📰 Free on Board's Agri Headlines gives an outline on notable news in the agriculture space. For this week, we cover record-low citrus production in the US, the expected entry of Jalisco avocados to the US amid lower availability in Michoacan, and how corn prices remain high.
Tune into Episode 15 to learn more about the situation.💻
Want more agricultural insights?
Get smarter and stay updated on the most important agricultural updates on https://www.tridge.com/intelligence-data.
0:00 Hey, thanks for stopping by.
0:01 This is free on board a podcast by Tridge.
0:04 You're in the right place if you're looking to stay up to date with the latest food and agricultural news.
0:08 Now onto the updates.
0:19 [Hyesun] Welcome back to Agri Headlines where we will be keeping you up to date on the latest agricultural news.
0:24 [Hyesun] This is Hyesun, a global market analyst at Tridge.
0:27 [Ben] And I'm Ben, also a global market analyst at Tridge.
0:29 [Hyesun] Ben and I have three stories prepared for you today.
0:32 [Ben] Yes, we do.
0:32 [Ben] So let's jump right in
0:36 [Hyesun] For our first story today, we're bringing you a tale of oranges and orange juice.
0:40 [Ben] That's right.
0:41 [Ben] Citrus production in the US, which is among the top five citrus producing countries, is forecast to hit a record low.
0:47 [Hyesun] That's right, Ben.
0:48 [Hyesun] It's the lowest in the last 50 years.
0:50 [Ben] Yes.
0:51 [Ben] And a 13% drop from the previous year.
0:53 [Hyesun] Okay, so why don't we take a closer look at some of the numbers.
0:56 [Hyesun] According to Tridge's price data, Californian orange prices started to soar in the last week of March
1:02 [Hyesun] and continued their upward trend until the second week of April
1:05 [Ben] Ah, right.
1:05 [Ben] And if we dig deeper, we see that the orange prices in the Los Angeles wholesale market during the second week of April stood at $45 per carton,
1:14 [Ben] which is a 26% increase from the same week last year.
1:17 [Hyesun] A 26% year on year increase!
1:20 [Hyesun] In Korea, we can certainly feel the repercussions of the pandemic dragging on.
1:24 [Hyesun] Customers are more driven to buying premium or imported fruits like mangoes and Californian oranges.
1:29 [Hyesun] Demand coupled with logistical issues and lower production in California has hiked up prices by 43% compared to pre-pandemic levels.
1:38 [Hyesun] And what's interesting is that the yearly zero-tariff season for the import of US oranges already started in March, but prices are still high.
1:47 [Ben] That's very interesting.
1:48 [Ben] But here in South Africa, the situation is the complete opposite.
1:52 [Ben] South Africa is in the middle of its citrus harvest season with an estimated 3% higher production and export of oranges,
1:58 [Ben] Prices are very similar to what they were last year and we are seeing a slight decrease in price as we're moving into the peak of the harvest season, which is during May.
2:07 [Ben] So orange prices are down 13.2% from last week.
2:10 [Ben] But the most interesting event in the South African citrus industry is the recent flooding that happened in the Kwazulu Natal region.
2:17 [Hyesun] Yes, I heard about the flooding and it sounds really hectic.
2:20 [Hyesun] Did it affect the citrus industry at all?
2:22 [Ben] Yes, severely.
2:23 [Ben] So the port of Durban which handles about 55% of South African citrus exports was closed for a few days due to heavy flooding and infrastructure damage.
2:32 [Ben] Now the port is steadily returning to full operational capacity but access roads have washed away and reefer ships still can't be loaded.
2:40 [Ben] So producers have delayed harvesting and have diverted shipments to alternative ports.
2:44 [Hyesun] It sounds like it's caused a lot of trouble for the industry.
2:47 [Hyesun] And while we're talking about oranges, we also have to talk about what's happening in the orange juice industry.
2:53 [Ben] Yes, definitely.
2:54 [Ben] The largest orange juice-producing country, Brazil, is set to experience heavy rains in Sao Paulo, its main producing region, which will impact the current season.
3:03 [Hyesun] Are you a big orange juice person, Ben?
3:05 [Ben] Yes, definitely.
3:06 [Ben] I love a freshly squeezed orange juice.
3:08 [Ben] And how about you?
3:09 [Hyesun] Well, I'm actually more of a soda person but brace yourself, Ben because by June which is the end of Brazil's marketing year, the ending stocks are set to be the lowest in the last five years.
3:19 [Ben] You're right.
3:20 [Ben] And with Brazil supplying 70% of the global orange juice share
3:24 [Ben] global supply is expected to be pretty tight.
3:27 [Hyesun] This will lead to elevated FCOJ (Frozen Concentrated Orange Juice) futures in the upcoming season.
3:33 [Ben] Moving on to our second story for the day, avocados.
3:36 [Hyesun] I see there are a couple of newcomers in the market.
3:38 [Ben] Indeed, in Mexico, the state of Jalisco is set to export avocados to the US for the first time.
3:44 [Hyesun] Yeah. Jalisco avocados are now authorized to enter the US market.
3:48 [Hyesun] And you know, this is big news because Jalisco has traditionally focused more on the European market and Michoacan was actually the sole exporting state to the US.
3:57 [Ben] That is big news. But just so we're clear, exports haven't started yet, right? They're still in the process.
4:03 [Hyesun] That's very correct.
4:04 [Hyesun] A work plan has been established by producers and the only thing missing is for the USDA to set a date to start inspections.
4:11 [Ben] The import of Jalisco avocados comes at an opportune time since lower availability in Michoacan has been hiking prices up.
4:19 [Hyesun] Right. Along with soaring production costs, labor shortages, and supply chain backlogs.
