""""

Required Report - public distribution

**Date:** 4/29/2003

**GAIN Report Number:** MX3056

MX3056

**Mexico**

**Citrus**

**Semi-Annual**

**2003**

**Approved by:**

![](media/image1.wmf)David Williams

#### Mexico City

**Prepared by:**

Dulce Flores/Gabriel Hernandez

**Report Highlights:**

The fresh orange production forecast for marketing year 2002/03 remains
unchanged at 3.6 MMT. Since the orange crop is expected to be down
200,000 MT from a year ago, with fresh orange prices subsequently
higher, the fresh concentrate orange juice (FCOJ) industry is expected
to reduce juice production to 15,000 MT for MY 2003. Therefore, exports
of FCOJ will be lower and the U.S. FCOJ quota will likely not be filled.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

[Section I. Situation and Outlook 3](#section-i.-situation-and-outlook)

[Section II. Statistical Tables 4](#section-ii.-statistical-tables)

[PS&D Table, Fresh Oranges 4](#psd-table-fresh-oranges)

[Trade Matrix Fresh Oranges 5](#trade-matrix-fresh-oranges)

[Fresh Orange Prices 5](#fresh-orange-prices)

[PS&D Table, Orange Juice 6](#psd-table-orange-juice)

[Trade Matrix, FCOJ 7](#trade-matrix-fcoj)

[Trade Matrix, Orange Juice Not Concentrated
8](#trade-matrix-orange-juice-not-concentrated)

[Section III. Narrative on Supply & Demand, Policy & Marketing
9](#section-iii.-narrative-on-supply-demand-policy-marketing)

[FRESH ORANGES 9](#fresh-oranges)

[Production 9](#production)

[Consumption 9](#consumption)

[Trade 10](#trade)

[Marketing 10](#marketing)

[FROZEN CONCENTRATE ORANGE JUICE 10](#frozen-concentrate-orange-juice)

[Production 10](#production-1)

[Consumption 11](#consumption-1)

[Trade 11](#trade-1)

[Other Citrus 11](#other-citrus)

# Section I. Situation and Outlook

The orange production forecast for MY 2002/03 remains as forecasted
previously. Orange producers indicate that the crop is expected to be
lower compared to the MY 2001/02 orange crop, but with expected higher
prices. The forecast for MY 2003 frozen concentrate orange juice (FCOJ)
production was revised downward, due to shorter supplies available for
the industry and higher prices. This situation will reduce FCOJ exports
to the point where the industry might not be able to fill the U.S. FCOJ
quota.

# Section II. Statistical Tables

## PS&D Table, Fresh Oranges

+------------------+-------+--------+--------+-------+-------+-------+
| PSD Table        |       |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Country          | M     |        |        |       |       |       |
|                  | exico |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Commodity        | Fresh |        |        |       |       |       |
|                  | Or    |        |        |       |       |       |
|                  | anges |        |        |       |       |       |
|                  | (HECT |        |        |       |       |       |
|                  | ARES) |        |        |       |       |       |
|                  | (1000 |        |        |       |       |       |
|                  | T     |        |        |       |       |       |
|                  | REES) |        |        |       |       |       |
|                  | (1000 |        |        |       |       |       |
|                  | MT)   |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
|                  | 2000  |        | 2001   |       | 2002  |       |
|                  | Re    |        | Es     |       | For   |       |
|                  | vised |        | timate |       | ecast |       |
+------------------+-------+--------+--------+-------+-------+-------+
|                  | USDA  | Post   | USDA   | Post  | USDA  | Post  |
|                  | Off   | Es     | Of     | Est   | Off   | Estim |
|                  | icial | timate | ficial | imate | icial | ate\[ |
|                  |       |        |        |       |       | New\] |
|                  | \[    | \      | \      | \[    | \[    |       |
|                  | Old\] | [New\] | [Old\] | New\] | Old\] |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Market Year      | 11    |        | 1      |       | 11    |       |
| Begin            | /2000 |        | 1/2001 |       | /2002 |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Area Planted     | 3     | 340805 | 347000 | 3     | 3     | 3     |
|                  | 40805 |        |        | 47633 | 48000 | 47700 |
+------------------+-------+--------+--------+-------+-------+-------+
| Area Harvested   | 3     | 324816 | 328000 | 3     | 3     | 3     |
|                  | 24816 |        |        | 21871 | 20000 | 20000 |
+------------------+-------+--------+--------+-------+-------+-------+
| Bearing Trees    | 65612 | 65612  | 66256  | 65018 | 64640 | 64640 |
+------------------+-------+--------+--------+-------+-------+-------+
| Non-Bearing      | 3230  | 3230   | 3838   | 5204  | 5656  | 5595  |
| Trees            |       |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
| TOTAL No. Of     | 68842 | 68842  | 70094  | 70222 | 70296 | 70235 |
| Trees            |       |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Production       | 3885  | 3885   | 4000   | 3844  | 3600  | 3600  |
+------------------+-------+--------+--------+-------+-------+-------+
| Imports          | 31    | 31     | 31     | 27    | 32    | 32    |
+------------------+-------+--------+--------+-------+-------+-------+
| TOTAL SUPPLY     | 3916  | 3916   | 4031   | 3871  | 3632  | 3632  |
+------------------+-------+--------+--------+-------+-------+-------+
| Exports          | 19    | 19     | 19     | 18    | 17    | 17    |
+------------------+-------+--------+--------+-------+-------+-------+
| Fresh Dom.       | 3497  | 3497   | 3562   | 3353  | 3255  | 3465  |
| Consumption      |       |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+
| Processing       | 400   | 400    | 450    | 500   | 360   | 150   |
+------------------+-------+--------+--------+-------+-------+-------+
| TOTAL            | 3916  | 3916   | 4031   | 3871  | 3632  | 3632  |
| DISTRIBUTION     |       |        |        |       |       |       |
+------------------+-------+--------+--------+-------+-------+-------+

