Citrus production unchanged in 2000/01; good quality expected.

The 2000/01 citrus crop is expected to be about the same size as last year, with losses in California balanced by gains in Arizona and Texas. California's citrus growers expect a 7% drop from 1999/2000, with reductions coming in oranges and tangerines.

Florida's growers expect a 1% increase overall, with a larger orange crop, but smaller crops of grapefruit, tangerines, temples, and tangelos.

Texas and Arizona, the smallest citrus-producing states, are expected to have the largest gains. Texas' citrus crop is projected to be 11% above last year, with increases in both its orange and grapefruit crops. Arizona's citrus crop estimate indicates an improved grapefruit crop and a larger lemon crop.

The orange crop for 2000/01 is forecast at 13.1 million tons, the same as last year. Florida's orange crop, estimated at 10.8 million tons, will be 3% above last year. Texas' orange crop is expected up 15%, increasing for the second consecutive year. Offsetting these increases, the California and Arizona orange crops, the major source of fresh oranges to the U.S. market, are expected to be down--12% in California and 2% in Arizona. Much of the decline is attributed to smaller fruit set this year.

Reduced demand affected California's Valencia growers in 1999/2000. Increased competition from other fruit, including navel oranges from Southern Hemisphere countries, forced California's Valencia growers to switch to processors instead of marketing to the much more lucrative fresh market. While fresh orange imports still account for only a small portion of domestic consumption, the domestic fresh Valencia crop could be pressured by the increased availability of navel orange imports during the summer--when previously they were not available in the U.S. market--as well as by a consumer preference for navels.

On the positive side, California's navel oranges are reported to be large this year, a boon for marketing since purchasers in both the domestic and international markets prefer larger sized fruit. The large size fruit should help boost demand in Japan, the major overseas market for U.S. navels. The tighter supply and higher demand for fresh oranges should also boost grower prices for the navel crop.

Although this season's Florida orange crop is not expected to be as large as the record crop of 1997/98, the supply of orange juice may exceed the previous record. Very high beginning stocks coming into the new marketing year, in addition to this year's expected second-largest production, could put orange juice supplies at 1.8 million single-strength equivalent gallons.

Stocks began high in 2000/01 for not-from-concentrate (NFC) orange juice, despite the increased popularity of this product. About 40% of the crop last year went into producing NFC, the largest proportion so far. Movement, however, was sluggish, and processors were left with large stocks. Processors may be forced to beef up their promotions this coming season to sell NFC orange juice, especially early in the season, to move it out of storage. As a result, consumers may see lower retail prices.

While NFC has become the orange juice of choice at the retail level, 60% of last year's Florida orange crop went into making frozen concentrated orange juice (FCOJ). FCOJ is sold at the retail level as well as to institutions and food services, and processors who reconstitute the juice and sell it chilled. Movement was good in 1999/2000 for FCOJ, and stocks ended only 4% above the year before. The situation coming into this year may result in more oranges going into FCOJ, at least at the beginning of the harvest, and less into making NFC orange juice.

Brazil, the world's largest orange juice producer and the major exporter of orange juice, is projected to produce less juice in 2000/01 due to smaller crop.

Unfavorable weather conditions during flowering and fruit set resulted in smaller sized fruit and slowed maturity, which delayed harvesting. USDA estimates that the smaller crop will result in Brazil's orange juice production declining by 18%. Although higher beginning global juice stocks coming into the new season will buffer the decline in Brazil's total orange juice supply, the decline is sufficient to reduce expected world orange juice supplies by 3%--despite the projected increase from Florida--and could be felt at the consumer level around the world. Brazil's exports are expected to drop 9% from last year, in part from reduced import demand in the U.S. because of this season's larger crop and stable import demand in the European Union.

Grapefruit production is expected to be lower in 2000/01 because of a smaller crop from Florida, where growers have been removing grapefruit trees in response to low prices in the recent past. As a result, the number of bearing trees has declined, reducing crop size.

Fruit size is reported to be similar to last year for white grapefruit and slightly smaller for red grapefruit. Florida's grapefruit are said to be of high quality with minimal blemishes. Small fruit size may hurt prices, especially in the international market where larger fruit command higher prices. Their good appearance, however, should help marketing. Grower prices for processing grapefruit should also be lower this year because processors have started the year with large stocks and will not demand as much fruit as last year. Overall grapefruit grower prices may fall this year, after experiencing only one good year following several years of very low prices.

Lemon production in the U.S. is forecast to be the highest in 3 years. Quality of the lemon crops in both California and Arizona is said to be excellent, which should bring producers good prices despite the larger supply. For the first time, the U.S. allowed Argentine lemons to be imported into certain areas in the summer of 2000. The ruling expands the areas in 2002 and in 2004 will allow them to be shipped to all parts of the country, provided there have been no pest problems.

Argentine lemons will enter the U.S. mostly during the summer months when demand is the highest. Even so, the competition may eventually bring down prices at a time when domestic growers expect to get their best prices. To maintain their market position, some larger domestic shippers have become involved in marketing Argentine lemons.

Temple, tangelo, and tangerine crops are expected to be smaller in 2000/01. Florida's tangerine crop is lower than last year's record crop but still higher than the year before, and there should be an ample supply for this winter. The U.S. market can expect to continue to see Spanish clementines alongside tangerines in supermarkets. Americans have come to like clementines because they are easily peeled and seedless.

Citrus exports to China, which began in 2000, will continue to expand. High-quality navel and Valencia oranges, plus grapefruit and lemons, probably have the greatest potential for export growth. Beginning in the 2000/01 season, China's Citrus Agreement calls for additional counties in Florida and California to qualify for exports to China. Exports to the Philippines, especially of grapefruit, are also expected to rise.

By Susan Pollack 202-694-5251. E-mail: [e-mail]