supply than it is to have over-supply.
In this supplement we have tended to major on the ‘big’ juices, and have returned to the old Foodnews (now powering IEG Vu) practice of publishing data tables and graphs, the better to make a point. All the data tables and graphs in this supplement are available from our website (assuming you are a logged-in subscriber) in Excel form.
Editor Neil Murray Tel: +44 20 7017 7553 Email: [email protected]
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04 How to damage a market
12 Tomato juice sales flying higher
14 The death of Florida orange?
18 Red still endangered
20 Sharp practice
22 Little hope of recovery
24 White in check
By Neil Murray
IEG Vu | Juice Supplement 2017 /
Fresh apple prices in Poland are still high, and IEG Vu believes that this is the result of Polish farmers not quite understanding how best to use their new-found power.
And power it is. As Chinese apple juice processors discovered some years ago, the addition of a modern cold storage network completely changes the dynamics of a fresh apple market. It gives farmers the ability to react instantly to market changes and to choose precisely when they can sell their fruit, be that to the fresh market or processors.
The problem is that the Polish apple growing sector, like the Chinese, is very fragmented. There are many, many small independent farmers, little vertical integration on the part of the juice processors, and the farmers have little experience of working in complex global markets – but that is precisely what they are doing now. It looks like their gut reaction is to treat fresh apple sales on an industrial scale as they would if they were selling them off a market stall. They want to hold onto their prices at all costs, maybe right until the end of the market or the close of the season.
Instead, they should be working closely with the processing industry.
Polish fresh apple exports rose by two-thirds in December 2016 to over 103,000 tonnes, compared with some 62,000 tonnes in December 2015, and about 67,000 tonnes in December 2014. In fact, Polish fresh apple exports have been markedly higher than last season, for every month of the season so far.
European (Polish) AJC prices have risen and fallen irregularly, according to the volumes coming out of the farmers’ coldstores; Chinese AJC prices have steadily, if slowly, declined. European imports into the US are now so small that they became too insignificant for the USDA to quote.
Meanwhile, Chinese AJC prices are absolutely at their lowest level for years, at around USD950-1,000/tonne fob. The last time prices were this low was in early 2010.
“We are in a buyer’s market today and the US and Canada are deciding where to buy from,” was one contact’s assessment
5
The unusual behaviour of Poland’s apple farmers has resulted in a confused apple juice market. It did not have to be this way.
By Neil Murray
How to damage a market
The problem is that the Polish apple growing sector, like the Chinese, is very fragmented.
6 www.iegvu.com/ Juice Supplement 2017 | IEG Vu
earlier this season. It was then far too early to tell what the prospects were for the apple crops in 2017 in both Poland and China, but the frost risk has now lifted from Poland. The new season fruit will be coming into the coldstores in a couple of months, and Poland (or rather, its farmers and coldstore operators) must now devote serious thought to reducing their fresh apple inventories.
While AJC was cheap, IEG Vu expected speculators to continue buying and simply store the juice in the hope of selling it for higher prices next season – this has probably happened in the US with Chinese juice, but it is doubtful that there has been sufficient Polish AJC production this season for speculators to play with. IEG Vu believes the big blenders have laid in stocks, though.
It has also been suggested that the Polish farmers will simply keep their fruit in store for another year. This seems unlikely - the coldstores probably don’t have enough space to handle the overspill from last year’s crops as well as the coming harvest, and besides, the cost of another season’s coldstore operating costs would also have to be factored in.
Chinese discounting has now made Polish AJC completely uncompetitive in the critical US market. Chinese product is priced as low as USD5.10 per gallon ex-dock east coast, equivalent to almost exactly USD1,000/tonne. This implies a fob price of well under USD950/tonne. IEG Vu has noted that China’s AJC price, since the start of 2017, has moved in a narrow band between USD1,000-1,100/tonne. One month it is priced at USD1,100/tonne, the next month at USD1,000/tonne, then back to USD1,100/tonne, and so on.
No figures have been put on the damage caused by the recent frosts in Poland, either in terms of financial loss or percentage of crop damaged. Fresh apple prices have certainly risen in Poland, though: a well-placed source put them at around PLN2.00 (USD0.53) per kilo, up from around PLN1.00-1.20/kg earlier this year. Whether this is just a knee-jerk reaction or a fundamental price shift is hard to say.
The situation is hardly transparent. Farmers’ reports in the country are notoriously inaccurate and prone to exaggeration. IEG Vu has heard no really bad stories from the AJC industry yet.
The real problem that processors are facing is a near-total absence of raw material. Poland ought to have roughly 100,000 tonnes of fruit in its coldstores, but there is no sign of it. Fresh exports are running at exactly the same level as last year –some 370,000 tonnes in Q1, the most recent data available. However, for the season from September to March, fresh exports are about 643,000 tonnes, or nearly 100,000 tonnes more than in the same period in the 2015-16 season.
