As reported in May, Mandarin Oranges continue to be very difficult, with supply almost nonexistent in China. Prices rose drastically from April-July with increases as high as 25-30%. Some believe that there may be a few available stocks come September when the suppliers take a good look at what is left in the warehouse vs. what is expected to ship on contracts. We expect prices to hold firm until the new crop. New harvest normally begins at the end of October to early November, with shipments of canned mandarin oranges arriving at the end of December or early January. There will be little to no carryover going into the new crop that is expected to be better than last year’s. We should see some relief in prices heading into the New Year.
As reported in January, Mandarin Oranges have proven to be difficult this year. Product continues to be in short supply due to no carry-over from the previous year, bad crop conditions, and a decrease in labor pool. Prices have increased dramatically over the past 2 months, with increases as high as 20-25%. Whole Segments in Juice are the most difficult to secure at the moment. Many suppliers indicate they are sold out completely until new crop.
We expect prices will continue to hold at these higher levels until new crop begins. The challenge will be securing enough product to hold until the new crop.
2017/2018 proves to be another tough season for mandarin oranges in China. Since the previous season was short, partially because the Chinese New Year started relatively early (January 28, 2017), and partially because of a short fruit crop, there was practically no carryover before the new season and buyers could hardly wait for the fresh production to begin.
If we thought that the situation could not be any worse than last year, we were wrong as this season seems to be quite a disaster. Raw material supply is short and a decrease in available labor in all packing areas, when compared to the previous year, forced factories to firm up their quotes to compensate for the decrease in production.
Packing mandarin orange segments is very labor intensive since every single fruit has to be peeled and segmented by hand and factories are unable to fill all shifts and all production lines with workers. It has been reported that the price of the raw material is still on the upward trend and offers for finished product, both retail and foodservice, are following the same path.
For this reason, many factories are reluctant to speculate and they only produce for firm orders that reflect the day’s raw material price and have prompt shipping dates. Even though Chinese New year is late this year (February 16, 2018), factories aren’t planning to pack mandarin oranges until that date like they used to because of the above reasons.
In addition, the Chinese currency (RMB or Yuan) has been steadily gaining value against the USD and reached its highest level since end 2015. The weak dollar, together with the higher cost of labor, sugar, tin plate and cardboard are all adding to the already firm market prices of canned mandarin oranges.
As reported early January, Chinese Mandarin Orange packers finished production early this year because of a shorter than usual crop and because of labor shortages.
According to our sources, most processors have packed product for firm orders only, and hardly any packer has surplus inventory for future sales, especially in Foodservice can sizes. U.S. importers that didn’t cover their requirements for the entire season are finding out now that the prices are up by about 10%.
We expect the mandarin orange market to remain firm throughout the year.
Mandarin Orange production to finish early in China due to poor crop.
Our buyers have recently traveled to China and visited several mandarin orange packers in Zhejiang province (Ningbo area).
There are several growing areas in China, like Hunan, Hubei, and Zhejiang Provinces. According to packers, the crop in Zhejiang is some 40% shorter than in a regular year, while the crop is decent in the other provinces in terms of volume but poor in quality as fruit is small due to lack of rain. These other growing areas are in the middle of the country and domestic freight from Hunan and Hubei Provinces to ocean ports or to other factories in Zhejiang or Shandong Provinces makes the raw material very expensive.
Also, it may be hard to believe, but factories are having a hard time hiring workers. Processing mandarin orange segments requires a lot of manual labor and it’s a seasonal job. Some large factories pack nothing but mandarin oranges and they are only open for 2-3 months per year, so a temporary and tough job is not very appealing to workers.
China is facing challenges regarding environmental issues. The country is very polluted and the air quality is bad; as we can all see on the news and on the internet. The government is taking tough measures in order to “clean up” the air and the land; these clean-up efforts affect the food processing factories as well: they must contain and clean their waste and that costs a lot on money. Higher fruit prices, rising labor cost and expenses related to environmental clean-up contribute to higher production costs.
