Required Report - public distribution

**Date:** 12/13/2004

**GAIN Report Number:** MX4136

MX0000

**Mexico**

**Citrus**

**Annual Report**

**2004**

**Approved by:**

![](media/image1.wmf)Suzanne E. Heinen

U.S. Embassy Mexico City

**Prepared by:**

Dulce Flores

**Report Highlights:**

Fresh orange and grapefruit production is expected to increase for MY
2004/05, due to higher yields and good weather conditions. Lime
production is forecast to decrease slightly, due to out of season
rainfall. Fresh concentrate orange juice is forecast to increase sharply
for MY 2005, due to the larger fresh orange crop and expectations of
better international prices.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled 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)

[Fresh Orange Table 4](#fresh-orange-table)

[Fresh Citrus, Other Table 5](#fresh-citrus-other-table)

[Fresh Grapefruit Table 6](#fresh-grapefruit-table)

[Frozen Concentrate Orange Juice 7](#frozen-concentrate-orange-juice)

[Key Lime Wholesale Prices 8](#key-lime-wholesale-prices)

[Persian Lime Wholesale Prices 8](#persian-lime-wholesale-prices)

[Grapefruit Wholesale Prices 9](#grapefruit-wholesale-prices)

[Wholesale Orange Prices 9](#wholesale-orange-prices)

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

[FRESH ORANGES 10](#fresh-oranges)

[PRODUCTION 10](#production)

[CONSUMPTION 11](#consumption)

[TRADE 11](#trade)

[MARKETING 12](#marketing)

[FRESH CITRUS, OTHER 12](#fresh-citrus-other)

[PRODUCTION 12](#production-1)

[CONSUMPTION 13](#consumption-1)

[TRADE 14](#trade-1)

[FRESH GRAPEFRUIT 14](#fresh-grapefruit)

[PRODUCTION 14](#production-2)

[CONSUMPTION 15](#consumption-2)

[TRADE 15](#trade-2)

[FROZEN CONCENTRATE ORANGE JUICE 16](#frozen-concentrate-orange-juice-1)

[PRODUCTION 16](#production-3)

[CONSUMPTION 16](#consumption-3)

[TRADE 16](#trade-3)

# Section I. Situation and Outlook 

The fresh orange production forecast for MY 2004/05 is 4.4 MMT, a
10-percent increase from MY 2003/04 production, due to good weather
conditions. Higher exports of fresh oranges are forecast, due to better
demand from the international market. Frozen concentrate orange juice
(FCOJ) production for MY 2005 is also forecast to increase because of
more available fresh oranges. MY 2005 FCOJ exports are also forecast to
increase, due to the larger fresh orange crop and expectations of better
international prices.

Total production for Key Limes and Persian Limes for MY 2004/05 is
forecast at 1.73 MMT, a 5-percent decrease compared to MY 2003/04, due
to out of season rainfall and humidity in Veracruz. Exports are forecast
to be lower for MY 2004/05, due to expectations that export quality
limes have been adversely affected by weather conditions. Grapefruit
production for MY 2004/05 is forecast to increase to 310,000, due to
more trees coming into production and higher yields. Grapefruit exports
for MY 2004/05 are forecast to remain at the MY 2003/04 level.

# Section II. Statistical Tables

## Fresh Orange Table

  ---------------- ---------- ---------- ---------- ------------ ---------- ----------
                                                                            

  Country          Mexico                                                   

  Commodity        Oranges,                         (HECTARES)              
                   Fresh                            (1000 TREES)            
                                                    (1000 MT)               

                   2002       Revised    2003       Estimate     2004       Forecast

                   USDA       Post       USDA       Post         USDA       Post
                   Official   Estimate   Official   Estimate     Official   Estimate
                   \[Old\]    \[New\]    \[Old\]    \[New\]      \[Old\]    \[New\]

  Market Year                 11/2002               11/2003                 11/2004
  Begin                                                                     

  Area Planted     355387     355387     356000     349600       0          354000

  Area Harvested   329942     329942     332000     334000       0          336000

  Bearing Trees    66648      66648      67064      67468        0          67872

  Non-Bearing      5089       5089       4848       3151         0          3636
  Trees                                                                     

  TOTAL No. Of     71737      71737      71912      70619        0          71508
  Trees                                                                     

  Production       3734       3734       4000       4000         0          4400

  Imports          39         39         40         18           0          18

  TOTAL SUPPLY     3773       3773       4040       4018         0          4418

  Exports          7          7          10         10           0          20

  Fresh Dom.       3646       3686       3860       3913         0          3998
  Consumption                                                               

  Processing       120        80         170        95           0          400

  TOTAL            3773       3773       4040       4018         0          4418
  DISTRIBUTION                                                              

                                                                            
  ---------------- ---------- ---------- ---------- ------------ ---------- ----------

## Fresh Citrus, Other Table

## 

  ---------------- ---------- ---------- ---------- ------------ ---------- ----------
  Country          Mexico                                                   

  Commodity        Citrus,                          (HECTARES)              
                   Other,                           (1000 TREES)            
                   Fresh                            (1000 MT)               

                   2002       Revised    2003       Estimate     2004       Forecast

                   USDA       Post       USDA       Post         USDA       Post
                   Official   Estimate   Official   Estimate     Official   Estimate
                   \[Old\]    \[New\]    \[Old\]    \[New\]      \[Old\]    \[New\]

