Economy, elections could influence Chilean grape market - The Packer

Economy, elections could influence Chilean grape market

01/15/2010 02:25:05 PM
Abraham Mahshie

The strengthening dollar and slow recovery of the European economy are some of the forces that may influence Chilean grape exports to the U.S. this season. Labor availability, a smooth presidential succession and prices in the spot market are also in the mix.

“So far, prices in U.S. are so incredibly high, so nobody is thinking Europe right now,” said Manuel Jose Alcaino, president of Decofrut, Santiago, Chile.

“We could see some diversion in middle of season to February, March, April into Europe looking for that stronger euro.”

Presently, the advantage of selling to Europe amounts to only $1-2 per box, Alcaino said, but demand in Europe is also low.

“The exchange rate does not seem as much of a factor as the economy in the U.S. is doing better than Europe,” said Omar Abu-Ghazaleh, import managers for Pacific Trellis Fruit LLC, Reedley, Calif.

“I don’t think Chile is looking at the U.S. as an unvalued marketplace,” said Craig Uchizono, vice president of Southern Hemisphere for The Giumarra Cos., Los Angeles. “Every year, we hear situations where it’s less, it’s less, it’s less, but looking at statistics, sometimes it is and sometimes it’s not.”

Uchizono thought it more important to consider the challenges facing Chile in terms of the devaluation of the Chilean peso, grape volumes, quality and condition.

Rodrigo Echeverria, president of Fedefruta, the Santiago-based federation of Chilean fruit growers, agreed that the greater impact is on the higher cost of dollar-priced technology to Chileans as the peso devalues against the dollar.

He also said that Europe is not in a position to receive much more fruit and estimated a change of 5% plus or minus in exports to Europe as a result.

“It will depend on where the markets are as they are loading up the vessels down there,” said Josh Leichter, director of the grape category in the Vancouver, British Columbia-based Oppenheimer Group’s Newark, Del., office.

Tom Tjerandsen, marketing manager for the Chilean Fresh Fruit Association, Sonoma, Calif., thinks that if retailers are aggressive enough with their Chilean partners, fruit destined for other parts of the world may be more affected than the U.S.

While a clear line of communication between grower/shippers in Chile and suppliers and retailers in the U.S. is essential for setting promotions, some growers are still apt to maintain ambiguity that can help them profit from the spot market.

“People are still likely to — gamble is the right word — with some volumes and commit the rest because you know that you need to secure some volume at a certain price,” said Alcaino, noting that there is no countrywide strategy.

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