This is where transparency ends. According to the customs figures, Poland has exported over 300,000 tonnes of fresh fruit to Belarus, 100,000 tonnes more than last year. In the last two previous years, Belarus has exported vast quantities of fresh apples to Russia, and it is almost certain that much of this fruit is re-exported from Poland, to circumvent the Russian embargo on EU fresh fruit. However, Belarus has declared just 33,210 tonnes of fresh apple exports to Russia so far this season and, frankly, IEG Vu thinks these figures have been falsified.
So what has happened to the apples? The industry would like to know. “Last year, from January to May, [AJC] production was booming,” a processor said to Foodnews. “Volumes were so big and everybody was producing AJC like crazy.”
“This year, almost none! I do not know where the apples are going? Is the quality so much better and is it being shipped to Russia? Compared to last year, AJC production is very low.” He wondered aloud whether the WAPA inventory figures were correct. IEG Vu is taking them as correct, at least for the time being, and reckoning that the simplest solution is the correct one: there is no fruit because the farmers are simply waiting for the very best price they can get, having played their cards right, and waited in case there was a serious frost – and there was.
AJC pricingSome customers held back on their large orders this year, because they calculated that Polish fruit prices would fall and that AJC would be cheaper. This has not happened. In fact, prices now seem to be rising: the latest IEG Vu has heard is EUR1.10-1.20 per kilo (USD1.23-1.25/kg) ex-works. At this price, Poland cannot compete with China in the US market, although the 30% duty on Chinese AJC still locks that country out of the European market. There are suggestions that the AJC price could rise to between EUR2.10-1.30/kg if buyers that are inadequately covered come into the market – and that price would certainly tempt the farmers to open the coldstore doors.
Latin AmericaArgentine AJC production is likely to be severely constrained for the second successive year, due to a poor harvest, according to the latest USDA assessment.
The decrease in production is due to bad weather conditions (as it was in the preceding year), such as hailstorms and late frosts. An estimate of 5,000 hectares of fruit was affected by summer hail, and 14,000 ha were affected by frosts during the spring of 2016. As a result, volumes and quality diminished. Present low AJC prices are also a disincentive to process fruit into juice.
Two years ago, Argentina was quite confident that it would be able to reverse the decline in its apple (and AJC) productivity, but now the USDA says that farmers are switching to more profitable
CHILEAN APPLE PRODUCTION (TONNES)
2014/15 2015/16 2016/17
Area planted (ha) 37,200 36,059 36,000
Area harvested (ha) 33,900 33,600 33,500
Total trees 42,800 41,700 40,500
Production 1,210,000 1,335,000 1,410,000
Imports 2,100 1,809 1,500
Total supply 1,212,100 1,336,809 1,411,500
Fresh dom. consumption 252,032 251,926 255,000
Exports 628,300 764,883 800,000
For processing 331,768 320,000 356,500
Total distribution 1,212,100 1,336,809 1,411,500
Source: USDA
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crops, especially (in Mendoza, which accounts for about 10% of Argentina’s apple production) grapes.
In Rio Negro, the largest apple growing area and one that accounts for 80% of production, small farmers are selling their plantations to larger producers or packers/exporters or, if the plantations are in poor condition, they are selling the land for real estate development.
The problems of a lack of investment, especially in automation, persist and the USDA says: “The sector needs to undergo a structural change, led by investment in mechanisation to improve yields, and the development of new varieties. Only efficient players will survive this crisis, i.e. vertically integrated companies which will produce high-quality fruit for demanding markets that pay higher prices. Those companies
that are environmentally sustainable and make the best use of water, land and other natural resources will be in a better position to succeed.”
The heavy flooding this year prompted the government to declare a state of emergency and provide financial aid to apple growers but, as the USDA says, this is only short-term relief and the sector needs much more investment if it is to recover and grow. “A significant structural change is urgently needed to make the activity profitable,” advises the USDA.
Organic production is, however, increasing and 10% of the production in Alto Valle (Rio Negro) and Neuquen is certified as organic and last year fresh organic production for export rose by 2%. Not only that, but the USDA notes that there is increasing interest in, and production of, organic apple juice.
The UK and the US are traditional markets for Argentine organic apples (and pears).
The British market is projected to remain stable and the US market to continue to grow. In the UK there is a broader distribution of organic fruit, while in the US organic fruit is primarily sold in specialty retail stores.
In December 2015, the new government lifted export taxes on all fruits and other commodities. In addition, one year later, export rebates were increased for several products, including apples, pears, and table grapes, and they depend on the size of the container. The goal is to provide support to regional rural economies.
Initially, the removal of export taxes had a significant impact in international markets as it made Argentine agricultural commodities more competitive. However, that benefit has largely been offset by high inflation rates and production cost increases.
Argentine AJC is effectively locked out of Europe by high tariffs, so its main market is the US. However, in the southern hemisphere, Argentina faces fierce competition from Chile whose AJC industry is better organised, more efficient and has access to more raw material, and even Chile sometimes finds it hard to compete in the US against cheap supplies from China and Europe.
South American AJC is (unsurprisingly) priced between Chinese and European (from USD5.85/gallon) but mostly around USD6.10/gallon, which is uncomfortably close to European prices and therefore rather costlier than Chinese.