  Market Year                 11/2002               11/2003                 11/2004
  Begin                                                                     

  Area Planted     141000     141084     142000     145430       0          146500

  Area Harvested   126000     130053     127500     134000       0          134100

  Bearing Trees    24570      25360      24862      26130        0          26150

  Non-Bearing      2925       2151       2827       2228         0          2418
  Trees                                                                     

  TOTAL No. Of     27495      27511      27689      28358        0          28568
  Trees                                                                     

  Production       1700       1705       1800       1820         0          1730

  Imports          1          1          1          1            0          1

  TOTAL SUPPLY     1701       1706       1801       1821         0          1731

  Exports          330        330        335        355          0          330

  Fresh Dom.       1111       1086       1196       1160         0          1121
  Consumption                                                               

  Processing       260        290        270        306          0          280

  TOTAL            1701       1706       1801       1821         0          1731
  DISTRIBUTION                                                              

                                                                            

                                                                            
  ---------------- ---------- ---------- ---------- ------------ ---------- ----------

## Fresh Grapefruit Table

## 

  ---------------- ------------- ---------- ---------- ----------------- ---------- ----------
  Country          Mexico                                                           

  Commodity        Grapefruit,                         (HECTARES)(1000              
                   Fresh                               TREES)(1000 MT)              

                   2002          Revised    2003       Estimate          2004       Forecast

                   USDA Official Post       USDA       Post Estimate     USDA       Post
                   \[Old\]       Estimate   Official   \[New\]           Official   Estimate
                                 \[New\]    \[Old\]                      \[Old\]    \[New\]

  Market Year                    11/2002               11/2003                      11/2004
  Begin                                                                             

  Area Planted     17000         17039      17500      18000             0          18400

  Area Harvested   14900         14088      15100      14400             0          14800

  Bearing Trees    2801          2648       2838       2707              0          2782

  Non-Bearing      394           554        451        676               0          676
  Trees                                                                             

  TOTAL No. Of     3195          3202       3289       3383              0          3458
  Trees                                                                             

  Production       310           281        312        288               0          310

  Imports          11            12         8          8                 0          8

  TOTAL SUPPLY     321           293        320        296               0          318

  Exports          4             7          5          7                 0          7

  Fresh Dom.       283           247        280        241               0          261
  Consumption                                                                       

  Processing       34            39         35         48                0          50

  TOTAL            321           293        320        296               0          318
  DISTRIBUTION                                                                      

                                                                                    
  ---------------- ------------- ---------- ---------- ----------------- ---------- ----------

##  

## Frozen Concentrate Orange Juice

## 

  ----------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country           Mexico                           65 Degrees            
                                                     Brix                  

  Commodity         Orange                                      (MT)       
                    Juice                                                  

                    2002       Revised    2003       Estimate   2004       Forecast

                    USDA       Post       USDA       Post       USDA       Post
                    Official   Estimate   Official   Estimate   Official   Estimate
                    \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin 01/2003               01/2004               01/2005    

  Deliv. To         120000     80000      170000     95000      0          400000
  Processors                                                               

  Beginning Stocks  3000       1000       3000       1000       3000       1000

  Production        12000      8000       17000      9500       0          40000

  Imports           600        200        600        165        0          165

  TOTAL SUPPLY      15600      9200       20600      10665      3000       41165

  Exports           8600       4000       13600      5200       0          33365

  Domestic          4000       4200       4000       4465       0          4800
  Consumption                                                              

  Ending Stocks     3000       1000       3000       1000       0          3000

  TOTAL             15600      9200       20600      10665      0          41165
  DISTRIBUTION                                                             

                                                                           
  ----------------- ---------- ---------- ---------- ---------- ---------- ----------

##  

## Key Lime Wholesale Prices

+------------------+-----------------+-----------------+---------------+
| **[Key Lime      |                 |                 |               |
| Wholesale Prices |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| Month            | 2003            | 2004            | Change        |
|                  |                 |                 |               |
|                  |                 |                 | \%            |
+------------------+-----------------+-----------------+---------------+
| January          | 2.66            | 4.07            | 53.00         |
+------------------+-----------------+-----------------+---------------+
| February         | 6.21            | 2.55            | (58.93)       |
+------------------+-----------------+-----------------+---------------+
| March            | 8.39            | 1.91            | (77.23)       |
+------------------+-----------------+-----------------+---------------+
| April            | 3.19            | 1.87            | (41.37)       |
+------------------+-----------------+-----------------+---------------+
| May              | 1.65            | 1.77            | 7.27          |
+------------------+-----------------+-----------------+---------------+
| June             | 1.75            | 1.92            | 9.71          |
+------------------+-----------------+-----------------+---------------+
| July             | 1.90            | 1.86            | (2.10)        |
+------------------+-----------------+-----------------+---------------+
| August           | 2.10            | 2.42            | 15.23         |
+------------------+-----------------+-----------------+---------------+
| September        | 2.30            | 2.33            | 1.30          |
+------------------+-----------------+-----------------+---------------+
| October          | 2.19            | 2.11\*          | (3.65)        |
+------------------+-----------------+-----------------+---------------+
| November         | 2.16            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 3.59            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| **[SOURCE:       |                 |                 |               |
| Servicio         |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercado          |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[Avr. exchange |                 |                 |               |
| rate for 2003    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 10.79            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[exchange rate |                 |                 |               |
| Oct. 6, 2004     |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 11.35            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **\*As 3er Week  |                 |                 |               |
| of October       |                 |                 |               |
| 2004**           |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

