Free on Board's Agri Headlines gives an outline on notable news in the agriculture space. For this week, we cover the rise of table grapes and broccoli in Mexico, and the challenges Vietnamese and Chinese fresh produce markets are facing from COVID-19.
Tune into Episode 17 to learn more about the situation.
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0:00 Hey, thanks for stopping by.
0:01 This is Free on Board a podcast by Tridge.
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0:05 If you're looking to stay up to date with the latest food and agricultural news.
0:08 Now onto the updates.
0:20 [Ben] Welcome again to Free on Board where we bring the latest agricultural updates to our listeners.
0:25 [Ben] I'm Ben, a global market analyst here at Tridge.
0:27 [Hyesun] I'm Hyesun, also a global market analyst.
0:30 [Hyesun] And we have a very special episode this week where we give you an overview of what's happening in the fresh produce industry in three major agricultural markets.
0:38 [Ben] Indeed. For this week we'll talk about Mexican fresh produce exports to the US and how they are doing in the market.
0:44 [Hyesun] We will also be talking about what's going on in the Vietnamese fruit market.
0:48 [Ben] And lastly, we will discuss the fresh fruit and vegetable market situation in China amid strict COVID-19 restrictions.
0:55 [Hyesun] So starting with what's happening in the Mexican fresh produce sector
0:58 [Hyesun] Mexican table exports to the US are set to increase by 20% for the 2021/22 season.
1:05 [Ben] And how many boxes would that amount to?
1:07 [Hyesun] That would be around 25 million 18-pound boxes.
1:09 [Hyesun] The latest forecast was confirmed as the harvest came early with seemingly good quality.
1:14 [Ben] Right. With increases in production as well.
1:17 [Ben] After starting in mid-April, exports are also expected to pick up significantly in May and continue into June.
1:23 [Hyesun] That's right.
1:24 [Hyesun] The most exported variety is the Red Seedless which takes up almost half of the production volume and the other half consists mostly of the White Seedless and other minor varieties such as Cotton Candy.
1:34 [Ben] Things haven't always been good for Mexican grapes.
1:36 [Ben] For the 2020/21 season, Chile surpassed Mexico, and Mexico lost its position as the second-largest exporter to the US.
1:44 [Hyesun] Exactly. As Mexican table grapes are off to a great start for this season
1:48 [Hyesun] There is a good possibility that they might regain their status as the second-largest exporter.
1:53 [Ben] Indeed. And Mexican table grapes have a significant advantage of being able to supply the US market in July, earlier in the year than their South American counterparts
2:02 [Ben] along with the geographic proximity as sea freight costs remain high and delays continue.
2:07[Hyesun] Another Mexican produce that has exhibited a notable trend is broccoli which benefited from a substantial supply shortage in the US.
2:15 [Ben] Can you elaborate on the shortage, Hyesun?
2:17 [Hyesun] Yes, so California is facing significant challenges due to water shortages, which, combined with rising temperatures, has caused the supply of broccoli to decrease significantly.
2:27 [Hyesun] This is a critical blow to the supply as almost 90% of the broccoli produced domestically in the US comes from California.
2:35 [Ben] Now this led to a drastic increase in prices where according to Tridge’s data, US wholesale prices in early January stood at 5 US dollars per kilo, the highest recorded in the last season.
2:46 [Hyesun] But I heard prices didn't keep on rising?
2:49 [Ben] No, so this is where it gets interesting.
2:51 [Ben] After a significant increase in imports to fill in the supply gap, prices recorded a 40% WoW drop in the third week of March.
2:58 [Ben] And in April, prices continued to go down recording the lowest price this year and in all of 2021.
3:05 [Hyesun] Wow. Was that kind of a drop expected?
3:07 [Ben] No. On the contrary, it was initially expected that prices would recover to the average season price and then increase towards mid-April.
3:14 [Ben] Now large shipments starting from March and continuing into May are attributed as the main factor for the unexpected drop.