Very heavy rain has caused chaos in Argentina’s key Valle Rio Negro producing region, with 10 consecutive days of rain and as much as 23 centimetres of rain (more than the annual average) falling in a single day.
The government has declared a state of emergency, to last one year, and a provincial emergency declaration has also been made. This has the effect of exempting producers of fruit, wine and other horticultural products from taxes for an initial period also of one year.
“The apple harvest is gone,” an on-the-spot source gloomily told IEG Vu. The extent of the damage is yet to be assessed, but in
Chinese monthly AJC exports (tonnes)
2011/122012/132013/142014/152015/162016/17
20000
30000
40000
50000
60000
70000
80000
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
2013/142014/152015/162016/17
Chinese AJC exports to USA (tonnes)
2011/122012/132013/142014/152015/162016/17
20000
30000
40000
50000
60000
70000
80000
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
2013/142014/152015/162016/17
10 / Juice Supplement 2017 | IEG Vu
addition to the torrential rain, hail and frost has also afflicted local crops.
While duties make its juice virtually unsellable in the EU, Argentina is a significant supplier to other Latin American countries and also the US. Argentina’s AJC exports were around 55,600 tonnes in 2014 (calendar year), 46,500 tonnes in 2015 and 42,100 tonnes in 2016. In those years, exports to the US were 38,190 tonnes, 31,875 tonnes and 30,380 tonnes respectively. The next figure is unlikely to be much above 20,000 tonnes.
The immediate effect is likely to be increased interest in Chilean AJC from the US (and Latin America). Chile has found it hard to compete against cheap Chinese and, to a lesser degree, European AJC this season, but the market may firm slightly now that Argentine production has been partially or even totally removed from buyers’ calculations.
The rest of the yearThe global apple juice industry is now waiting to see the effect on AJC prices after
the recent assessment of the frost damage to Europe’s orchards.
As of June 19, China was reported to have withdrawn its offers, though one contact reckons the country claims to have sold out.
“The Chinese were waiting for a [European] freeze, and they got it,” observed one source. “I do think prices will increase, but as to how much, we will have to wait and see. The EU/Polish growers are reluctant to sell fruit at USD50 per tonne, but this is the price you need, in my opinion, to sell AJC into the US at, say, USD5.50 per gallon ex-dock east coast (USD1,080/tonne) and make some money.
“In the end, I don’t think you will sell any more AJC at USD5.50/gallon than at USD6.75/gallon, but these big buyers just want to buy cheap, cheap, cheap.”
IEG Vu can obtain no up-to-date offers from European processors, but would not expect new season offers to open at less than EUR1.20 per kilo (USD1.34/kg) ex-works if these frost damage assessments prove accurate. There also seems to be an
acceptance that Polish farmers will be quite happy to carry their apple stocks forward into next season now, if they have to.
“With the new warehouses they have, they can keep the apples for more than a year,” observed another contact.
“I hear there is an over-supply of AJC in the market, but the price should not go to EUR2,000/tonne,” mused another European source. “Will China adapt and produce 700,000 tonnes of AJC?”
IEG Vu expects Chile to increase its prices to USD1,300/tonne fob at least.
Meanwhile, Poland continues to whittle down its fresh apple stocks, but according to the latest WAPA data, inventories are still historically high.
As at May 1, Poland held 300,000 tonnes of fruit in its coldstores, down 280,000 tonnes in a month. Europe’s main apple producing countries collectively hold 1.35mln tonnes, compared with 1.40 mln tonnes at this point last year, and that was the all-time record high inventory. In short, Europe still has an over-supply of unsold fresh apples.
Meanwhile, a report in the German journal Fluessiges Obst (Fruit Processing) says that the extremely cold weather in April and May has brought “significant crop losses in many European farming regions”. It estimates that Poland will have an apple harvest only 50-60% the normal size, Belgium 65-70%, the Netherlands 30-35%, Austria 45-50%, Italy 20-25% and the Balkan countries 50-80%. Only Spain and the UK were unaffected by the frosts, it adds.
If these gloomy estimates are correct, then the 2017 EU apple harvest is likely to be below 10 mln tonnes. The WAPA forecast, to be released in early August at the Prognosfruit conference, will give a clearer picture.
Possible impactsThis could change everything. Hitherto, it had been expected that the Polish farmers would open their coldstores and sell their excess fruit stocks at relatively low prices, but it now looks like their decision to hold onto their fruit has, luckily for them, been the right one. This means that they can maintain their inventories right up to the start of the new season’s harvesting, and quite possibly to the end of the year, securing good prices on the way.
There will also be a knock-on effect in China. If the Chinese are certain that they will not face cheap Polish competition in the new season’s AJC market, they will almost certainly raise their prices, even though China itself is forecast to have a large crop this year. More immediately, Chile may find it easier to sell its apple juice made from the fruit it harvested a couple of months ago.
What will happen next season is now a very interesting question, and this will be dealt with in our full Global Outlook in late December.
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/ Juice Supplement 2017 | IEG Vu 12 www.iegvu.com
Growth in the global airline business should increase sales, unlikely as the connection sounds.