## 

## 

## Persian Lime Wholesale Prices

+-----------------+----------------+----------------+-----------------+
| **[Persian Lime |                |                |                 |
| Wholesale       |                |                |                 |
| Prices          |                |                |                 |
| (Pesos/Kg)      |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
+-----------------+----------------+----------------+-----------------+
| Month           | 2003           | 2004           | Change          |
|                 |                |                |                 |
|                 |                |                | \%              |
+-----------------+----------------+----------------+-----------------+
| January         | 1.89           | 2.74           | 44.97           |
+-----------------+----------------+----------------+-----------------+
| February        | 4.38           | 2.50           | (42.92)         |
+-----------------+----------------+----------------+-----------------+
| March           | 6.79           | 3.21           | (52.72)         |
+-----------------+----------------+----------------+-----------------+
| April           | 8.51           | 6.00           | (29.49)         |
+-----------------+----------------+----------------+-----------------+
| May             | 9.70           | 3.07           | (68.35)         |
+-----------------+----------------+----------------+-----------------+
| June            | 3.69           | 1.85           | (49.86)         |
+-----------------+----------------+----------------+-----------------+
| July            | 1.67           | 1.51           | (9.58)          |
+-----------------+----------------+----------------+-----------------+
| August          | 1.69           | 1.71           | 1.18            |
+-----------------+----------------+----------------+-----------------+
| September       | 2.02           | 1.57           | (22.27)         |
+-----------------+----------------+----------------+-----------------+
| October         | 1.86           | 1.74\*         | (6.45)          |
+-----------------+----------------+----------------+-----------------+
| November        | 1.48           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| December        | 1,79           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| **[SOURCE:      |                |                |                 |
| Servicio        |                |                |                 |
| Nacional de     |                |                |                 |
| Informacion de  |                |                |                 |
| Mercados        |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[Avr.         |                |                |                 |
| exchange rate   |                |                |                 |
| for 2003        |                |                |                 |
| US\$1.00 = \$   |                |                |                 |
| 10.79           |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[exchange     |                |                |                 |
| rate Oct. 6,    |                |                |                 |
| 2004 US\$1.00 = |                |                |                 |
| \$ 11.35        |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **\*As 3er Week |                |                |                 |
| of October      |                |                |                 |
| 2004**          |                |                |                 |
+-----------------+----------------+----------------+-----------------+

## Grapefruit Wholesale Prices

+--------------+--------+--------+--------+---+--------+--------+---+--------+
| *            |        |        |        |   |        |        |   |        |
| *[Grapefruit |        |        |        |   |        |        |   |        |
| Wholesale    |        |        |        |   |        |        |   |        |
| Prices]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[By Main   |        |        |        |   |        |        |   |        |
| Producer     |        |        |        |   |        |        |   |        |
| States]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [Month]      | [Mich  |        | [Tamau |   |        | [Ver   |   |        |
| {.smallcaps} | oacan] |        | lipas] |   |        | acruz] |   |        |
|              | {.smal |        | {.smal |   |        | {.smal |   |        |
|              | lcaps} |        | lcaps} |   |        | lcaps} |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
|              | 2003   | 2004   | 2003   |   | 2004   | 2003   |   | > 2004 |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [January]    |        |        |        |   |        | 1.68   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 7 |        |
|              |        |        |        |   |        |        | 1 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [February]   |        |        |        |   |        | 2.69   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [March]      |        |        |        |   |        | 3.53   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 7 |        |
|              |        |        |        |   |        |        | 4 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [April]      |        |        |        |   |        | 3.03   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 8 |        |
|              |        |        |        |   |        |        | 9 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [May]        |        | 2.65   |        | 3 |        | 2.38   | 2 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 3 |        |        | 5 |        |
|              |        |        |        | 0 |        |        | 0 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [June]       | 3.57   | 2.80   | 3.46   | 3 |        | 3.46   | 2 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 4 |        |        | 9 |        |
|              |        |        |        | 0 |        |        | 0 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [July]       | 3.54   | 3.31   |        | 3 |        | 3.75   | 3 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 2 |        |        | 0 |        |
|              |        |        |        | 0 |        |        | 8 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [August]     | 3.50   | 3.45   |        |   |        | 3.86   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 8 |        |
|              |        |        |        |   |        |        | 0 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [September]  | 3.50   | 2.85   |        |   |        | 2.93   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 8 |        |
|              |        |        |        |   |        |        | 8 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [October]    |        |        |        |   |        | 2.27   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 8 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [November]   |        |        |        |   |        | 2.31   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [December]   |        |        |        |   |        | 2.16   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| **[SOURCE:   |        |        |        |   |        |        |   |        |
| Servicio     |        |        |        |   |        |        |   |        |
| Nacional de  |        |        |        |   |        |        |   |        |
| Informacion  |        |        |        |   |        |        |   |        |
| de           |        |        |        |   |        |        |   |        |
| Mercados]{.  |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[Avr.      |        |        |        |   |        |        |   |        |
| exchange     |        |        |        |   |        |        |   |        |
| rate for     |        |        |        |   |        |        |   |        |
| 2003         |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 10.79     |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[exchange  |        |        |        |   |        |        |   |        |
| rate Oct. 6, |        |        |        |   |        |        |   |        |
| 2004         |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 11.35     |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+

