Brazilian drought causes lime prices to double

October 28 , 2014

Lime prices in Brazil have skyrocketed in October as droughts throughout many parts of the country take their toll on supply volumes. shutterstock_75311899 drought sq

The terminal market price in Sao Paulo for one kilogram (2.2 pounds) of limes increased from US$1.24 on Oct. 12 to US$2.79, after several months of relatively stable prices.

According to NASA’s Earth Observatory, the southern region has been hit the hardest by the drought, with total rainfall for the year 300-400 millimeters (12 to 16 inches) below normal, and reservoirs have dwindled to 3-5% of storage capacity.

A representative of Brazil’s largest Tahiti lime exporter Itacitrus told the effects of the low rainfall were felt particularly hard at this time of the year as the country was in between seasons.

Currently we’ve got a problem with very low volumes. At the moment Brazil has no season, but we should normally still have limes in October,” export manager Patricia Marsuka said.

She added the season would usually start up again in early November, but because of the drought this would likely be pushed back a couple of weeks.

“I think now the season should probably start from the middle of November and maybe go until June if everything goes well, but we’re really not sure at the moment – it really depends on the rains,” she said.

Marsuka added Itacitrus, which makes up around 80% of domestic production, was currently loading about 23-30 containers a week for export from Brazil, but volumes would normally be far higher.

Many other companies are also exporting very little fruit at the moment in order to take full advantage of the attractive domestic market prices, but Itacitrus is focused mainly on foreign trade as it has clients with fixed contract prices.

A representative of Agronometrics – the market information service that noted the price spike – said the Brazilian supply shortage could have indirect effects on global market dynamics, as the country was a major shipper to the EU.

“Brazil is a year-round producer, so less volume from Brazil will mean higher prices in Europe. If these become attractive enough they could re-divert Mexican fruit that would otherwise go to the U.S., potentially driving up prices around the world,” said Agronometrics CEO Colin Fain.

“As it is Brazil’s low season – and Europe is currently receiving volume from Mexico, Colombia and Israel – the effects won’t be as pronounced as they could otherwise have been, but as things develop it will be interesting to see what the effects on international markets will be.”



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