By Neil Murray
Tomato juice sales flying higher
There are two methods of making tomato juice. One, for NFC juice, is the simple squeezing of fresh tomatoes. The second (cheaper) approach is to take tomato paste, add water and (perhaps) seasonings, and pack. Almost all the premium NFC juice goes into the licensed trade, which also accounts for much of the juice made from paste.
Interestingly, Canada is one country where tomato juice must, by law, be made from whole tomatoes.
Italy dominates the global tomato juice trade. In 2014, Italy exported 10,000 tonnes of tomato juice totalling USD8 million, 17% over the previous year. Its primary trading partner was Germany, where it supplied 57.8% of its total tomato juice exports in value terms, accounting for 84.3% of Germany’s total imports.
From 2007 to 2014, Italy was a net exporter of tomato juice. Over this period, exports
consistently exceeded imports in value terms. In physical terms this difference was even more pronounced.
Germany and the US were among the other main global suppliers of tomato juice in 2014. The fastest growing exporters from 2007 to 2014 were the U.S. (+24.6% per year) and Spain (+67.6% per year). With this sustained growth, it’s no wonder that the US was able to significantly strengthen its position in the global export structure.
Italy’s top five trading partners in 2014 were the aforementioned Germany, along with France, Switzerland, the Netherlands and Austria, with a combined 94.8% share of Italy’s tomato juice exports. The share of France soared (+18.6 percentage points), while the share of Switzerland declined (-6.8 percentage points).
As for global trade, the UK is actually the world’s largest importer, closely followed
Interestingly, Canada is one country where tomato juice must, by law, be made from whole tomatoes.
IEG Vu | Juice Supplement 2017 / 13www.iegvu.com
WORLD’S BIGGEST TOMATO JUICE IMPORTERS16 year
total2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
UK 136828 5552 4800 5398 5582 7075 5390 6044 6866 6207 11346 26655 24211 21702
Germany 134373 9978 8099 9439 10317 12032 9838 8507 7887 8459 7078 7430 7713 8425 9213 9958
Netherlands 80290 3526 4829 5077 5269 8157 8226 5004 3207 7440 4140 4108 4152 4184 3919 9052
Belarus 31198 10061 8979 6603 5555
Hong Kong 19703 804 652 741 442 676 789 2774 3117 2854 3011 3843
Lithuania 56005 3224 4458 4435 4449 4572 5332 4360 2804 2865 2851 3251 3268 3172 3411 3553
France 70406 6249 5141 5311 6765 7590 4832 6120 5570 5436 3203 3168 4563 3210 3248
Russia 88917 10496 8411 6004 4723 4278 6397 6043 3973 4998 5549 7516 9256 6283 2470 2520
Poland 16020 969 1085 261 318 665 1343 532 397 488 438 1692 2024 2124 1678 2006
Hungary 18132 60 87 521 1178 1644 2159 2236 2345 1835 1621 1545 1371 1530
Japan 19097 1129 1000 2223 792 826 728 676 536 426 1087 2963 2452 1484 1251 1524
Belgium 33344 1485 1739 1548 1952 2503 2879 3152 3865 5659 2400 1444 1213 1169 959 1377
Romania 13879 300 291 259 290 378 696 705 949 1840 1752 1798 1369 968 1110 1174
Guatemala 5714 149 660 395 619 546 635 805 920 985
Latvia 14943 620 518 835 1382 1312 1245 848 912 1092 1054 1172 1199 889 884 981
by Germany. Tomato juice is a favourite in Russia, but imports have dropped by about 75% in the last three years. Some of this will be due to the economic crisis in the country, but Russia is also a producer itself and may have increased production: no data is available.
Japanese consumers are particularly fond of tomato juice, and sales are growing fast. This is because in 2015, Japan extended the law known as FOSHU (Food For Specified Health Use), which covers foods and beverages to replace medicine, assuming that they secure governmental approval, with a category for foods and drinks that make functional claims, again assuming the necessary approval is won.
To secure FOSHU approval involves testing on humans, costs USD11.0 mln, takes a year, and is audited by the government. To win approval for a functional claim is very much cheaper, unaudited, and takes just 60 days. By April 2016, over 300 products had won approval, whereas FOSHU products number just 1,250 since that programme was inaugurated in 1991, and tomato juices feature prominently in that list.
What is intriguing is the use of tomato juice (not paste) as an ingredient in other products. Apart from its presence in fruit/vegetable juice blends, it is also used with prepared vegetables, prepared meals and (unsurprisingly) pasta sauces.
Tomato juice is widely consumed on board airliners. There are several theories about
why this is so. One is that because of the cabin pressure, savoury flavours come through more prominently than sweet. Attempts to recreate the noise in an aircraft cabin have indicated that this, too, can increase the desire for umami flavours.
Whatever the reason, the association between flying and tomato juice consumption goes back to the 1920s, and has shown no signs of abating. Some
years ago Lufthansa discovered that they were serving almost as much tomato juice annually as beer – Lufthansa served more than 1.7 mln litres (450,000 US gallons) of tomato juice in 2008, and 1.65 mln litres of beer, which prompted several surveys into the consumption of the juice on board aircraft.