3:22 [Hyesun] For our second story, Vietnam's fresh produce exports have decreased dramatically since the start of the year.
3:28 [Hyesun] Fruit and vegetable exports are down 12% for January and February 2022 compared to the same period last year.
3:35 [Ben] The decrease in Vietnamese exports is primarily the result of the COVID-19 outbreak in China in the middle of February 2022.
3:43 [Hyesun] That's right, Ben.
3:44 [Hyesun] Vietnam relies heavily on China as its primary export partner for fruit and vegetables.
3:49 [Hyesun] In 2021, Vietnamese fruit and vegetable exports reached 3.6 billion US dollars where exports to China accounted for 54% of the total export turnover.
3:59 [Ben] China's continued enforcement of its strict zero-Covid policy has resulted in long delays at ports and intermittent court closures.
4:07 [Hyesun] Exactly. And the lack of market access to China has led to an oversupply of fruit in Vietnam's local market, causing prices to plummet.
4:15 [Ben] Yes, exactly.
4:15 [Ben] So currently, Vietnamese fruit including mangoes, bananas, and dragon fruit are ripe but traders are not buying the products.
4:22 [Ben] Mangoes, for example, are being traded at 70% below the normal price range.
4:27 [Hyesun] Right. And Vietnam is not alone in this boat.
4:30 [Hyesun] Other countries, such as Cambodia that rely heavily on China for its banana exports are in the same situation with an oversupply of produce driving prices down.
4:38 [Ben] Yes, and farmers have taken drastic measures in the face of slowed exports and depressed prices.
4:44 [Ben] Vietnamese mango growers have reportedly given up on trying to harvest their mangoes because the low prices do not cover the labor and transportation costs.
4:52 [Ben] While dragon fruit growers are cutting down orchards due to the low prices and slowing exports.
4:57 [Hyesun] And for its third and final story, we stick with the COVID-19 situation in China, but focus on the fresh produce market.
5:05 [Ben] In April 2022, the average wholesale price of domestic fruit in China reached its highest level for this period in ten years And was trading at 10% above last year's prices.
5:15 [Hyesun] Exactly. Domestic fruit prices have continued to rise rapidly since late March.
5:20 [Hyesun] The wholesale price appears, for example, has increased more than 40% since March to approximately 15.69 US dollars per box.
5:28 [Hyesun] Persimmon prices are up almost 200% YoY.
5:32 [Ben] Exactly.
5:33 [Ben] And as we discussed previously, China's enforcement of its strict zero-COVID policy has resulted in long delays at points of import and port closures, which are the main reasons for skyrocketing prices.
5:45 [Hyesun] Fresh produce cannot be imported fast enough to keep up with local demand, resulting in major discrepancies between supply and demand, putting upward pressure on the price of fruits and vegetables.
5:54 [Ben] And there is no end in sight for the current market situation
5:57 [Ben] as China struggles to contain the outbreak of the highly contagious omicron variant of COVID-19 with cities like Shanghai remaining in lockdown.
6:06 [Hyesun] So Ben, can you prepare the takeaways for us?
6:08 [Ben] Certainly. First up, Mexican table grapes are off to a great start this season and looking to regain their position as the second-largest exporter to the US
6:17 [Ben] while Mexican broccoli has stepped in to fill the initial supply gap in the US.
6:21 [Hyesun] For our second story, countries such as Vietnam and Cambodia that rely heavily on China for exports are experiencing an oversupply of produce combined with very low prices.
6:30 [Ben] For our third story, fresh produce prices in China is at a ten-year high as long delays at ports of entry and port closures hinder the movement of fruit and vegetables, leading to a supply shortage.
6:41 [Hyesun] And that is all we have for you today.
6:43 [Hyesun] We will be back next week with the latest agricultural updates!
6:58 If you enjoyed this episode, please leave a review, subscribe, and share our podcast.
7:03 Check out tridge.com/intelligence-data for more price analyses and up-to-date insights into the food and agriculture industry.