## Wholesale Orange Prices

+------------------+-----------------+-----------------+---------------+
| **[Wholesale     |                 |                 |               |
| Orange Prices    |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| Month            | 2003            | 2004            | Change        |
|                  |                 |                 |               |
|                  |                 |                 | \%            |
+------------------+-----------------+-----------------+---------------+
| January          | 1.62            | 1.63            | 0.61          |
+------------------+-----------------+-----------------+---------------+
| February         | 1.74            | 1.63            | (6.32)        |
+------------------+-----------------+-----------------+---------------+
| March            | 2.23            | 1.78            | (20.17)       |
+------------------+-----------------+-----------------+---------------+
| April            | 2.61            | 1.93            | (26.05)       |
+------------------+-----------------+-----------------+---------------+
| May              | 3.05            | 2.08            | (31.80)       |
+------------------+-----------------+-----------------+---------------+
| June             | 4.64            | 2.23            | (51.93)       |
+------------------+-----------------+-----------------+---------------+
| July             | 4.46            | 2.33            | (47.75)       |
+------------------+-----------------+-----------------+---------------+
| August           | 3.78            | 3.12            | (17.46)       |
+------------------+-----------------+-----------------+---------------+
| September        | 3.01            | 3.07            | 1.99          |
+------------------+-----------------+-----------------+---------------+
| October          | 2.39            | 2.15            | (10.04)       |
+------------------+-----------------+-----------------+---------------+
| November         | 1.84            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 1.81            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| **[SOURCE:       |                 |                 |               |
| Servicio         |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercado          |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[Avr. exchange |                 |                 |               |
| rate for 2003    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 10.79            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[exchange rate |                 |                 |               |
| Oct 6, 2004      |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 11.35            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

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

## FRESH ORANGES

## PRODUCTION

Although there is not an official SAGARPA forecast for MY 2004/05
(November-October) fresh orange production, sources believe production
will be 4.4 MMT, a 10-percent increase from MY 2003/04 production, due
to good weather conditions. Orange trees had abundant first blooms,
resulting in higher volumes of Valencia oranges that will be harvested
from December to early April approximately. Second blooms were not as
abundant and the May crop might be lower compared to the 2003 crop. The
third bloom is not over yet and could be similar to the one in August
2003. Area planted for oranges is forecast at 354,000 hectares for MY
2004/05, a very slight increase compared to MY 2003/04 area planted.
Producers do not expect an increase in the expansion of groves, due to
high production costs.

The My 2003/04 orange production estimate remains at 4.0 MMT, despite
growers' estimation that production will be lower as a result of adverse
weather conditions. Area planted for MY 2003/04 was revised downward as
some groves were abandoned due to high costs of production and swings in
fresh orange prices. My 2003/04 area harvested was revised upward as
more trees came into production.

Production, area planted and harvested for MY 2002/03 remain unchanged.

The MY 2004/05 forecast for oranges destined for processing is
approximately 400,000 MT, a sharp increase compared to MY 2003/04, due
to expected larger supplies of fresh oranges at affordable prices. It is
important to note that this amount of oranges destined for processing
was a normal level prior to MY 2002 -- a period when there was good
international demand for FCOJ. International prices for frozen
concentrate orange juice (FCOJ) have been low for the past three years,
which has limited production in Mexico. The estimate for oranges
destined for processing for MY 2002/03 and 2003/04 was revised downward,
based on industry information, as there were fewer oranges available for
the industry and international prices for FCOJ were low.

Countrywide orange yields for MY 2004/05 are forecast at 13 MT/ha, due
to good weather conditions. Countrywide orange yields for MY 2003/04 are
expected at 11.9 MT/ha. Orange yields differ widely depending on the
production area. Usually, Veracruz yields range from 10 to 20 MT/ha. In
Nuevo Leon, yields range from 12 to 15 MT/ha. In San Luis Potosi, yields
range from 7 to 13 MT/ha. This variance in yields is caused by many
factors such as weather, frequency of inputs used such as fertilizers
and pesticides, tree density and terrain. Some areas in Nuevo Leon were
affected by black fruit flies, due to excessive rainfall in April 2004,
which somewhat lowered the quality of oranges from that region for MY
2003/04.

Production costs vary among the citrus regions and between producers.
The average cost of production in some areas in Veracruz for a
traditional grove with little intensive cultivation is approximately
4,500 pesos/Ha (US\$391/Ha), while the average cost for a more
intensively-farmed grove in Veracruz is about 8,500 pesos/Ha (US\$739)
or higher. Costs in Nuevo Leon range from 8,500 to 12,500 pesos/Ha
(US\$739.00 to \$1,087.00/Ha) and are higher than those in Veracruz, due
mainly to irrigation costs, but also to fertilization and pest control
costs. These last two account for approximately 40 percent of total
production costs in Nuevo Leon. For example, urea prices increased 84
percent from about \$1.90 pesos/Kg (US\$ 0.17/kg) in 2003 to \$3.50
pesos/kg (US\$ 0.29/Kg) in 2004. According to growers, a further
increase in some fertilizer prices is expected in MY 2004/05, due to the
increase in world oil prices. Average field worker wages are about 70
pesos (US\$6.08) per day, but sometimes producers have to pay 90 pesos
(US\$7.82) per day or more to attract enough workers.