With the International Air Transport Association (IATA) expecting 7.2 bln passengers to travel in 2035, a near doubling of the 3.8 bln air travellers in 2016, the growth prospects for tomato juice in this unusual market look good, especially as much of the growth is expected to come from China and Asia where tomato is already established as a popular flavour.
Japanese consumers are particularly fond of tomato juice, and sales are growing fast.
www.iegvu.com
Florida will harvest around 70 million boxes of orange juice this season – in June, the USDA increased its forecast to 68.5 mln boxes. In April, the forecast was for 67 mln boxes, so if weather conditions remain favourable, then 70 mln boxes is within reach.
However, this is still an appallingly low figure. Florida’s orange production rose steadily through the 1980s and into the 1990s, peaking at nearly 237 mln boxes in the 1997/98 season. The picture, since the early years of the century, has been one of constant decline.
Florida estimates around 1.6 gallons of FCOJ per box, at 42 brix, but it is easier to take the Brazilian measurement of some 260 boxes per tonne at 66 brix. Brazil’s yield in the 2015/16 season was actually just over 300 boxes/tonne, but this was an exceptionally poor yield; the worst on record. Juice content in the fruits dropped, and the average brix of processed fruits was just over 10 instead of the normal 12+, creating big problems for NFC juice production and necessitating a lot of blending with higher brix and higher ratio juice from other sources.
Florida’s processing orange harvest has fallen to critical levels. It is doubtful whether orange juice production in the state will actually be viable, should the decline not reverse itself.
By Neil Murray
The death of Florida orange?
Florida forecast orange output (million boxes)
Source: FDOC
Low tree lossMedium tree lossHigh tree loss
100
110
120
130
140
150
160
170
180
2007
-08
2008
-09
2009
-10
2010
-11
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
2018
-19
2019
-20
2020
-21
14 / Juice Supplement 2017 | IEG Vu
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On this latter basis, then Florida’s FCOJ equivalent production is down to around 230,000 tonnes from 700,000 tonnes in the heydays of the 1990s. By comparison. Brazil’s FCOJ equivalent figure last season was over 795,000 tonnes and this season the yield is expected to be back to around 260 boxes/tonne (the average
for the last 10 years is 263 boxes/tonne) and Brazil will crush some 300 mln boxes, for a notional FCOJ production of 1.15 mln tonnes.
In other words, the increase in FCOJ output between last season and the current one is roughly equivalent to
Florida’s total production. On that basis, Florida is now an irrelevance.
Of course, Florida’s signature product is its sweet NFC juice, but Brazil is equally aware of the importance of its NFC production in both the US and European markets, which is why it has been holding the fob price at USD350/tonne fob for the last few years: effectively, FCOJ pricing has been used to subsidise NFC juice sales.
The area under citrus cultivation in Florida was reducing sharply in the early years of the century, as farmers took advantage of the real estate boom. The four hurricanes that struck in a single year, and blew citrus canker all over the state, only spurred more farmers to sell their land for redevelopment.
The sub-prime housing crash and the financial crisis of 2008 put the brakes on redevelopment of land, but orange juice consumption in the US is still tumbling by around 6% a year.
On these pages, there is a chart made by the FDOC in 2007, forecasting the decline in Florida’s orange production until 2021, based on low, medium and high tree loss. The reality has been even worse than this forecast, considered pessimistic at the time. The future does not look bright, and it does not look orange.
FLORIDA PROCESSED ORANGE VOLUMES 1980/81 TO DATE (1,000 BOXES)
Season FCOJ Chilled incl. NFC juice
Others (canned, salads etc) Total
1980/81 144,322 19,867 6,353 170,542
1981/82 105,150 16,518 4,473 126,141
1982/83 114,627 18,254 2,665 135,546
1983/84 94,547 16,981 2,909 114,437
1984/85 86,112 14,903 1,907 102,922
1985/86 96,061 17,267 1,361 114,689
1986/87 96,182 19,661 948 116,791
1987/88 110,206 23,325 904 134,435
1988/89 113,732 29,902 1,141 144,775
1989/90 73,640 33,836 659 108,135
1990/91 104,136 38,387 568 143,091
1991/92 93,932 37,324 456 131,712
1992/93 132,154 47,441 355 179,950
1993/94 116,248 52,912 225 169,385
1994/95 144,678 54,843 289 199,810
1995/96 132,907 64,543 224 197,674
1996/97 153,842 65,676 842 220,360
1997/98 160,865 74,767 989 236,621
1998/99 97,247 80,112 756 178,115
1999/2000 134,204 90,085 2,387 226,676
2000/01 124,072 89,564 2,246 215,882
2001/02 135,975 85,869 1,385 223,229
2002/03 102,073 92,506 1,445 196,024
2003/04 139,727 93,393 500 233,620
2004/05 54,322 88,514 1,059 143,895
2005/06 51,873 88,662 1,195 141,730
2006/07 47,996 74,523 907 123,426
2007/08 80,817 84,710 0 165,527
2008/09 72,543 82,561 1,115 156,219
2009/10 52,745 75,149 431 128,325
2010/11 51,739 82,674 835 135,248
2011/12 63,355 75,518 2,455 141,328
2012/13 47,968 79,247 411 127,626
2013/14 22,723 76,035 442 99,200
2014/15 19,224 71,891 865 91,980
2015/16 15,844 61,768 69 77,681
SOURCE: FDOC
The increase in FCOJ output between last season and the current one is roughly equivalent to Florida’s total production.
