THE world is experiencing record high orange juice prices and Australia is not immune to the trend.
A recent Rabobank global report says high juice prices are a consequence of a very tight market, with smaller-than-expected production and low inventories.
It says the the decline of orange juice demand is set to accelerate this year, in the face of high prices and weaker consumer demand, which will, in part, allow the market to find an equilibrium at high levels.
Prices will probably remain high, at least until forecasts for the 2023/24 Brazil harvest provide more clarity on supply relief.
Rabobank senior analyst Andrés Padilla said the world has experienced very low inventories from two consecutive small harvests in 2020/21 and 2021/22, plus worsening news for the current 2022/23 season.
RELATED READING
"This created the perfect environment for OJ prices to see a significant rally this year, surpassing levels last seen back in 2017 and climbing toward all-time highs," Mr Padilla said.
According to Rabobank, the ongoing decline of production in Florida has meant US imports have been rising over the past four years, adding demand for exports from Brazil.
In turn, all eyes are on the first forecasts for Brazil's 2023/24 harvest as a measure of global supply. Some early indications suggest a crop similar in size to 2022/23 could be in the cards, given rain patterns, flowerings, and tree conditions at this stage of the cycle.
"However, it is unclear whether such a crop would be sufficient to alleviate inventory issues, even if fruit quality and harvest size were both satisfactory," the Rabobank report said.
The 2021/22 Australian Horticulture Statistics Handbook, released in February, reported for the year ending June 2022, Australia imported an additional 12,242 kilolitres of frozen orange juice.
Australia also imported 643kL of fresh orange juice while exporting 5101kL of fresh orange juice.
For Australia, prices for orange juice have also been subject to inflation, according to Rabobank associate analyst Pia Piggott.
"While orange juice prices are not specifically tracked, the most recent quarterly Australian Consumer Price Index found the non-alcoholic beverages category - of which orange juice is part - had risen 10.5 per cent in the year to December 2022," she said.
Ms Piggott said local price increases in orange juice were likely to be the result of a combination of both global market factors and conditions in Australia which had affected local production.
"Australia does import approximately half of the orange juice consumed here - including a considerable amount from Brazil - however the other half is produced from local oranges, so the challenging weather conditions that growers have encountered here in the past year, with flood damage in a number of areas, would also have impacted production and be feeding into higher prices, despite increases in navel orange rejects being channeled from eating to juicing," she said.
Sign up here to Good Fruit and Vegetables weekly newsletter for all the latest horticulture news each Thursday...