Farm gate prices in Northern Veracruz began in October 2004 at
approximately \$1,100 pesos/MT (US\$95.65/MT) for the early varieties,
however, prices are expected to be lower for the Valencia oranges that
are harvested in December. Transportation costs from Veracruz to Mexico
City are usually 2,500 to 3,000 pesos per 10 MT (US\$217.33 to \$260.86
per 10 MT) for one-day delivery.

[]{.mark}

## CONSUMPTION

The fresh orange consumption forecast for MY 2004/05 is 3.9 MMT, a
2-percent increase, due to larger supplies at affordable prices. Final
domestic consumption estimates, however, will depend on the final volume
purchased by the processing industry. The fresh orange consumption
estimates for MY 2002/03 and 2003/04 were revised upward as the industry
did not process the expected volume of oranges for these marketing
years, due to low international prices for FCOJ. According to producers,
market orange prices for MY 2004/05 will follow a similar pattern as in
MY 2003/04, with lower prices during the first four months of the
season, but which will increase when the first bloom crop is over and
the second bloom crop begins in May. Most of the oranges in the fresh
market are destined for domestic fresh squeezed juice.

## TRADE

Mexican orange exports for MY 2004/05 are forecast at 20,000 MT, due to
an expected increase in international demand, as the Florida orange crop
was somewhat damaged by the 2004 hurricanes. Most of the oranges
exported to the United States are from Sonora, a state which produces
very good, high quality oranges, but Nuevo Leon is also increasing its
orange exports to both the United States and Canada. The export
estimates for MY 2002/03 and 2003/04 remain unchanged.

Citrus producers indicated that they are pushing for USDA recognition of
northern Tamaulipas and Nuevo Leon as a low prevalence fruit-fly area,
as this will enable orange exports from those area-free regions to have
market access to certain U.S. states. Currently, Nuevo Leon exports
treated citrus to the U.S. under a pre-clearance program.

Mexico will have more opportunities to expand its fresh orange exports
to Japan under the new trade agreement signed on October 2004. Under
this agreement, Mexico will have a duty-free annual quota of 10 MT of
oranges during the first two years (i.e., 2005-2006). During MY 2002/03,
Mexico exported about 6 MT to Japan.

Mexican orange imports for MY 2004/05 are forecast to remain at 18,000
MT, due to large domestic orange supplies at relatively affordable
prices offset by expectations of increased export demand because of some
damage to the Florida citrus crop. MY 2003/04 imports were revised
downward as demand was not as strong and domestic orange prices were
relatively affordable and less than U.S. orange prices. Imports for MY
2002/03 remain unchanged.

## MARKETING

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. Because of
the excellent quality, U.S. oranges command a price four to five times
higher than Mexican prices. 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. Due to phytosanitary
restrictions, only citrus fruit coming from California, Texas and
Arizona can be exported to Mexico.

# FRESH CITRUS, OTHER

## PRODUCTION

This section covers two citrus fruits that are of economic significance
to Mexico: Key Limes and Persian Limes. Mexican Key Limes are grown
mainly on the Pacific coast, in the states of Colima, Michoacan,
Guerrero and Oaxaca. Most Persian Limes are grown in a micro‑climate
called \"*La Huasteca*\" that includes portions of the states of
Veracruz, San Luis Potosi, Tamaulipas, and Hidalgo. However, Oaxaca,
Yucatan, and Tabasco, states in the southern part of Mexico, also
produce Persian Limes but on a smaller scale.

Although there are no official estimates, total MY 2004/05 production
for both limes is forecast at 1.73 MMT, 5 percent lower than MY 2003/04
production estimates, due to out-of-season rainfall and higher humidity
during fruit development in some areas of Colima and Veracruz. Other
producing areas had good weather conditions. MY 2003/04 production was
revised slightly upward as there was more area harvested than expected.
Production for MY 2002/03 was revised slightly upward based on official
estimates.

Area planted to both Persian and Key Limes has increased in Mexico, due
to the fact that limes command good prices on the international market
and they generate few phytosanitary concerns. Because of this, Persian
Lime planted area in Veracruz grew at a faster rate, with some producers
replanting orange and grapefruit groves with Persian Limes in order to
take advantage of the good international demand and higher prices.
Domestic demand for Key Limes also increased. Approximately 30 percent
of total area planted is Persian Limes and 70 percent is Key Limes.
Because Michoacan has an excellent winter window (December -- February),
which allows its Key Limes to hit the domestic market first, planted
area is slowly expanding in this state. According to producers, however,
the domestic market is almost saturated with Key Limes and therefore a
substantial increase in Michoacan's area planted could lower prices for
Key Limes.