/ Juice Supplement 2017 | IEG Vu 18 www.iegvu.com
Total US cranberry production in 2016 was about 9.63 million barrels, 12.4% more than the year before when the volume settled in the range of 8.56 mln barrels, driven up by a production increase in Wisconsin, according to the latest data from the USDA.
Wisconsin’s 6.13 mln barrels was about 26% more than in 2015, when volume was hovering around 4.85 mln barrels. The state, which represents 64% of the
total output, reported the highest yield of record at 288 barrels per acre (+20% y-o-y) and also the harvested area increased from 20,200 acres of 2015 to 21,100 acres of 2016.
The average price of cranberries was unchanged from 2015 at USD29.20 per barrel, although fresh market prices fell 21% while processed prices rose by 2%, resulting in a general increase of overall production value at USD177 mln.
Against most logic, and in contrast to most fruit juices, cranberry juice concentrate prices have been sliding for the last five years. The occasional price rise has always proved to be a false dawn or, at best, negligible.
By Foodnews Staff
Red still endangered
The 2016 price for Massachusetts fresh cranberries averaged USD44.50 per barrel, down from USD59.60 in 2015. The 2016 price for processed cranberries averaged USD29.40/barrel, down from USD30.50 in 2015.
US CRANBERRY PRODUCTION BY STATE
State 2014 2015 2016
Massachusetts 2,070,000 2,352,000 2,070,000
New Jersey 652,000 595,000 588,000
Oregon 500,000 562,000 530,000
Washington 156,000 198,000 194,000
Wisconsin 5,022,000 4,856,000 6,130,000
Total 8,400,000 8,563,000 8,591,700
IEG Vu | Juice Supplement 2017 / 19www.iegvu.com
Wisconsin’s bumper crop offset losses recorded in Massachusetts, the second largest producer of this commodity in the US. Here production declined by 4% y-o-y reaching 2.268 mln barrels in 2016. Here growers harvested 12,900 acres of cranberries, 300 acres less than the previous year. Yields averaged 174.3 barrels per acre, compared with 177.3 barrels/acre a year earlier.
The 2016 price for Massachusetts fresh cranberries averaged USD44.50 per barrel, down from USD59.60 in 2015. The 2016
price for processed cranberries averaged USD29.40/barrel, down from USD30.50 in 2015. Prices in Massachusetts are higher due to a lower yield and higher producing costs linked to the drought that hit the state.
Other producing states are New Jersey, Oregon and Washington which harvested 653,000 barrels, 401,000 barrels and 175,400 barrels respectively.
The harvested acreage totalled 41,500 acres across the US, up 600 acres from
the previous season. The average yield, at 230.0 barrels per acre, was up 11% from 2015. Most of the production goes for processing and in 2016 about 9.083 mln of barrels were processed overseas, more than half of them (5.87 mln barrels) were processed in Wisconsin and about 2.06 mln barrels in Massachusetts.
Cranberry juice prices remain appallingly weak. From around USD35 per gallon in 2012, they have essentially halved and have hovered between USD16.50-17.70/gallon for the last two years. The frosts that have seriously damaged European red fruit crops this year may cause bottlers and blenders to reconsider cranberry as a cheap juice to add to blends, or when a red colour is needed to replace (for example) raspberry juice, but IEG Vu does not think this is likely. The juice is still in massive over-supply, and that over-supply is a direct result of the growth in popularity of sweetened dried cranberries (SDCs). To make SDCs you, ipso facto, need to remove the juice, and about the only thing that will halt the juice over-supply is a sudden slump in the popularity of SDCs. With the present backlash against sugar, this could happen, but there is no sign of it so far.
Ocean Spray cranberry concentrate auction prices (USD/gallon, 50 brix)
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0
20
40
60
80
100
120
140
0
2
4
6
8
10
12
50 brix concentrate price, USD/gallonHarvest size, million barrels
13
15
17
19
21
23
25
27
29
31
33
35
37
Source: Ocean Spray
Jul-0
9Fe
b-10
Feb-
11M
ay-1
1Ju
l-11
Oct
-11
Jan-
12Ap
r-12
Jul-1
2Ja
n-13
Apr-
13Ju
l-13
Oct
-13
Jan-
14Ju
l-14
Apr-
14O
ct-1
4Ja
n-15
Apr-
15Ju
l-15
Oct
-15
Jan-
16Ap
r-16
Jul-1
6Ja
n-17
Apr-
17
1st auction period 2nd auction period 3rd auction period
US cranberry production and juice concentrate price
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0
20
40
60
80
100
120
140
0
2
4
6
8
10
12
50 brix concentrate price, USD/gallonHarvest size, million barrels
13
15
17
19
21
23
25
27
29
31
33
35
37
Source: Ocean Spray
Jul-0
9Fe
b-10
Feb-
11M
ay-1
1Ju
l-11
Oct
-11
Jan-
12Ap
r-12
Jul-1
2Ja
n-13
Apr-
13Ju
l-13
Oct
-13
Jan-
14Ju
l-14
Apr-
14O
ct-1
4Ja
n-15
Apr-
15Ju
l-15
Oct
-15
Jan-
16Ap
r-16
Jul-1
6Ja
n-17
Apr-
17
1st auction period 2nd auction period 3rd auction period
Cranberry juice prices remain appallingly weak. From around USD35 per gallon in 2012, they have essentially halved.
