Weather events in South America have conspired with higher volumes to produce a challenging summer for easy peelers in the United States, while a lingering Californian Navel crop put the strain on the orange market as well. At www.freshfruitportal.com we speak with two leading importers - Capespan North America CEO Mark Greenberg and Oppy citrus category executive director James Milne - about adapting to this complicated situation and what it might look like for the weeks ahead. 

"The challenge is to increase consumption which is also what we’re doing," says Greenberg, finding the positive in what has been a tough and busy campaign to say the least.

It's a classic example of the old adage 'when the going gets tough, the tough gets going'.

"All sellers are going further afield with their sales – we’re always working on developing promotions, promotional strategies, getting into markets that have not traditionally focused on summer citrus, and trying to move it more efficiently through the market," Greenberg adds.

The source of the season's difficulties is a substantial volume of easy peelers this year, mainly from Chile but to a lesser extent from South Africa, Peru and Uruguay.

He says through Week 31, Chile had shipped 42,000 metric tons (MT) of clementines to the U.S., compared to 28,000MT for the same period last year.

"Pricing for a period of time - maybe for the last four weeks - has lower than the market expected and certainly lower than the exporters would have anticipated, but demand is still good, product was moving well," he says.

"The price  is very susceptible to the momentary volume in the market, and when that declines the price reacts very well."

He says the price troughed the week before last, most likely to the lowest the market has seen, but that should be on the mend now.

"No what we expect is the market is probably going to be a little bit short of clementines, soft citrus, for probably the last two weeks of August until the Chilean W. Murcotts really start to hit," he says.

"With the anticipation of lower volumes in the next few weeks we’ve seen prices go up and customers reacting not unfavorably to the expectation that prices will rise."

He adds that storage is not the best option for the sector when faced with higher volumes as clementines are quite sensitive.

"You don’t really want to sit on them very long. It’s not like an apple or even an orange that will hold its condition over a period of time," he says.

"If you wait too long, in the process of value-adding it you’ll end up losing more in that process, so what you might gain in waiting two weeks in price you’ll probably lose at the value-adding point.

"The W. Murcotts, the late mandarins, have a bit more capacity than the clementines, especially Chilean ones and the South African ones."

Milne echoes Greenberg's comments, highlighting how inventories got filled up due to "bunched arrivals", and also adds 2016 has not been a stellar year for quality.

"A lot of the issues that evolved came from climatic conditions in Peru, Chile, Uruguay and elsewhere," he says.

"I wouldn’t talk in terms of the South African clementines; they were fine and obviously the Australian Daisies were fine, but from a general mandarin and easy peel perspective that added a little bit of a kink in the system."

The high volume early on in the deal conflicted with great expectations for FOB (freight on board) prices, while there was also early summer fruit coming on from parts of the U.S. and Canada that compete with the imported citrus.

"It was a recipe for disaster really, and that’s why we’ve had a more difficult season than before."

While Chile's unusual April rains attracted much attention, weather events in Peru and Uruguay may have also exacerbated what is already a more challenging export procedure for the two countries.

"Chile is exempt from it, but for Peru and Uruguay with the cold treatment process that adds further stress to the fruit, so if it’s not picked at optimum condition it can cause issues and I think we’ve seen that not just with the usual realm of decay and mold but you’ve got skin break-down," he says.

"So you've got discoloration on the fruit which is happening at retail. We might pack accordingly, you’ve got reasonably clean fruit heading out, but unfortunately it starts to break down when it hits the retail shelves once it hits ambient [temperature].

"The good part about this season for us is our market reports have been reflecting this, but for all of us [in the industry] it’s been consistent."

However, Milne clarifies there have been exemptions depending on country of origin, and there has still been good quality fruit coming from South America despite the weather-related condition issues.

"South Africa and Australia have a fairly preeminent role in the market, and a lot of retailers will have their own hierarchy of fruit they want to pick from, and as long as it arrives in good condition they’ll keep going that route," he says.

"What you’ll find is other countries of origin start to vie for the pecking order. So Australia and South Africa in the early stages stayed above that kind of malaise that captured the market - I know from our perspective the Daisies excelled in a very weak market, and that's a testament to the eating quality of the fruit, the color and the cosmetic appeal of the fruit.

"From there on in good Chilean, Peruvian and Uruguayan fruit get caught a little bit because it becomes a country of origin type of scenario. So that’s what they’ll want to be mindful of, but it is going to be tough because some seasons it’s going to be driven more by climatic factors than the standards you’re trying to employ in the packhouse."

Like Greenberg, Milne agrees there is now recovery in the market.

"It isn’t just a function of getting it out of everyone’s coolers up and down the East and the West Coast, but it’s getting it through the retail channels," he says.

"That's what we’ve got to hope happens at a rapid pace now, and obviously retailers have softened their pricing at point of sale. Summer fruit is cleaning up a little bit, and all of this means easy peelers are going to find stronger favor again.

"And with stronger fruit coming on it should stand up to the test of the distribution system and hopefully it shows up fairly well on the retail shelf."

Navel raising

Both experts note the supply situation has not been as severe for Navel oranges, but Californian fruit did stay in the market longer than previous indications. Milne says this may have even been the case for four to five weeks.

"The domestic sellers of California citrus really stayed in the market almost right through July this year, which made retailers delay their move to the imported products," says Greenberg.

The Capespan executive said 19,000MT of oranges had already arrived from South Africa this season, while Chile has already loaded 38,000MT of the fruit of which 50% have already arrived on both the East and West Coasts of North America.

This compares to 36,000MT loaded in the same period last year.

"There are a lot of Navel oranges and prices are a little softer, but I believe they’re as soft as they’re going to get and I believe they’re going to firm up a little bit as the inventories get more into line," he says.

"In the U.S. Everyone has oranges in the summertime, but the question is how much weight are they going to put behind those? One square meter or one square foot of attention? Or are they going to try to promote it to their customers?"

"That [Californian supply] has had a bit of an impact - there were large volumes from South Africa on the East coupled with large volumes from Chile on the West – it’s been primarily Chile that’s upped the ante in terms of their volumes, and Australia has been moderate," adds Milne.

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