Although area planted to both lime varieties has increased in the past
two years, the increase in area planted for MY 2004/05 is forecast at
146,500 hectares, a less than one-percent increase, due to concerns that
the market may becoming saturated. Area planted for MY 2003/04 was
revised upward as the states of Colima, Michoacan and Veracruz increased
area planted. Area harvested was also revised upward as more trees came
into production in the states of Veracruz, Michoacan and Oaxaca. Area
planted and harvested for MY 2002/03 was updated based on official final
estimates.

Nearly 20 percent of the Persian Lime groves in Veracruz use micro-jet
irrigation or other irrigation systems and produce all year round. Most
of the irrigated Key Lime groves are in the states of Michoacan and
Colima and are able to produce all year round. In contrast, almost all
the planted area for Key Lime in Guerrero and Oaxaca is non‑irrigated.
In Colima, over half of the Key Lime groves have coconut palm trees
planted in between Key Lime trees in order to increase producer revenue.

The Persian Lime trade tends to be dominated by large producers whose
efficiencies of scale reduce production costs. Persian Lime production
costs average from 8,500 pesos/Ha to 10,000 pesos/Ha (US\$739.13 to
\$869.56/Ha) or more, due to higher prices for imported inputs such as
fertilizers, pesticides and other agrochemical products. Well-tended
areas can have production costs of \$14,000 pesos/Ha (US\$1,223.77/Ha).
Transportation costs from Veracruz to Mexico City are usually 3,500 to
4,000 pesos/truck (US\$304.34 to \$347.82/truck), and delivery time
averages about 8 hours. The cost of production for Key Limes varies
according to the cultural practices and technology used. In the most
important Key Lime producing states (Oaxaca, Colima and Michoacan),
production costs can vary from 7,000 pesos/Ha to 16,000 pesos/Ha
(US\$608.69 to \$1,391.30./Ha) for the well-tended areas.

Persian and Key Lime yields differ widely depending on production
conditions. The yields for Persian Limes in Veracruz mostly range from 8
to 16 MT/Ha, depending on cultural practices, but some yields are as
high as 25 MT/Ha. Key Lime yields average between 7 to 12 MT/Ha, with a
few well-tended groves reaching 30 MT/Ha. For Key Limes in Colima that
are interplanted with coconut palm, yields are generally 50 percent less
than in conventional groves.

Grower prices for Persian Limes range from \$400 to \$800 pesos/MT
(US\$34.78 to \$69.56/MT) for the domestic market, and \$600 to \$3,000
pesos/MT (US\$52.17 to \$261.00/MT) for the export market during January
to April. Grower prices for Key Limes fluctuate more than do those for
Persian Limes, depending on the season and the producing state. On
average, Key Lime grower prices range from \$800 to \$3,000 pesos /MT
(US\$69.56 to \$260.86/MT). Michoacan production is geared toward the
winter season (October/February), while production from Colima, Oaxaca
and other states cover the rest of the year. There is, however,
year-round production for both Key and Persian Limes.

## CONSUMPTION

Domestic consumption of both Key and Persian Limes in Mexico depends
largely on price. Total domestic lime consumption for MY 2004/05 is
forecast at 1.12 MMT, a 3.4 percent decrease compared to MY 2003/04, due
to expected higher prices. Consumption for MY 2002/03 and 2003/04 was
revised downward due to a lower demand and fluctuating prices.

Persian Limes that do not meet the higher quality requirements demanded
of the export market, will be consumed domestically. Most of the Key
Limes go to the fresh domestic market, although exports have been
increasing recently. In general, approximately 16 to 20 percent of total
Key Lime production goes to processing. Producers from Colima and
Michoacan indicate that approximately 30 percent of their limes go to
processors. Official information on the processing industry, however, is
unavailable. About 50 to 60 percent of Persian Limes from Veracruz go to
the export market and the rest go to the fresh market and processing
plants. This balance, however, depends on U.S. demand.

Mexican Key Limes and Persian Limes compete for the same market. When
Key Limes and Persian Limes are both present in the domestic market,
prices are relatively low. When Persian Lime harvest season is at the
strongest (June to September), prices for both tend to drop. After two
or three months, however, when Persian Lime growers begin to export,
prices for Persian Limes increase and remain high until April or May
when exports of Persian Lime decrease and both crops are again competing
for the fresh domestic market. Key Limes from Michoacan, Colima and
Oaxaca are sold on the wholesale market in 18-20/kg boxes; those from
Guerrero are sold in 20-22/kg bags. Persian Limes are sold in the
wholesale market in 50-100/kg bags.

## TRADE

Persian and Key Lime exports for MY 2004/05 are forecast at 330,000 MT,
a 7-percent decrease compared to MY 2003/04, due to smaller production.
Export estimates for MY 2003/04 were revised upward, due to greater
international demand and good prices. Export estimates for MY 2002/03
remain unchanged. According to producers, Persian Limes from Mexico
supply about 40 percent of the U.S. and Canadian markets. However, lime
producers are expanding into new markets in Japan and Europe.

International prices for Persian Limes reach on average, US\$20 to
US\$30 per 40-pound box. MY 2003/04 prices for Persian Limes at the
international market were good, reaching a high of US\$58 per 40-pound
box in February 2004 and decreasing to US\$30 per 40-pound box at the
end of the season in October 2004.