20 www.iegvu.com
Argentine lemon juice concentrate exports have bounced back remarkably since the terrible year of 2014, when the country’s lemon harvest was badly damaged by the frosts that struck in October of the preceding year.
The US remains by far the largest market for the country’s lemon juice, and US uptake is strongly driven by the soft drinks majors, in particular Coca-Cola. The US has been increasing its purchases of Argentine lemon juice, as part of its strategy to source larger amounts of citrus juice from the country.
Argentina’s juice carries a duty penalty into the EU but supplies from Italy have dwindled and have also become extremely expensive, and Spain cannot always fill the demand gap. It is instructive to see that Argentina is making increasing inroads into the European market. Although in 2016 there was a 5,000 tonne drop in imports through the Netherlands, this has more than been made up by direct and higher exports to Germany (2,400 tonnes up on 2015’s uptake), Italy (+2,180 tonnes), France (+2,160 tonnes), Ireland (+590 tonnes) and the UK (+490 tonnes), among others.
Argentina has also increased its exports to
minor customers such as Israel, Canada and Australia.
What is likely to happen this year is subject to conjecture. Argentina has had a bad harvest, and a late harvest, and prices of its lemon concentrate have firmed considerably. Lemon production for the 2016/17 marketing year is believed to be around 1.27 million tonnes, because of a late frost, high temperatures, and excess rain, according to a recent USDA report. This year’s harvest started extremely late (May), because of heavy rain, and demand for lemon juice is huge. One major problem was that the constant rain restricted the picking volumes. This constrained the supply of fruit to the processing plants, and probably cut the total quantity of fruit available for processing.
“They [the processors] said they were going to work doubly hard collecting and processing in May to make up for the lost time in April, but due to weather and damage I assume they never got the chance,” IEG Vu was told.
Although Argentina’s fresh fruit export policy has changed (the country has increased its quality standards for fresh fruit exports, meaning that, in theory at
Perhaps it is the backlash against sweet juices that is making lemon flavour so popular.
By Neil Murray
Sharp practice
20 / Juice Supplement 2017 | IEG Vu
IEG Vu | Juice Supplement 2017 / 21www.iegvu.com
ARGENTINE 400GPL LEMON JUICE CONCENTRTE EXPORTS (TONNES)
2011 2012 2013 2014 2015 2016
US 17627 17928 15254 10556 18703 22977
Netherlands 22635 20980 23392 7969 18170 13242
Germany 1171 928 342 779 3466 5862
Japan 3402 5452 4912 2256 3238 3425
Italy 914 858 2415 77 1016 3193
France 837 970 1483 318 862 3020
Spain 434 693 1332 113 1034 1898
Israel 2034 857 1162 1033 938 1463
Canada 1666 1107 1797 414 966 1438
Australia 1523 1777 2165 674 1203 1337
Mexico 250 1237
Ireland 267 758 1012 688 621 1210
UK 617 867 1006 441 246 736
Belgium 189 586 564 428 494 539
Switzerland 27 27 52 385 391
Chile 181 332 187 271 296 345
Austria 210 310
Others 1183 874 2761 2831 2099 2032
Total 54735 55167 59930 29160 53993 64660
least, there should be more fruit for processing) it now looks unlikely that there will be sufficient fruit to cover all processing needs.
The result is that 400gpl lemon concentrate is presently quoted at anything between USD2,700-3,100 per tonne (dependent on quantity ordered, delivery terms etc, and most business seems to be at the upper end of the scale) fob Buenos Aires and 500gpl product is between USD3,600-3,650/tonne on the same basis. There is little chance of prices going down until the next harvest, assuming that one is an improvement on the present.
Unipektin Image-Ins 2017_A5_Drinktec_E1.indd 1 30.05.17 16:01
What is likely to happen this year is subject to conjecture. Argentina has had a bad harvest, and a late harvest, and prices of its lemon concentrate have firmed considerably.
22 www.iegvu.com/ Juice Supplement 2017 | IEG Vu
Nothing shows the effects of the slump in the Thai pineapple juice concentrate (PJC) sector like its export figures. From well over 140,000 tonnes exported in 2011 to barely 85,000 tonnes last year, and there is nothing to suppose that the figures for 2017 will show any improvement.
True, the US has increased its purchases from Thailand, at the expense of its imports from other origins, but Europe has always been the main market for Thai PJC, and Thailand has lost two-thirds of its business through the Netherlands, while direct exports to Spain (which is a country with a liking for pineapple juice) have fallen by 25% in the last six years. Such ‘inependent’ exports to the UK and France have also suffered.