## Trade Matrix Fresh Oranges

  ------------------- ---------------- ------------------- ----------------
  **ORANGES H.S.                       **UNITS: METRIC     
  0805.1001**                          TONS**              

  EXPORTS FOR MY 2002                  IMPORTS FOR MY 2002 
  TO:                                  FROM:               

  U.S.                17404            U.S.                27258

  OTHER                                OTHER               

  JAPAN               251                                  0

  CANADA              175                                  0

  TOTAL OF OTHER      426              TOTAL OF OTHER      0

  OTHER NOT LISTED    236              OTHER NOT LISTED    0

  **GRAND TOTAL**     18066            GRAND TOTAL         27258
  ------------------- ---------------- ------------------- ----------------

Source: Global Trade Information, World Trade Atlas, Mexico Edition,
January 2003.

[Note: the Marketing Year starts on November and ends on
October.]{.smallcaps}

## Fresh Orange Prices

+------------------+-----------------+-----------------+---------------+
| **[Wholesale     |                 |                 |               |
| Orange Prices    |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| Month            | 2002            | 2003            | Change        |
|                  |                 |                 |               |
|                  |                 |                 | \%            |
+------------------+-----------------+-----------------+---------------+
| January          | 1.12            | 1.62            | 44.64         |
+------------------+-----------------+-----------------+---------------+
| February         | 1.14            | 1.74            | 52.63         |
+------------------+-----------------+-----------------+---------------+
| March            | 1.19            | 2.23            | 87.39         |
+------------------+-----------------+-----------------+---------------+
| April            | 1.54            | 2.36\*          | 53.25         |
+------------------+-----------------+-----------------+---------------+
| May              | 2.47            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| June             | 3.30            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| July             | 4.01            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| August           | 4.05            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| September        | 3.54            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| October          | 1.69            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| November         | 1.71            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 1.59            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| SOURCE: Servicio |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercados         |                 |                 |               |
|                  |                 |                 |               |
| [Avr. exchange   |                 |                 |               |
| rate for 2002    |                 |                 |               |
| US\$1.00 =       |                 |                 |               |
| \$9.82           |                 |                 |               |
| pe               |                 |                 |               |
| sos]{.smallcaps} |                 |                 |               |
|                  |                 |                 |               |
| [exchange rate   |                 |                 |               |
| April 21, 2003   |                 |                 |               |
| US\$1.00 =       |                 |                 |               |
| \$10.62          |                 |                 |               |
| pe               |                 |                 |               |
| sos]{.smallcaps} |                 |                 |               |
|                  |                 |                 |               |
| \* As of second  |                 |                 |               |
| week of April    |                 |                 |               |
| 2003.            |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

