European undersupply benefits South African lemon sales
South African lemons are fetching top prices of €18-20 per 15 kilogram (kg) carton on the European wholesale market due to a massive undersupply.
Estimated lemon exports this season are expected to drop by 10% to 9.97 million cartons due to smaller sized but good quality fruit, while Argentina has faced difficulties because of difficult rain conditions and high export costs.
While lemons are achieving strong prices in Europe, exporters regard the market as notoriously unstable and this year total exports to the continent are expected to drop by 2-13%.
Sundays River Citrus Company (SRCC) marketing director Hannes de Waal described the continent as volatile.
"Obviously prices in Europe are quite attractive. However, we don't know how long that's going to last. Markets in general for lemons are really strong so we are obviously quite happy with this," said de Waal, whose cooperative exports 2.7 million cartons of lemons annually.
Dramatic rise for Middle Eastern share
The share of shipments bound for the Middle East this season is expected to increase to 46%, compared with 36% the previous year, partly because of greater tolerance for smaller sized lemons.
Cape Citrus general manager Scott Dowle said the Middle East was becoming more popular because it offered greater price stability.
"It's a trend which is growing, Europe is becoming more difficult and they want quality at knock down prices. The Middle East will give you a fixed price; Europe will offer you a nice price but once the fruit is on the water they will say there is no money for it."
Lona Citrus logistics director Charl Milleskie agreed the Middle East market was a strong one.
"The Far East and Middle East have been doing consistently well. The Russians stress they want bigger lemons whereas the Far East and Middle East enjoy mid-sized lemons."
Although Russia is an important market, many producers said they regarded it as a changeable import destination.
"The Russians will do fixed prices, they are quite clever in terms of putting claims in afterwards, although you will get your money in Russia more often than not," said Dowle.
Milleskie agreed that Russia could be a tricky market.
"We have to be careful in Russia, Russian buyers will not lose money. We make sure we get 80-90% of the money before we ship because the Russians are notorious about asking for a discount."
AMC Fruit's Andrew Greyling said his company preferred the Middle East and was not sending citrus to Russia this year because of the rubles' recent instability.
"Obviously people will have to be careful about their currency devaluing. The issue is they might not be able to afford the fruit."
However, de Waal said his relations with Russian importers who buy on a fixed basis was good.
"They are consistent and the indications they give you are pretty much valid. The companies we deal with are quite stable, it's much less volatile market than Europe which is on a consighment basis which makes a huge difference."
De Waal described the quality of this season's lemons as better than last year's despite a two to four week delay in harvesting.
He said SRCC, which comprises 150 growers, had already shipped some lemons but volumes would start to increase again in week 28 and 29.
Western Cape lemon volumes are decreasing, however the Eastern Cape and Sundays Valley River are hitting their peak production rate.
"Our quality of lemons is better than last year and we should be able to supply at least to week 40," said de Waal.