Thailand is still picking up stray business here and there, from minor customers. Australia is buying more, probably because of Thailand’s relative proximity, and the 5,540 tonnes exported to
Taiwan and 3,780 tonnes to South Korea last year indicate a strengthening Asia-Pacific market.
At the time of writing, the price of Thai PJC (quality juice with a nitrate content of below 25 parts per billion) is around USD1,500-1,550 per tonne fob. Frozen aseptic juice is slightly more expensive. The indications are that Thai farmers are, as is their wont, turning to other crops and abandoning pineapple for the time being now that the raw material price has fallen to THB4.5-5.0 per kilo (though one source reckons the price has strengthened recently to THB5.50/kg).
This means that the price of PJC can be expected to strengthen as fruit becomes more scarce. However, demand in Europe is still extremely weak and it will take some time to put the juice back into tropical blends, and for the discounters to put it back on the shelves.
Thailand’s PJC industry is in the nadir of one of its regular downswings.
By Neil Murray
Little hope of recovery
Thailand has lost two-thirds of its business through the Netherlands, while direct exports to Spain (which is a country with a liking for pineapple juice) have fallen by 25% in the last six years.
/ Juice Supplement 2017 | IEG Vu 24 www.iegvu.com
Spain exported 107,630 tonnes of WGJC last year, a fall of around 6,500 tonnes from 2015, and a decline of a massive 60,000 tonnes from 2011. At present, there does not seem to be any immediate sign of exports recovering, although the likely high price of apple juice concentrate (AJC) in the coming season may persuade some users to opt for grape.
France overtook Italy to become the largest customer for Spanish WGJC, although its volume imported was scarcely changed from 2015. Italy’s imports dropped below 10,000 tonnes. They tend to fluctuate widely, depending on the state of the Italian grape harvests and Italian demand for WGJC, and the table on this page shows a high in the last six years of over 40,000 tonnes exported to Italy.
The UK is a keen buyer of Spanish WGJC, but its uptake has remained relatively stable for the last six years, although its imports dipped in 2014 and 2015 before bouncing back to a ‘normal’ level of over 9,000 tonnes in 2016.
Russia, as ever, tends to buy on price, but its purchases of Spanish WGJC dropped for the third year in succession to just 5,350 tonnes in 2016, as Russia’s fruit juice industry contracted and imports because very costly due to the depreciated rouble. Interestingly, China is buying more WGJC these days (although in absolute terms, not very much). IEG Vu would welcome any information as to its end use.
Relatively poor harvests (not just in Spain – Italy has also suffered in some recent years) and the very low prices of AJC have combined to hammer the Spanish industry. At present, Spanish WGJC is quoted around EUR1.15-1.20 per kilo
Spanish white grape juice concentrate (WGJC) exports have slumped to their lowest level for many years.
By Neil Murray
White in check
France overtook Italy to become the largest customer for Spanish WGJC, although its volume imported was scarcely changed from 2015. Italy’s imports dropped below 10,000 tonnes.
Russia, as ever, tends to buy on price, but its purchases of Spanish WGJC dropped for the third year in succession to just 5,350 tonnes in 2016.
/ Juice Supplement 2017 | IEG Vu 26 www.iegvu.com
SPANISH WHITE GRAPE JUICE CONCENTRATE EXPORTS (TONNES)
2011 2012 2013 2014 2015 2016France 19652 14464 14486 22264 13980 13557Italy 38846 40637 16944 23915 21395 9866UK 9955 9811 9947 5590 6812 9111Netherlands 13646 11274 9533 8812 8499 7895Germany 14538 11094 8312 9222 9249 6869Portugal 7257 5276 4767 4893 3792 5621Russia 2901 6017 5054 6814 6245 5350China 6147 3225 3188 3949 2311 4208Austria 2968 2916 2463 3209 3258 3074South Africa 3192 1045 1759 2467 478 3043Saudi Arabia 1870 2664 1709 2044 2451 2993US 3087 641 390 1601 636 2893Pakistan 374 1221 1830 1425 1812 2506Taiwan 3475 3202 2089 2682 2000 2466Belgium 3234 2367 3255 3782 2685 2191Equatorial Guinea 1888 2120 1471 1636 1601 1928Thailand 1327 1819 1397 2203 1951 1872Poland 2708 2322 1555 1906 1784 1667Finland 1751 1323 1840 1543 1463 1626South Korea 1433 1681 790 1982 347 1566Denmark 1082 920 865 859 1151 1405Japan 2897 2285 1595 1025 945 1155Egypt 1109 1965 1433 1754 2202 1128Others 24436 22561 20514 20020 16996 13644
Total 169773 152850 117186 135597 114043 107634
(USD1.32-1.38/kg) ex-works, which is certainly competitive with present Polish AJC prices (anything from EUR1.20-1.40/kg ex-works, depending on who you speak to). However, it is unlikely to be enough of a price difference to warrant bottlers and blenders switching back to grape juice from apple in blends and bases, given the cost and hassle of making such a change.
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