4:24 [Hyesun] As some of you may remember, there was also an export ban on all Michoacan avocados to the US
4:30 [Hyesun] a couple of months back right during the Super Bowl.
4:33 [Hyesun] You can also check out that on episode six for more information on that.
4:36 [Ben] Yeah, I remember that.
4:38 [Ben] After prices reached a record-high in mid-February, they decreased by 20% in early April compared to the previous week.
4:45 [Ben] But even with the latest reductions in prices, this year's average price remains 30% above last year's.
4:50 [Hyesun] Right.
4:51 [Hyesun] US consumers are hopeful that the inflow of new Jalisco avocados will be able to fill the gap created by Michoacan production.
4:58 [Ben] Although that won't be very easy
5:00 [Hyesun] Nope, it certainly won't be.
5:02 [Hyesun] Production from Jalisco alone is actually not comparable to that of Michoacan
5:06 [Hyesun] but it will act as more of a supplement to Michoacan's production.
5:10 [Ben] A new up-and-comer in the avo market is new Zealand.
5:14 [Hyesun Right.
5:14 [Hyesun] Ecuador, a very interesting addition amidst South American avocado giants like Colombia and Peru.
5:19 [Ben] Right.
5:20 [Ben] These markets are not exactly well known for the avocados but are interested in expanding their export market.
5:26 [Ben] Avocados are the fifth most important horticultural export product in New Zealand with the country exporting mostly to Australia and Southeast Asia.
5:34 [Hyesun] So how are they doing in terms of exports?
5:36 [Ben] Well, New Zealand had a very successful 2020/21 season, increasing sales by 45% compared to the previous year.
5:43 [Hyesun] Which is pretty significant since they are such a heavily export-based market, right?
5:47 [Ben] Absolutely.
5:48 [Ben] For the coming season, producers are anticipating some challenges regarding COVID-19 and the geopolitical tensions in Russia and Ukraine.
5:55 [Hyesun] And another interesting nontraditional market is Ecuador where the government is actively taking the initiative to promote production and exports.
6:03 [Ben] Interesting. Did the efforts pay off?
6:05 [Hyesun] It certainly did. Ecuadorian avocado exports in 2021 recorded a 175% increase from that in 2016.
6:13 [Hyesun] And the country is set to cover 34 different markets very soon.
6:17 [Ben] And our third and final issue is on grains.
6:19 [Ben] And I know we have been covering the grain market a lot recently, but this is such an important market for the agricultural industry in general that it warrants a weekly update in my opinion.
6:28 [Hyesun] Definitely.
6:29 [Hyesun] And for this week we want to talk a little bit more about the corn market.
6:33 [Ben] Yes, and I know everyone must be tired of us saying this throughout the podcast.
6:37 [Hyesun] Let me guess, Ben. Record high prices?
6:40 [Ben] Record high prices. You guessed it.
6:42 [Ben] Corn futures at the Chicago Mercantile Exchange hit a ten-year-high on April 12th this year, reaching 305 US dollars per metric ton.
6:49 [Hyesun] And for those of you who are interested in finding out why and how prices are rising, you can also check out our webinar episode on the causes and effects of agflation, also available on YouTube.
6:59 [Ben] We would love to do an episode on how prices are stabilizing for once.
7:03 [Ben] But unfortunately high prices and high demand seems to be the default state these days.
7:08 [Ben] For corn specifically, bullish prices are attributed to unfavorable weather in Brazil as well as Argentina where production has slowed down.
7:15 [Hyesun] Right.
7:16 [Hyesun] And even though the USDA has raised Brazil's crop estimate for April, it has not yet exerted downward pressure on prices.
7:23 [Ben] Yes, it is still too early to tell.
7:25 [Ben] And high gas and fertilizer prices are certainly not helping.
7:28 [Hyesun] Right. And we have also seen an increase in the demand for the US corn as an alternative to buying from Ukraine
7:34 [Hyesun] with China purchasing 1.1 million metric tons,
7:37 [Hyesun] the largest weekly purchase in the last year.
7:40 [Ben] And we're expecting more buyers to be interested in sourcing from alternative markets with where the prices are at currently.
7:46 [Hyesun] And for any potential buyers out there, Argentinian offers are currently pegged at 37 US dollars per metric ton cheaper than Brazilian corn and 40 US dollars cheaper than US corn
7:57 [Hyesun] So don't forget to be on the lookout for these offers.
8:00 [Ben] Yes, definitely keep your eyes peeled.
8:03 [Ben] Can you get us started on the takeaways for today, Hyesun?
8:05 [Hyesun] Certainly, Ben.
8:06 [Hyesun] For our first issue, US orange production is down 13% from last year, the lowest in 50 years with prices increasing 26% year over year as a result.
8:16 [Hyesun] Severe flooding is hampering South African citrus exports while heavy rains in Brazil is expected to result in elevated frozen concentrated orange juice futures in the coming season.
8:26 [Ben] And for our second issue, in Mexico Jalisco is said to export avocados to the US for the first time.
8:32 [Ben] While New Zealand and Ecuador are rising stars in the avocado market with significantly increased sales in 2021.
8:38 [Hyesun] Lastly, corn futures hit a ten-year-high at 305 US dollars per metric ton.
8:44 [Hyesun] But Argentina is offering good prices for interested buyers.
8:48 [Ben] And that is all for today.
8:50 [Ben] We will be back next week with another episode on the latest agricultural updates.
9:03 If you enjoyed this episode, please leave a review, subscribe, and share our podcast.
9:08 Check out tridge.com/intelligence-data for more price analyses and up-to-date insights into the food and agriculture industry.