Exchange rates, fuel costs put citrus imports up for grabs - The Packer

Exchange rates, fuel costs put citrus imports up for grabs

06/02/2011 01:58:00 PM
Dan Gailbraith

A weaker dollar and higher shipping costs could mean fewer citrus imports hitting the U.S. market this summer.

“It’s not just the exchange rates that have things upside down,” said David Mixon, senior vice president and chief marketing officer of Vero Beach, Fla.-based Seald Sweet International.

“On top of that, you’re looking at a 20% increase in freight just because of fuel costs. Those are major concerns about what value fruits will achieve to meet growers’ cost factor. The value of the peso or the rand against the dollar, euro or yen — there are a lot of markets they’re taking a look at.”

“We have to sell (imports) at the best prices we can get to make up for the exchange rate,” said Matt Gordon, Chilean program manager for DNE World Fruit Sales, Fort Pierce, Fla.

But as Gordon sees it, imports should fare well against limited domestic alternatives.

“The only real competition is California valencias and lemons,” he said.

“Anything shipping eastward out of Los Angeles, that’s where the price inflation will be. I don’t see a lot of change out of New York or Philadelphia. California will still have a lot of freight coming eastward, so that should give a slight advantage to import.”

Last year’s citrus market saw prices depressed because of a glut of smaller fruit among imports and a California navel orange deal that lasted several weeks longer than normal. For grower-shippers everywhere, it was a summer of discontent.

Neither factor seems likely to return this summer, though estimates differ on when California navels will end.

“Exchange rates are working against all of the Southern Hemisphere countries,” said James Milne, citrus category director and business development director for Vancouver, British Columbia-based The Oppenheimer Group.

“There will be a more measured response to the market this year. You won’t see people sending fruit in vast numbers on a wing and a prayer. Fixed programs are the way to go. We’re fortunate because we have programs all over the place and wide distribution.”

Exporters as well as importers will be cautious about smaller sizes, Milne said.

“Last year small killed everybody,” he said.

“Retailers were spoiled for options. In the old days sizes 4 and 5 were perfect for bagging, but they became the orphaned child. Retailers and other buyers took the 24 and 28 and put them in a bag. This year the supply base might be more cautious about what they pack and send, and the trade here might have to be a little more forgiving and accept 4 and 5 at fair value.”


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