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Brazilian orange juice sales may dip if record export price holds steady.

Brazilian Orange Juice Sales May Dip If Record Export Price Holds Steady Forecast pegs 117.5 million gallons going to Europe, with North America taking 105 million. Florida processors expected to buy between 39 and 50 million gallons.

Exports of Brazilian frozen concentrated orange juice (FCOJ) will fall 11.3% to 222.4 million 42| Brix gallons if the current export price holds and the value of the dollar remains unchanged, predicts the Economic Research Department of the Florida Department of Citrus.

Brazil's export price is currently at a record $1.40 per pound of solids FOB Santos and $1.85 CIF Florida, and production for 1988-89 is projected at 244.8 million gallons, unchanged from 1987-88 (The record was 301.7 million gallons in 1985-86). Florida production for 1988-89 (about Dec. 1-Nov. 30, as opposed to Brazil's June 1-May 30) is projected at 182.8 million gallons, with movement ranging from 221.1 million to 230.5 million, depending on the price; imports could be from 39.1 million to 50.2 million.

Brazil's disastrous economic situation has impacted on that country's citrus industry. The orange crop for 1988-89 is projected at 225 million boxes, up five million; but fresh utilization is expected to drop the same amount, to 35 million, due to high prices and the erosion of consumer purchasing power by hyperinflation.

Just a few years ago, the new civilian government of Jose Sarney undertook a currency reform, replacing the almost worthless cruzeiro with the cruzado, pegged at 13.77 to the dollar. As of late December last year, the cruzado was 735 to the dollar and sinking fast. As in Germany in the 1920's, hyperinflation threatens to wipe out the middle class and thus destabilize society as a whole.

So far, the citrus industry remains one of the few bright spots in the Brazilian export economy, which has traditionally depended on coffee -- coffee has been doing so poorly in the last couple of years that soybeans have overtaken it as the chief agricultural export! Despite the prospect of an export drop, citrus growers are expected to realize an on-tree price of $3.36 to $4.73 a box for 1988-89, vs. $2 for 1987-88, based on a formula tied of New York futures prices.

Processed utilization for the coming season is pegged at 190 million boxes, up 10 million from 1987-88, but Florida analysts expect yield to be off because of dry weather this past summer. The 1988-89 season got off to a slow start because of an abundance of low-ratio fruit, but since then the ratios have improved and yields have returned to more normal levels. Even so, the output of 244.8 million gallons (including 5.2 million from outside Sao Paulo state, center of the citrus industry) will be no more than 190 million boxes than 1987-88's from 180 million. Poor grove care and a die-off of young trees have contributed to the stagnation in FCOJ production.

Brazilian carryover going into the 1988-89 season was a razor-thin 13.1 million gallons, down from 29.7 million the year before. With production unchanged, availability for the season is thus projected at 257.9 million gallons, down six percent from 274.5 million. But if exports decline as forecast, from 254.5 million to 222.4 million gallons (domestic FCOJ consumption is expected to remain unchanged at 6.9 million), the carryover at the end of May should be back up to 28.6 million, a 6.5 week supply (vs. 2.6 weeks this past year). It would be a blessing in disguise, for if exports were to be substantially higher than forecast, they would wipe out the inventory.

Of the forecast exports, 104.9 million gallons (down from 120.5 million) would go to the United States and Canada, and 117.5 million (down from 130.1 million) to Europe and elsewhere. Imports by Florida processors are forecast at 39.1 million gallons if the FOB card price is $21.70 a 24-count case of 12-ounce cans, 45 million if the case price drops to $20.70 and 50.2 million if it sinks to $19.70. Total availability under those scenarios would be 258.9 million, 264.8 million and 270 million gallons, respectively; movement 221.1 million, 226.2 million and 230.5 million; carryover 37.8 million, 38.6 million and 39.5 million (in the area of 8.9 weeks' supply in each case).

Orange juice prices in the U.S. increased significantly last year in response to tight supplies, reaching a record $4.04 a single strength equivalent (SSE) gallon by July, up 18.5% from a year earlier. Grapefruit juice prices, which never suffered the mid-1980's decline for orange juice, were up 5.6% to $4.50 a SSE gallon. Based on three scenarios of supply and demand, prices for the coming season could be $3.84, $3.97 or $4.09 for orange juice, and $3.92, $4.20 or $4.48 for grapefruit juice. Based on the middle projection, orange juice sales for 1988-89 are forecast at 822 million SSE gallons, up from 797 million.

Frozen orange juice retail sales, which suffered heavily last year, are expected to increase slightly from 353 million to 446 million SSE gallons, but chilled orange juice is expected to gain a lot faster, from 428 million to 446 million. Canned orange juice, a minor factor in the retail market, will remain about the same at 16 million. As for grapefruit juice, retail sales for 1988-89 are projected at 72.5 million SSE gallons, up from 71.2 million. Frozen is a small factor here: 9.5 million gallons, off slightly. Chilled will be 37 million, canned 26 million.
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Title Annotation:includes related article on Israeli citrus supplies
Publication:Quick Frozen Foods International
Date:Jan 1, 1989
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