Required Report - public distribution

**Date:** 12/21/2004

**GAIN Report Number:** BR4019

BR4019

**Brazil**

**Citrus**

**Annual Report**

**2004**

**Approved by:**

![](media/image1.wmf)Ron Verdonk, Director

U.S. Agricultural Trade Office

**Prepared by:**

Sergio Barros, Agricultural Specialist

**Report Highlights:**

The Brazilian orange crop for MY 2005/06 is forecast at 402 MBx, down 65
Mbx from a revised number for the current season, assuming that typical
weather conditions prevail during the December 2004 to June 2005 period
to support fruit setting and size. The Sao Paulo and western Minas
Gerais commercial areas should contribute 320 MBx, down 60 from MY
2004/05. Total FCOJ production for MY 2004/05 is estimated at 1.33 mmt,
65 Brix, up 238,000 metric tons from our previous estimate due to higher
volume of fruits delivered for processing. FCOJ exports for MY 2004/05
are estimated stable at 1.225 mmt.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Sao Paulo \[BR3\]

\[BR\]

Table of Contents

[**FRESH ORANGES 3**](#fresh-oranges)

[PS&D Table 3](#psd-table)

[Production 3](#production)

[PS&D Tables 3](#psd-tables)

[General 4](#general)

[Area, Tree Yields and Inventory 5](#area-tree-yields-and-inventory)

[Diseases 6](#diseases)

[Cost of Production 7](#cost-of-production)

[Producers' Prices 8](#producers-prices)

[Consumption 8](#consumption)

[Trade 9](#trade)

[FCOJ (FROZEN CONCENTRATED ORANGE JUICE)
10](#fcoj-frozen-concentrated-orange-juice)

[PS&D Table 10](#psd-table-1)

[Production 10](#production-1)

[PS&D Tables 10](#psd-tables-1)

[General 11](#general-1)

[Consumption 12](#consumption-1)

[Trade 12](#trade-1)

[Stocks 13](#stocks)

[NFC (NOT FROM CONCENTRATE) 14](#nfc-not-from-concentrate)

[Exchange Rate 15](#exchange-rate)

# FRESH ORANGES

# PS&D Table

![](media/image2.wmf)

# Production

## PS&D Tables

The following tables provide revised data for Sao Paulo and total
Brazilian fresh orange production, supply and demand (PS&D) for
marketing years (MY) 2003/04, 2004/05 (July-June) and the initial
forecast for MY 2005/06.

# 

![](media/image3.wmf)

![](media/image4.wmf)

## General

## 

The Agricultural Trade Office (ATO)/Sao Paulo adjusted Brazil's orange
crop for MY 2004/05 (Jul-Jun) to 467million 40.8 kg boxes (Mbx), up 13
MBx compared to previous estimate, due to better yields than initially
expected as a consequence of the precipitation that occurred during the
April-July 2004 period in the Sao Paulo commercial area.

The commercial area of the state of Sao Paulo and the western part of
Minas Gerais should produce 380 Mbx, whereas other growing regions
should contribute 87 Mbx. Note that the orange production estimate in
states other than Sao Paulo is taken from updated information from the
Brazilian Geography and Statistics Institute (IBGE). The harvest season
has moved along well and according to post contacts, harvest should be
extended to January and even early February for some processing plants.

The Sao Paulo State Institute of Agricultural Economics (IEA) released
the results of the sixth and last citrus crop survey (September 2004)
for the 2003/04 crop (MY 2004/05). The Sao Paulo crop, including both
commercial and non-commercial areas, is estimated at 360.7 Mbx, up 33.6
Mbx compared to MY 2003/04 (327.1 Mbx). Note that IEA takes into account
the entire state of Sao Paulo, while ATO estimates follow the citrus
industry methodology limited to the commercial area of the state plus
the western part of Minas Gerais. IEA also reports that the state of Sao
Paulo orange tree inventory is estimated at 215.4 million trees (188.1
million bearing and 27.3 non-bearing trees)

## 

ATO/Sao Paulo forecasts the total Brazilian orange crop for MY 2005/06
(Jul-Jun) at 402 Mbx, down 65 MBx compared to MY 2004/05, assuming that
good weather conditions prevail during the December 2004 to June 2005
period to support fruit setting and size. The commercial area of the
state of Sao Paulo and the western part of Minas Gerais should produce
320 Mbx, whereas other growing regions should account for the remaining
82 Mbx.

Note that it is still too early to forecast the 2004/05 crop (MY
2005/06) and that more accurate numbers will be available only after
February 2005. The projected decrease in production for MY 2005/06 in
the Sao Paulo and Minas Gerais commercial areas is based on the
following factors:

-   Orange trees are stressed from a relatively large MY 2004/05 crop;

-   The off-year of the biannual cycle of the Hamlin and Valencia
    varieties;

-   Below average crop management for some groves during 2004 due to the
    increase of inputs costs and lower orange prices received by
    producers;

-   The irregular weather pattern during 2004 and its impact on
    blossoming. The rainy season, which historically ends in April-May
    was extended through July and the dry season usually necessary to
    stress the citrus trees before the flowering was affected by the
    prolonged precipitation.

