Global supply will keep restrict

For one more year, forecasts point to a restricted orange juice supply in the international market, at least until October, when the new Florida's crop starts. The mains reasons are the forecast of lower supply in the next Sao Paulo state's crop and the reduction of perspectives of recovery in Florida's orchards during the current crop.

In Sao Paulo state, due to the drought from August to October, the 2008/09 crop that will be harvested from May on should be inferior to the productive potential (360/370 million boxes of 40.8 kilos). According to players, the decrease should overtake 20 percent of this potential, which should result in a volume lower than 300 million boxes.

In this context, prices received by growers will depend on the kind of negotiation settled for 2008. For those who trade in the spot market (no contract), the perspective is that industries keep attractive prices, attempting to maintain the process. On the other hand, those who traded through contracts will receive the values according to the expectancies of surplus or deficit of orange juice in the global market in next years.

This scenario of restrict supply should keep international juice prices at a high level in 2008. Even so, it is important to remember that the sector is still facing difficulty to maintain the profitability due to the dollar depreciation, the higher production costs and risks, reinforced by the greening in the last crop.

At this beginning of 2008, Brazilian orange prices (in tree) have been moving up in the Sao Paulo state. The main reason is the lower supply, due to the off-season period. On Jan 15th, the natal variety was traded at 13.39 reals or 7.65 dollars per box of 40.8 kilos (in natura market), increasing 6.7 percent in Real over Dec 28th. For the valencia, the raise was of 5.4 percent in Real during the same period, at 13.32 reals or 7.61 dollars per bag of 40.8 kilos. In general terms, trades have been moving at a good pace only for oranges of better quality.

For the tahiti lime, the supply available is large, as normally observed in this period. On Jan 15th, this variety averaged 5.70 reals or 3.26 dollars per box of 27 kilos (harvested), dropping 8.2 percent in Real over Dec 28th.


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