Lime imports continue to be small due to ample domestic supplies. MY
2004/05 imports are forecast at 1,000 MT. Data for MY 2002/03 and
2003/04 remain unchanged. Mexico\'s tariff rate on imported limes from
the United States is zero under NAFTA.

# FRESH GRAPEFRUIT 

## PRODUCTION

Although there is no official forecast for grapefruit production for MY
2004/05, producers believe grapefruit production could reach 310,000 MT,
due to higher yields. Weather has been relatively good in most areas,
however, due to some warm weather and low rainfall during the months of
August and September 2004, grapefruit from Veracruz is coming in late.
Production estimates for MY 2003/04 were revised downward to 288,000 MT,
due to a smaller-than-expected crop and the alternate bearing nature of
the fruit. Weather for MY 2003/04 was especially good in Michoacan,
which enjoys a micro-climate and is becoming a bigger citrus producer.
Michoacan's orange groves are still relatively new, and are now just
reaching their maximum-bearing potential. Grapefruit production
estimates for MY 2002/03 were revised downward because production was
affected by dry weather conditions in some areas of Nuevo Leon,
Tamaulipas and Veracruz.

Area planted for MY 2004/05 is forecast at 18,400 hectares, an increase
of two percent, due to increased planted area mainly in the state of
Michoacan. Although the state of Veracruz, the state with the largest
grapefruit production, increased area planted, this has been offset by
abandoned areas in other parts of the state as well as other parts of
the country. Costs of production, such as imported agrochemicals and
fertilizers, will be higher for MY 2004/05, due to the increase in world
oil prices. Area planted for MY 2002/03 was revised upward, due to a
faster-than-expected growth rate, mainly in Michoacan where the new
planted area is geared towards the European export market. MY 2003/04
area harvested was revised downward because not all the new area planted
came into production.

There are two types of grapefruit planted in Mexico: the red table
varieties produced in Tabasco, Campeche, Michoacan, Nuevo Leon and
Veracruz, which are mainly for export to the United States and Europe as
fresh fruit and peeled slices; and the white fleshed varieties produced
in Tamaulipas and Veracruz which are mainly for juice production or for
peeled slices. According to growers, planting of red varieties is
increasing because of increased export demand.

According to growers and the industry, about 16 to 18 percent of
grapefruit production is destined for processing, but that will depend
on demand for peeled fruit from the international market and demand of
juice from the domestic market. The MY 2004/05 forecast for grapefruit
destined for processing is 50,000 MT. However, this information is
difficult to verify since it is not published by official sources and
companies treat it as confidential information. Grapefruit for
processing purposes for MY 2002/03 and 2003/04 were revised upward, due
to more international market for peeled grapefruit.

Overall average yields for MY 2004/05 are forecast at 21 MT/Ha. Average
yields for MY 2003/04 are estimated at 20 MT/Ha, however yields could be
higher as weather conditions were not as dry as a year before. An
overall normal yield for grapefruit is approximately 23 MT/Ha. Veracruz
accounts for about 58 percent of Mexican grapefruit production and has
the highest yield in the country with 20 to 30 MT/Ha. Michoacan follows
with 11 percent of production and yields between 9 to 15 MT/Ha. Nuevo
Leon accounts for almost 9 percent of total production of grapefruit
with yields of 16 to 21 MT/Ha. In other states, yields vary from 10 to
15 MT/Ha. Grower prices for MY 2004/05 in Veracruz for October 2004 were
approximately \$800 to \$1,100 pesos/MT (US\$69.56 to \$95.65/MT) for
the red varieties, but prices tend to drop by November. Average grower
prices for Nuevo Leon began at 1,000 pesos/MT (US\$86.95/MT). Michoacan
has developed areas with red varieties that can be harvested in
June/July and grower prices tend to be higher than Veracruz grower
prices because fruit gets to the market earlier in the season.

## CONSUMPTION

Grapefruit fresh consumption for MY 2004/05 is forecast at 261,000 MT,
an increase of 8 percent, due to consumer demand for low calorie foods.
Consumption estimates for MY 2002/03 and 2003/04, however, were revised
downward due to high prices compared to other citrus. Wholesale prices
for October 2004 in Mexico City began at approximately \$2.60/kg
(US\$0.22/kg) for the Veracruz crop, which was higher than last year's
October price of \$2.30 pesos/kg (US\$0.20/kg). Growers indicate that
there is no premium on quality, as consumers are more interested in
lower prices. Since Michoacan can harvest earlier than Veracruz,
Michoacan producers can often command higher prices in the domestic
market. Michoacan wholesale prices for July/September ranged from \$2.85
pesos/kg to \$3.50/Kg (US\$0.24 to \$0.30/kg).

## TRADE

Grapefruit exports for MY 2004/05 are forecast to reach 7,000 MT.
According to growers, demand from the European market has been growing
steadily. Although grapefruit exports are geared to the European and
Japanese markets, exports are still small. Exports for MY 2002/03 and
2003/04 were revised upward, due to increased international demand
mainly from European countries.

MY 2004/05 imports are forecast at 8,000 MT. Data for MY 2003/04 remains
unchanged. The MY 2002/03 import estimate was revised upward to 12,000
MT, due to increased demand from the processing industry and low
domestic production. Although U.S. grapefruit exports to Mexico are
growing, exports to Mexico will still be relatively small. According to
sources, most of the imported grapefruit from the United States is
further processed for re-export to U.S. and European markets.