## PS&D Table, Orange Juice

+------------------+-------+-------+-------+-------+-------+-------+
| PSD Table        |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Country          | M     |       |       | De    |       |       |
|                  | exico |       |       | grees |       |       |
|                  |       |       |       | Brix  |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Commodity        | J     |       |       | (MT)  |       |       |
|                  | uice, |       |       |       |       |       |
|                  | O     |       |       |       |       |       |
|                  | range |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
|                  | 2000  |       | 2001  |       | 2002  |       |
|                  | Re    |       | Est   |       | For   |       |
|                  | vised |       | imate |       | ecast |       |
+------------------+-------+-------+-------+-------+-------+-------+
|                  | USDA  | Post  | USDA  | Post  | USDA  | Post  |
|                  | Off   | Est   | Off   | Est   | Off   | Estim |
|                  | icial | imate | icial | imate | icial | ate\[ |
|                  |       |       |       |       |       | New\] |
|                  | \[    | \[    | \[    | \[    | \[    |       |
|                  | Old\] | New\] | Old\] | New\] | Old\] |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Market Year      | 01    |       | 01    |       | 01    |       |
| Begin            | /2001 |       | /2002 |       | /2003 |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Deliv. To        | 400   | 400   | 450   | 500   | 360   | 150   |
| Processors       |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks | 3000  | 3000  | 3000  | 3000  | 3000  | 3000  |
+------------------+-------+-------+-------+-------+-------+-------+
| Production       | 40500 | 40500 | 45000 | 50000 | 36000 | 15000 |
+------------------+-------+-------+-------+-------+-------+-------+
| Imports          | 770   | 770   | 700   | 1000  | 700   | 1500  |
+------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY     | 44270 | 44270 | 48700 | 54000 | 39700 | 19500 |
+------------------+-------+-------+-------+-------+-------+-------+
| Exports          | 37900 | 37900 | 42350 | 47000 | 33350 | 13150 |
+------------------+-------+-------+-------+-------+-------+-------+
| Domestic         | 3370  | 3370  | 3350  | 4000  | 3350  | 3350  |
| Consumption      |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks    | 3000  | 3000  | 3000  | 3000  | 3000  | 3000  |
+------------------+-------+-------+-------+-------+-------+-------+
| TOTAL            | 44270 | 44270 | 48700 | 54000 | 39700 | 19500 |
| DISTRIBUTION     |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+

## Trade Matrix, FCOJ

  ------------------- ---------------- ------------------- ----------------
  **F.C.O.J. H.S.                      **UNITS: LITERS**   
  2009.11**                                                

  EXPORTS FOR CY 2002                  IMPORTS FOR CY 2002 
  TO:                                  FROM:               

  U.S.                13361378         U.S.                238135

  OTHER                                OTHER               

  JAPAN               2333299          BRAZIL              193281

  NETHERLANDS         1724615          PUERTO RICO         12610

  TOTAL OF OTHER      4057914          TOTAL OF OTHER      205891

  OTHER NOT LISTED    5697511          OTHER NOT LISTED    7000

  **GRAND TOTAL**     23116803         GRAND TOTAL         451026
  ------------------- ---------------- ------------------- ----------------

  ------------------- ---------------- ------------------- ----------------
  **F.C.O.J. H.S.                      **UNITS: METRIC     
  2009.11**                            TONS**              

  EXPORTS FOR CY 2002                  IMPORTS FOR CY 2002 
  TO:                                  FROM:               

  U.S.                7620             U.S.                0

  OTHER                                OTHER               

  NETHERLANDS         4568                                 0

  GERMANY             2023                                 0

  TOTAL OF OTHER      6591             TOTAL OF OTHER      0

  OTHER NOT LISTED    3197             OTHER NOT LISTED    0

  **GRAND TOTAL**     17408            GRAND TOTAL         0
  ------------------- ---------------- ------------------- ----------------

Note: H.S. 2009 consolidates sub-fractions 1100 & 1101

Source: Global Trade Information, World Trade Atlas, Mexico Edition,
January 2003.

