Due to the poor orange harvest in Brazil and Florida the prices of this fruit on the global markets may grow three-fold. The orange industry in Brazil, the world’s biggest exporter, last winter was hit the hardest in the last 7 years frosts and damage of the trees. Colleagues from radio Business FM quote The Financial Times that said that Brazilian exporters have already raised prices by 50% to 60%.
Situation with the supply of orange juice to the world markets may also aggravate due to the threat of a poor harvest in Florida caused by hurricanes that damaged orange plantations. It’s a very serious threat, says the US Agriculture Secretary. The citrus harvest this year will be the worst in 10 years.
All this lead to the growth of frozen juice concentrate futures at the world’s exchanges by 95%! And the hardest hit will be the US, the biggest consumer of fresh orange juice.
As for Russia, the bullish market trend will affect Russia to a much smaller degree and mainly in the mid-term perspective, says market analyst Dmitry Livinsky. Of course, we will see a price hike, but I wouldn’t say that it would do us as much harm, as, say it would damage Americans. The juice market in Russia is diverse with many types of soft drinks. The market share of orange is about 15%. Americans like to drink mainly fresh orange juice, and its market share in the United States is about 80% or even more, said Dmitry Livinsky.
More than just that. Russian companies import juice concentrate from a number of its exporters, mixing their produce. They also work based on mid-term contracts, so the growth of prices is not expected to affect the Russian customers very soon.
According to David Yakobashvili at the biggest Russian producer of soft drinks “Wimm-Bill-Dunn” the mixing of raw materials from Brazil, Florida and Israel is done in the Netherlands to meet the requirements of the standard we in Russia stick to. So the more expensive concentrate from Brazil will not be the decisive price factor.
By and large, the global orange juice market has been shaken by forecasts of poor harvests almost every year. For example, last December the speculations about possible drop of orange production in Florida the juice futures prices at NYSE sky-rocketed to the highest level in almost two years.
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