On the other hand, China’s largest competition in this business, Spain, is experiencing a good season, with expectations to exceed normal production volume due to strong demand. Chinese mandarins are subject to anti-dumping duties in Europe that can make their product hardly competitive when the crop is abundant in Spain.
The USA remains China’s main export market and even though the cost of production seems to have increased we expect the prices to remain around last year’s levels because of the decreased demand from Europe. Chinese packers traditionally continue processing mandarin oranges through Chinese New Year that falls on January 28th this year but we are hearing that production will be completed by end December or early January in most factories.
The Chinese Mandarin Orange pack season has finished and all reports indicate a short crop in the largest growing areas (Hunan, Hubei Zhejiang Provinces). According to sources in China, rainy weather throughout November damaged fruit trees and ripe fruit, forcing growers to dump up to 40% of fruit at the end of the harvest. The remaining fruit, according to reports, is of “very poor” quality.
At the same time, Chinese packers are worried about what they see as a decrease in the number of orders placed by US importers. The United States is China’s largest market for canned mandarin oranges and this product shortage has driven prices up. American importers seem to be holding out for falling prices, adding further pressure to the Chinese packers.
The price of mandarin oranges has been fairly low for the last few seasons, but it can be expected the prices will increase throughout the New Year if demand surpasses supply. The days of inexpensive mandarin oranges may be coming to an end.
The mandarin situation seems to have changed in China very quickly. As reported earlier, packers were dealing with a substantial carryover from the 2012/13 season at the beginning of the production; however, those lower-priced stocks have dried up quickly and the shortage of the 2013/14 crop became promptly evident. Raw material prices tripled between end November and January, forcing a third of the mandarin packers to abandon packing altogether. This shorter capacity, strong domestic demand, expensive labor and energy costs, as well as the early Chinese New Year that normally marks the end of the season, have all contributed to the sudden increase of mandarin orange prices. After the initial offerings packers quickly withdraw their offers and have since been holding their prices steady at a level that’s about 30% higher than last year’s. Unsold stocks aren’t substantial and prices are expected to go even higher by the summer.
All Chinese packers and growers lost money on mandarins last year. They started the season at very ambitious price levels but kept reducing the price due to high inventories and sluggish sales. Due to this painful experience they are proceeding with much caution this season. The crop size is expected to be smaller than last year and the packing season will also be shorter because Chinese New Year is fairly early in 2014: January 31 (it’s usually in February). The packing season normally starts at the end of October and runs through Chinese New Year when the factories shut down and the workers go home to their families that may be thousands of miles away. Most packers reported a substantial carryover and were eager to move their product to make room for fresh production. We expect the prices to level out, with both old crop and new crop product filling the pipelines during at least the first half of 2014.
The new crop of Mandarin Oranges from China (our only source for several years) is virtually over. Prices have increased again this year due to raw material shortages and strong fresh market demand, as well as a severe shortage of labor in the factories. The quality seems to be fine, but product has become expensive for what used to be a cheap fruit. Mandarins are now more expensive than Pineapple, which may slow demand.
Chinese packers are predicting yet another difficult season. The market is empty with no carryover from last year, and the crop seems to be short by as much as 50% in Hunan and Hubei provinces, due to frost during blossoming and drought in May. Zhejiang and Fujian provinces are expecting a better crop but high raw material prices. Domestic demand is strong and the opening prices are expected to be twice as much as last year.
Packing mandarin orange segments is highly labor-intensive and packers are complaining that it’s hard to find workers. Also, the Chinese New Year (January 23, 2012) is almost two weeks earlier than this year, and packers fear that the workers won’t want to return after the Spring Festival which might make the packing season quite short, less than three months. We can expect high prices in November since most customers will be pushing for early shipments. Unfortunately there is no chance for the prices to go back to levels of 2-3 years ago. The term “cheap Chinese fruits/vegetables” seems to be a thing of the past.