## Trade Matrix, Orange Juice Not Concentrated

  ------------------- ---------------- ------------------- ----------------
  **ORANGE JUICE NOT                                       
  CONCENTRATED H.S.                                        
  2009.19 UNITS:                                           
  LITERS**                                                 

  EXPORTS FOR CY 2002                  IMPORTS FOR CY 2002 
  TO:                                  FROM:               

  U.S.                6756213          U.S.                3951946

  OTHER                                OTHER               

  ECUADOR             109188           SPAIN               189463

  VENEZUELA           23349            CANADA              4745

  TOTAL OF OTHER      132537           TOTAL OF OTHER      194208

  OTHER NOT LISTED    18072            OTHER NOT LISTED    8302

  **GRAND TOTAL**     6906822          GRAND TOTAL         4154456
  ------------------- ---------------- ------------------- ----------------

  ------------------- ---------------- ------------------- ----------------
  **ORANGE JUICE NOT                                       
  CONCENTRATED H.S.                                        
  2009.19 UNITS:                                           
  METRIC TONS**                                            

  EXPORTS FOR CY 2002                  IMPORTS FOR CY 2002 
  TO:                                  FROM:               

  U.S.                5680             U.S.                0

  OTHER                                OTHER               

  VENEZUELA           45                                   0

  ARUBA               20                                   0

  TOTAL OF OTHER      65               TOTAL OF OTHER      0

  OTHER NOT LISTED    53               OTHER NOT LISTED    0

  **GRAND TOTAL**     5798             GRAND TOTAL         0
  ------------------- ---------------- ------------------- ----------------

Note: H.S. 2009 consolidates sub-fractions 1900, 1901 & 1999

Source: Global Trade Information, World Trade Atlas, Mexico Edition,
January 2003.

# Section III. Narrative on Supply & Demand, Policy & Marketing

# FRESH ORANGES

## Production

The fresh orange production forecast for marketing year 2002/03
(November‑October) remains unchanged at 3.6 MMT. The dry weather
conditions that prevailed along the Gulf of Mexico affected overall
citrus production for MY 2002/03, with the most affected product being
oranges. Orange trees had fewer first and second blooms, resulting in
lower volumes of oranges. According to producers, prices for oranges,
therefore increased compared to MY 2001/02.

Citrus producers from the state of Nuevo Leon are organizing themselves
to build a citrus clearance and quality control facility to help them
become the main orange exporters of the country. This project is to
include an office of plant health, a nursery, a laboratory for pest
control, an irradiation treatment chamber, a packing plant and other
related services and will be built over an area of 5.5 hectares (ha).
This investment will take approximately three years to develop and will
be done in several different stages.

Orange production for MY 2001/02 was also revised downward based on
official data, due to the dry weather conditions that affected producing
states. The third and fourth blooms, from April to August, were affected
by dry weather conditions reducing production somewhat. The early
variety (Marsh) of oranges from Nuevo Leon and Tamaulipas was slightly
shorter than expected. Data for MY 2000/01 remains unchanged

Oranges destined for processing for MY 2001/02 were revised upward based
on industry information, and MY 2002/03 were revised downward, due to
lower supplies.

Revised area planted for MY 2002/03 is down from a year ago based on
recent official information. Expansion in Veracruz has been almost
completely offset by growers abandoning groves or switching to other
crops, due to high production costs, wide swings in fresh orange prices,
or marketing problems. Orange production increases in Nuevo Leon are
more a result of tree density than of expansion in area planted. The
rate of expansion of orange groves in other areas of the country has
also been slow. Countrywide orange yields for MY 2002/03 are forecast at
11.2 MT/ha, lower compared to MY 2001/02 due to drier weather
conditions. Area planted and harvested for MY 2001/02 has been updated
to reflect recent official data. Area planted and harvested for MY
2000/01 remains unchanged.

Grower prices at the farm gate for MY 2002/03 began in October at 800
pesos/MT (US\$79.20/MT) for the early varieties. Some producers
indicated that by March 2003 producer prices in Nuevo Leon had increased
to approximately 1,500 pesos/MT (US\$138.88/MT) and 1,000 pesos/MT
(US\$92.60/MT) in the state of Veracruz. Transportation costs from
Veracruz to Mexico City are usually 2,500 to 3,000 pesos per 10 MT
(US\$247.52 to \$297.02 per 10 MT) for one-day delivery.

## 

## Consumption

The fresh orange consumption forecast for MY 2002/03 has been revised
upward to 3.4 MMT, an increase compared to MY 2001/02 consumption,
according to the industry. Final consumption estimates, however, will
depend on the final volume purchased by the processing industry. The
industry indicates that, despite the fact that international prices for
juice concentrate are good, lower orange supplies and higher prices will
decrease the volume of oranges for processing. The MY 2001/02
consumption estimate was revised downward,

due to a stronger demand from the industry. The MY 2000/01 consumption
estimate remain unchanged.

