Egypt exceeds expectations and "surprises" orange market

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Egypt exceeds expectations and "surprises" orange market

Egypt's decision to send up to 35% more Valencias to the Middle Eastern market in the lead up to Ramadan on Jul. 20 has led to oversupply, with prices dropping for South African Navels.

South African exporters describe the market as "tough" with the freight on board (FOB) price up to 20% lower at about US$7-7.50 per 15 kilogram carton of small sized Navels, compared with between US$9-10 last year.

Sunday Rivers Citrus Company marketing director Hannes de Waal, said one of the challenges South African exporters faced was lack of information about the Egyptian market.

He said he expected Egypt to send more Valencias to the Middle East but the sheer scale of volume in the market was a "surprise".

"Supply has continued longer than what we expected and their crop is still growing; they planted a lot of Valencias in the last couple of years - potentially their crop will double in the next five years.

"No one knows how much fruit comes out of Egypt. We can see what Chile and Uruguay are shipping but we don't have this quality of information structure for Egypt."

Capespan Middle East export manager Christo Botha, said Egypt's move to send more fruit to the Middle East was a reaction to the economic crisis in Europe.

"They saw the writing on the wall in Europe with Italy and Greece and they drew back on volumes and decided to store their fruit, knowing that Ramadan is earlier this year."

Last year Egypt sent oranges to the Middle East up to the end of June, but this season it is predicted they will continue until the end of July to catch the surge in demand for citrus running up to and throughout Ramadan.

Botha said it was important to send fruit to the Middle East before the post-Ramandan celebrations of Eid, Aug. 19, as the market tended to die down after this date.

"Egypt is here later than normal, so we have geared back, because if you over supply you can loose your boots, we are taking things a little slower. We are very cautious given the current circumstances."

He said Capespan would be looking to send more fruit to other markets such as Asia, the U.K., Europe and Canada.

"You have to look at your marketing strategy and move your volumes - the structure is to spread your risk."

Lona Citrus logistic director Charl Milleskie said another reason why Egypt was sending more fruit to the Middle East was because they could no longer export to Iran with closure of the Iranian border.

"It's causing a big headache for us. Last year they killed the Russian market and this year they are killing the Middle East market."

He said his company was currently focussing on sending fruit to Canada, the Far East, the U.K. and into Russia.

"Last year 30% of our citrus volumes went to the Middle East. This year it will be significantly less."

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