# 

# 

# FROZEN CONCENTRATE ORANGE JUICE

## PRODUCTION

Reliable frozen concentrate orange juice (FCOJ) production numbers are
difficult to obtain, as there is no official statistical data available.
Industry tends to keep partial information, most of which is
proprietary. According to industry sources, FCOJ production for MY 2005
(January-December) is forecast at 40,000 MT, due to expected higher
fresh orange production and lower orange prices available to the
industry, and better international prices. However, juice production
depends heavily on the international price of FCOJ that enables
processors to increase the price paid to fruit producers. Although
production for MY 2005 represents a sharp increase, Mexican FCOJ
production before MY 2002 used to be between 30,000 and 40,000 MT, but
large international inventories, small volumes of oranges available to
the processing industry at high prices, and low FCOJ international
prices, forced the Mexican industry to lower production of FCOJ in the
last three years.

FCOJ future contracts for CY 2005 decreased from an initial high price
of US\$0.90/lb, which resulted from speculations about damage to the
Florida citrus crop, to a lower price of \$0.70/lb -- a price low enough
to potentially discourage large FCOJ production. The FCOJ production
estimate for MY 2004 was revised downward, due to low international
prices. FCOJ future contracts for CY 2004 were on average US\$0.68/lb.
The production estimate for FCOJ for MY 2003 was also revised downward,
due to low international prices and fewer fresh oranges available at
good prices.

The industry is expecting to buy fruit for 2005 at lower prices than it
did in MY 2004.

The industry bought fruit for MY 2004 at an average of \$0.60 pesos/kg
to \$1.00 peso/kg.

Since the fresh market might receive lower prices due to larger
supplies, the processing industry might end up paying lower prices for
oranges for processing, which means more profit margins for the
industry. Most of the oranges in the fresh market are destined for
domestic fresh squeezed juice. Due to financial problems of the
processing industry, there has been a concentration in ownership. Of the
22 Mexican juice plants previously in operation, about 7 plants are
currently running.

## CONSUMPTION

MY 2005 FCOJ consumption is forecast at 4,800 MT, an increase of almost
8 percent compared to MY 2004, due to demand for orange juice in
beverages and products with orange flavorings. The majority of Mexican
consumers prefer fresh squeezed juice instead of processed orange juice.
Consumption estimates for MY 2003 and 2004 were revised upward as demand
for FCOJ has been increasing in hotel chains and restaurants and for
orange-flavored products. Most of the orange juice produced in Mexico
goes to the export market. According to processors, there is usually
about a 3,000 MT carryover of FCOJ from one year to the other, however,
due to the lower processing volume for MY 2003 and 2004, the carryover
was reduced to approximately 1,000 MT. []{.mark}

## TRADE

Exports of FCOJ for MY 2005 are forecast to reach approximately 33,365
MT assuming that international demand is good. Moreover, exports are
forecast to be higher because of an expected greater availability of
domestic oranges for processing at available prices. However, stocks of
FCOJ in the United States are considered high and therefore demand for
Mexican FCOJ could not be as strong as expected. Exports for MY 2003 and
2004 were revised downward due to a low international price for FCOJ and
a lower international demand. According to industry sources, the U.S.
quota for Mexican FCOJ was not filled for MY 2003 and 2004. The United
States is the main market for Mexican FCOJ, with Japan and European
countries as potential markets for this product. Any FCOJ export growth
will be limited by the needs of Florida's industry to mix its juice with
the higher sugar-ratio and more deeply-colored Mexican juice. Also,
export increases will depend on promotion in other markets besides the
U.S.

FCOJ imports for MY 2005 are forecast to be similar to those of MY 2004
in order to cover industry needs. MY 2003 import data was revised
downward, due to a decrease in demand to import for mixing purposes.
According to the industry, most FCOJ imports are for mixing purposes and
color.

Under NAFTA, Mexico has access to the U. S. market for 40 million
gallons of FCOJ (single strength equivalent) at one‑half of the Most
Favored Nation (MFN) tariff rate. Any FCOJ imports above the quota will
enter the United States at the MFN rate. This quota will be phased‑out
in 2008. Exporters of FCOJ need a certificate issued by the Mexican
government to be able to export to the U.S. under the NAFTA provisions.
The Mexican government allocates the quota amongst most of the producing
companies to give them an equal opportunity to share the benefits of
NAFTA. When a company cannot cover the designated quota, the Mexican
government reallocates the uncovered share to other companies.

Under the free trade agreement between Mexico and the European Union
(EU), the EU allows in 1,000 MT of fresh orange juice with a 50 percent
tariff below the MFN duty. The EU also allows 30,000 MT of FCOJ under a
quota with a tariff of 25 percent below the MFN duty. However, due to
lower domestic production and lower international prices, Mexico has not
been able to take advantage of these quotas from the EU.

Mexico will have more opportunities to expand its FCOJ exports to Japan
under the new trade agreement signed on October 2004. Under this
agreement, Mexico will be able to export a TRQ of 3,850 MT of FCOJ in
2005 at a 50-percent preferential duty, and up to 6,280 MT on 2009, when
the agreement will be revised.