Big freeze shakes up Asian markets
07 January 2007 11:56
John Hey
Barely is 2007 underway and fruit import markets across Asia have already been rocked by a major event in the form of the California freeze, which has reportedly ruined most of the state’s citrus crop.While initial estimates of 70 per cent crop damage may prove to be exaggerated, the domestic market looks set to absorb most of the remaining crop at high prices, leaving very little fruit for export destinations in Asia. By the end of January, navel orange prices had soared in several Asian markets as buyers scrambled to find alternative sources of fruit, with Egypt, Spain, Cyprus, Turkey and Israel all being explored.
The implications of the event are perhaps most serious for Korea, the top export market for California navels. Before the freeze, it was forecast to take 135,000 tonnes, but the import deal may now be over before it had really begun. The problem for Korea is that its quarantine restrictions are so tough that the alternative supply options are very limited. Spain is the only other source of citrus with market access at this time of year, but the import protocol, with its requirement for fruit to be cold-treated, is likely to deter most suppliers. In reality, Korean retailers will be forced to stock their shelves with other fruits like Philippine bananas and pineapples and Chilean grapes.The same kind of products are set to profit in Japan, where alternative citrus suppliers such as Israel and Florida are unlikely to make up the shortfall in US orange imports.
In China, meanwhile, local navels may just meet demand for the upcoming Lunar New Year festival, but supplies were already becoming tight in late January as the season approached its end.
Clearly, the big freeze is set to create a range of opportunities for suppliers of citrus – and indeed other fruits – to Asia. But the event is something of a mixed blessing for the citrus category as a whole. Southern Hemisphere citrus suppliers are no doubt looking forward to entering an undersupplied market by the time their season begins, but they may also face the challenge of winning back retail shelf space lost to other products. Equally, a little bit of fruit from every alternative citrus source could quickly add up to an oversupply situation in some Asian markets.
As for Asian buyers, the freeze is only likely to compound the difficulties of sourcing consistent lines of good-quality fruit that they’ve been facing in recent times, what with a freeze-bitten Australian citrus crop in 2006, a rained out US grape deal and generally disappointing performances from many other products. Asia’s burgeoning consumer markets are being underserved by the fruit trade – and the weather is a key factor.
Barely is 2007 underway and fruit import markets across Asia have already been rocked by a major event in the form of the California freeze, which has reportedly ruined most of the state’s citrus crop.While initial estimates of 70 per cent crop damage may prove to be exaggerated, the domestic market looks set to absorb most of the remaining crop at high prices, leaving very little fruit for export destinations in Asia. By the end of January, navel orange prices had soared in several Asian markets as buyers scrambled to find alternative sources of fruit, with Egypt, Spain, Cyprus, Turkey and Israel all being explored.
The implications of the event are perhaps most serious for Korea, the top export market for California navels. Before the freeze, it was forecast to take 135,000 tonnes, but the import deal may now be over before it had really begun. The problem for Korea is that its quarantine restrictions are so tough that the alternative supply options are very limited. Spain is the only other source of citrus with market access at this time of year, but the import protocol, with its requirement for fruit to be cold-treated, is likely to deter most suppliers. In reality, Korean retailers will be forced to stock their shelves with other fruits like Philippine bananas and pineapples and Chilean grapes.The same kind of products are set to profit in Japan, where alternative citrus suppliers such as Israel and Florida are unlikely to make up the shortfall in US orange imports.
In China, meanwhile, local navels may just meet demand for the upcoming Lunar New Year festival, but supplies were already becoming tight in late January as the season approached its end.
Clearly, the big freeze is set to create a range of opportunities for suppliers of citrus – and indeed other fruits – to Asia. But the event is something of a mixed blessing for the citrus category as a whole. Southern Hemisphere citrus suppliers are no doubt looking forward to entering an undersupplied market by the time their season begins, but they may also face the challenge of winning back retail shelf space lost to other products. Equally, a little bit of fruit from every alternative citrus source could quickly add up to an oversupply situation in some Asian markets.
As for Asian buyers, the freeze is only likely to compound the difficulties of sourcing consistent lines of good-quality fruit that they’ve been facing in recent times, what with a freeze-bitten Australian citrus crop in 2006, a rained out US grape deal and generally disappointing performances from many other products. Asia’s burgeoning consumer markets are being underserved by the fruit trade – and the weather is a key factor.
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