European grape market to see oversupply resolution

European grape market may see oversupply resolution due to Suez Canal blockage

European grape market may see oversupply resolution due to Suez Canal blockage

The European grape market is looking at a partial resolution of recent oversupply as Egypt’s Suez Canal was blocked for several days by an ultra-large container ship that ran aground last week.

The total volume of grapes from India will still come, but the week delay is going to give the market a little more room to reduce inventory and improve low prices, according to Corne van de Klundert of Origin Fruit Direct.

“Just a week delay is a little bit of a blessing in disguise, but at the same time, we have had to think about what happens as the [blockage] is resolved,” Van de Klundert told FreshFruitPortal.com.

“There is an accumulation of vessels now and as this situation resolves, then we are going to receive more vessels in a fairly short period of time.”

However, there was a discussion to stop packing from exporters in India so as to not put more pressure on the supply chain.

“For deliveries in week 15 or later, we have to be careful in planning as there is a need to roll over some inventory and not take on more or new promotions.”

Van de Klundert said working closely with the customers in providing as much information to them as possible is key right now to not overcommit to volumes that still may not arrive on time.

When asked if the European grape market may see undersupply he said: “Not immediately, but yes the sales momentum that has been built up recently from promotions and the Easter holiday is creating a lot of demand”.

“If that high demand and momentum are reduced because we would have had to increase prices, it would have caused a reduction in orders and the more aggressive promotions would have to be cut because there is wouldn't be volumes for them.”

Because the ship was dislodged on Monday, decisions won't be as difficult to make as they would have had the ship stayed in the canal for an extended period of time.

“There was an enormous amount of pressure on the salvage team to move the ship as quickly as possible because the economic interests are large,” Van de Klundert said.

While Egyptian citrus to Europe has not been heavily affected, citrus being shipped to China and other Asian countries is currently at a standstill.

“We can only hope and try to anticipate as well as we can what the impact is going to be on our marketplace and our customers,” he said.

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