Despite a late start to the Chilean grape season, volumes should be similar to last year, importers said.
Fluctuating temperatures during the Chilean spring — cool weather one week, warm weather the next — threw a wrench in the beginning of the U.S. export deal, said Josh Leichter, director of the grape category in the Newark, Del., office of Vancouver, British Columbia-based The Oppenheimer Group.
“It really had a big impact on the plants,” Leichter said. “It’s been a strange start.”
By the week of Jan. 3, volumes were starting to pick up, albeit slowly, Leichter said.
“By the end of January we should be back to quote, unquote normal,” he said.
That said, when the season winds down, total volumes may not reach earlier estimates, he said.
“The initial feeling was that volumes would catch up,” Leichter said. “Now, as growers are picking and packing, the packouts are less than expected.”
For Vero Beach, Fla.-based Seald Sweet International LLC, the first shipment of the season arrived in Philadelphia Dec. 16, with the deal expected to wind down in mid-May, said Mark Lewis, executive vice president.
Shipments started in a small way the week of Dec. 5 for The Giumarra Cos., Los Angeles, said Craig Uchizono, vice president of Southern Hemisphere.
“As the weeks progress, for sure we will see steady increases for both coasts,” Uchizono said.
The cool December weather may have delayed harvests, but it also kept acid levels high, improving the quality of perlettes and superiors, said Dave Sudduth, director of global operations for Pandol Bros. Inc., Delano, Calif.
Warmer weather later in the month brought the sugars on, Sudduth said, and as a result, fruit shipping over the next several weeks should be very high-quality.
Season-end volumes could wind up being 10% lower than preseason projections, which forecast a crop in the 55-million-box range typical of recent years. If that holds true, the 2010-11 Chilean grape deal would wind up being similar in size to last season’s total of 51 million boxes.
For the time being, at least, Giumarra is planning on a supply increase over 2009-10.
“Right now, the anticipation is to see more volumes from the previous year arriving to the U.S. marketplace,” Uchizono said. “It’s too early to guess, but that is the plan.”
Sizing was a challenge early in the season but was improving by early January, Leichter said. Quality has been good all season, he said.
Market reports
In late December, both the Atacama and Coquimbo regions were running at least 10 days behind where they were in 2009-10 at the same time, according to a report from SimFruit, a market analysis joint venture of the Santiago-based Chilean Exporters Association (ASOEX) and Fedefruta.
Harvest in late December in Atacama was focused on perlettes and flames, with some flames experiencing size and cracking problems, according to SimFruit. Superiors and thompson seedless also were being harvested in the region.
Cracking also was reported on some flames in Coquimbo.
Despite the late starts and quality problems in some areas, ASOEX still expected exports to all markets to rise in 2010-11.
About 846,000 tons were expected to be shipped, 6% more than in 2009-10, according to the association.
How much of that winds up in the U.S. could depend on the exchange rate, Leichter said.
“It’s certainly an issue,” he said Jan. 5. “Yesterday the Bank of Chile said it would take measures to strengthen the (dollar relative to the peso).”
In the 2008-09 season, the dollar was worth about 600 pesos, Leichter said. At the beginning of 2011, it was in the 460 range. Pandol’s Sudduth said there were fears in early December that it could go as low as 435.
“Growers are really pushing to get it over 500, and the government said it would take action,” Leichter said. “When all your costs are in pesos, if it’s 460 instead of 600, it can have a significant impact on your financial viability.”
It also makes shippers wonder if they can afford to ship to the U.S., Leichter said, though whether it will have an effect on shipments this year is hard to gauge.
It’s more likely to have a long-term effect, in which growers could not invest as much in grapes and other crops heavily tilted toward U.S. export.
Russia and South Korea are among export markets that have shown big increases in demand for Chilean grapes this season, Leichter said, adding Chile has too much invested in the U.S. market for a significant shift to occur.
“If you have one market that takes 50% of your product, you’re not going to deviate too much from that,” he said.
Uchizono agreed.
“Exchange rates affect the exporter first and foremost,” he said. “It does make suggestions for the exporter to look for other advantages, but the USA is an important market and fruit will continue to come.”
The Chilean government’s intervention at the end of December could wind up paying dividends for the U.S.-bound grape deal, Lewis said.
“The Chilean government bought a lot of U.S. dollars, which has caused the exchange rate to rise to about 500 pesos per dollar,” Lewis said. “That’s not a lot, but more volume may come to the U.S. because of it.”
Other export options, however, remain attractive for Chilean exporters, Lewis said.
“Russia, Korea and India are developing strong ties to Chile, and paying good prices,” he said. “Each will receive more fruit this year.”
Exports also are increasing to Colombia, Ecuador and Brazil, Lewis said.
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