Brazil: the aftermath of record juice production

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Brazil: the aftermath of record juice production

A large orange harvest in 2011-12 has led to a build-up of juice stocks in Brazil, driven also by a decline in consumption over recent years in key markets. At we speak with Brazil's National Association of Orange Juice Exporters (CitrusBR) president Christian Lohbauer about the current situation and what it means for the next campaign.

CitrusBR forecasts an orange crop of 364 million 40.8kg (90lbs) cartons from the Brazilian Citrus Belt (Sao Paulo and Triangulo Mineiro, Minas Gerais) in 2012-13.

Lohbauer explains while the crop is much less than last year's 428 million cartons, it is still higher than the 10-year historic average.

"For having been the largest harvest of the last 10 years, the 2011-12 harvest allowed the industry to refill its global orange juice stocks, which were below average until then.

He says the accumulation of stocks and large harvests have been worrying for businesses in the sector, who have also witnessed years of falling consumption.

"For the 2012-13 crop the industry is estimating total exports of around 970,000 metric tons (MT), which corresponds to an approximate fall of 18% compared to last year.

"That means it will take more time for stocks to be consumed, which reduces the capacity of industry to process oranges and store juice, right at a time when there is a large availability of oranges."

Lohbauer says there is concern that there simply won't be space to hold fruit from the next harvest.

"With accumulated orange juice stocks and a downward consumption trend, the industry estimates it could process 250 million cartons from the 2012-13 harvest.

"If more than this limit is produced there won't be enough physical space to put the stock surplus."

As for whether the fruit will be collected, he says the industry is currently analyzing different possible scenarios for the next harvest, which depend on unpredictable factors.

"It is likely there will be a surplus of 20-80 million orange cartons that won't be bought by the industry."

He said talks with the Brazilian government to find a solution were continuing, but there was still no official position on what action would be taken.

Around 70% of Brazil's orange production goes to processing.

Related story: Brazilian orange oversupply 'disturbing'

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