Orange prices for MY 2002/03 increased due to shorter supplies. During
the first two weeks of October 2002, wholesale prices of new-crop
Valencia oranges from Veracruz averaged 1.80 pesos/kg. (US\$0.18/kg). By
the month of March 2003, prices averaged 2.30 pesos/kg (US\$0.21/kg).
Most of the oranges in the fresh market are destined for domestic fresh
squeezed juice.

## 

## Trade

The forecast for orange exports for MY 2002/03 remains unchanged, but
final export figures will depend on the availability of supplies from
California and Florida. Most of the oranges exported to the U.S. are
from Sonora, which produces very good, high quality oranges. Mexico will
continue to export processed oranges as peeled slices for fruit salads
and other foods. According to growers, the international market is
demanding more peeled fruit. Export estimates for oranges for MY 2001/02
were revised downward based on available export data. Export data for MY
2000/01 remain unchanged. The United States continues to be the largest
export market for Mexican oranges. The MY 2002/03 forecast for orange
imports remains unchanged. Imports continue to be small, due to
available domestic orange supplies at affordable prices. Imports for MY
2001/02 were revised downward based on Mexican trade data. Orange
imports for MY 2000/01 remain unchanged.

## Marketing

The marketing situation for oranges and citrus fruit in general remains
unchanged from FAS/Mexico's report MX 2162. U.S. citrus fruit exporters
should be aware of the fact that the Mexican market is more price
sensitive than quality sensitive. This is one of the main reasons for
limited exports of U.S. citrus products. Despite the excellent quality,
prices are 4 to 5 times higher than Mexican products. Some attempts have
been made by U.S. firms to enter the market, but they have had limited
success because of strategies emphasizing quality rather than price.

# FROZEN CONCENTRATE ORANGE JUICE

## Production

Frozen concentrate orange juice (FCOJ) production forecast for MY 2003
(January/December) was revised downward to 15,000 MT, based on industry
information. According to the industry, lower orange supplies at high
prices are forcing the industry to reduce FCOJ production drastically,
even though international prices are still considered to be good. Juice
production depends heavily on the international price of FCOJ, but this
time the main factor was the shorter orange supply. FCOJ future
contracts for CY 2003 are about US\$0.71/lb to US\$0.87/lb, compared to
contracts for CY 2002 deliveries that were at US\$0.80 to US\$0.90/lb.
The forecast for oranges for processing was subsequently revised
downward to 150,000 MT. The FCOJ production estimate for MY 2002 was
revised upward based on industry information. According to the industry,
higher international prices encouraged the industry to produce more
juice compared to MY 2001. Data for MY 2001 remains unchanged. []{.mark}

[]{.mark}

The industry bought fruit for MY 2003 at higher prices than it did in MY
2002. The industry bought fresh fruit on average from 600 to 900
pesos/MT (US\$55.55 to \$83.33/MT) during February/March 2003. Since the
fresh market received higher prices due to shorter supplies,

the processing industry had to pay higher prices. But this situation is
not a profitable one, as it means smaller profit margins for the
industry. Most of the oranges in the fresh market are destined for
domestic fresh squeezed juice.

# 

## Consumption

FCOJ consumption for MY 2003 remains unchanged. The industry does not
expect domestic consumption to increase dramatically because of the
availability of fresh oranges in the domestic market and a lack of
demand. Consumption estimates for MY 2002 were revised upward, due to
the introduction of more orange-flavored beverages in the market.
According to processors, there is usually about a 3,000 MT carryover of
FCOJ from one year to the next. []{.mark}

## 

## Trade

The export forecast for FCOJ for MY 2003 was revised downward. Exports
are expected to be lower because of a shorter availability of domestic
oranges for processing. According to industry sources, if production is
as low as expected, the U.S. quota will not be filled. Exports for MY
2002 were revised upward, based on industry information and good
international demand. The United States is the main market for Mexican
FCOJ, with Japan and European countries also becoming important markets
for this product. The export estimates for MY 2001 remain unchanged.
FCOJ imports for MY 2002 and 2003 were revised upward based on trade
data and industry information. Most of the imported juice is used for
mixing purposes at the plants; as a result, imports are a small
percentage of total production. Import data for MY 2001 remains
unchanged.

## 

## Other Citrus

Data for fresh citrus and grapefruit remain unchanged from annual report
MX2162.