Historically, the first blossoming occurs in September, but in 2004 the
first big flowering took place in July-August. The rainfall that
persisted into July broke the dormancy of the trees and hastened the
first and intense blossoming. The dry weather in August and September
(lack of rainfall and low moisture content) that followed the blossoming
negatively affected flower and fruit setting, thus reducing the
producing potential of the trees.

The second blossoming that occurred in October/November after the
beginning of the rains in October was less intense, although with a
better fruit setting compared to the first one. The blossoming was not
uniform for the different growing regions, varieties and even within the
same grove. A third blossoming is still expected to happen for the Pera
variety.

## Area, Tree Yields and Inventory

The aforementioned factors are likely to result in a lower yield for the
Sao Paulo commercial area, which is projected at 1.96 boxes/tree for MY
2005/06. This represents a 17 percent fall from MY 2004/05, whereas the
overall Brazilian orange yield is forecast at 1.87 boxes/tree, a 15
percent reduction.

ATO/Sao Paulo projects total Brazilian orange area for MY 2005/06 at
849,000 hectares (ha), a 2 percent increase from the current crop, based
on relatively stable crop inventory for the Sao Paulo/Minas Gerais
commercial areas and updated information from the Brazilian Geography
and Statistics Institute (IBGE). The commercial areas of Sao Paulo/Minas
Gerais should account for 649,000 ha. Total Brazilian tree inventory for
MY 2005/06 is relatively stable and projected at 253 million trees (215
million bearing and 38 million non-bearing trees), up 5 million trees
compared to MY 2004/05. According to post contacts, many groves have
been replaced by sugarcane due to more attractive prices received by
producers. Citrus area expansion has been observed primarily for orange
juice processing plants.

As reported by Fundecitrus, 563 inspected nurseries were in operation in
November 2004 of which 560 are protected nurseries (560), which maintain
seedlings within screened enclosures in accordance with the Sao Paulo
State law. The number of inspected seedlings totaled 14,738,423 (only
319 seedlings coming from unprotected nurseries), whereas the number of
inspected rootstock totaled 10,084,640 (only 124 from unprotected
nurseries).

## Diseases

## 

According to the Sao Paulo State Fund for the Defense of Citriculture
(Fundecitrus), the 2004 CVC field survey (June-August 2004) shows that
43.84 percent of the sampled trees (1,900 samples) in the Sao Paulo and
western Minas Gerais commercial areas show symptoms of the disease.
Results indicate that 7.87 percent of the sampled trees show symptoms
restricted to leaves (Grade 1), while 35.98 percent show leaf and fruit
symptoms (Grade 2). The disease is mostly concentrated in the northern
part of the state of Sao Paulo. The survey also shows a 5.66 percent
infection rate for plants up to 2 years. CVC may become a minor problem
in the future since new plants have consistently shown low contamination
rates for the past years due to good management practices starting with
protected nurseries.

![](media/image5.wmf)

The evolution of citrus canker for 2004, as reported by Fundecitrus,
follows. Cumulative 2004 (January-September) tree eradication for
commercial groves (blocks) due to citrus canker is approximately 213,713
trees, up 53,723 trees from the same period in 2003. Cumulative
non-commercial grove eradication for the January-September period is
approximately 140,947 trees.

![](media/image7.wmf)

A new disease named huanglongbing (HBL) or greening was described for
the first time in Brazil in March 2004. The disease is a major concern
for the citrus industry due to its severity and quick dissemination.
Initially, plants affected by greening show symptoms of yellowing in one
or more sectors of the crown, which progresses to the whole plant.
Furthermore, leaves and fruit drop, and pointers become dry.

The Candidatus Liberibacter spp. Bacterium, the causal agent of the
disease, multiplies, causes obstruction and upsets the phloem of the
trees. The bacteria is transmitted by insects such as Diaphorina citri
(broadly distributed in Brazil) and Trioza erytraea (not reported in
Brazil yet), which are responsible for the quick evolution of the
disease.

Fundecitrus carried out a sampling survey during September-October 2004
in the commercial areas of Sao Paulo and western Minas Gerais to screen
the disease. The bacteria was found in 45 municipalities of Sao Paulo,
especially in the citrus regions of Araraquara, Araras and Itapolis
with, respectively, 20.20, 2.40 and 0.26% of groves, affected. Although
not yet confirmed, the insect, D. citri, is considered the main vector
of the American form of greening.

## Cost of Production 

The tables below show comparative costs for processed oranges in
southwest Florida and Sao Paulo, according to a paper presented by
MURARO & POZZAN at the 8th International Citrus Seminar held in
Bebedouro, Sao Paulo, Brazil on October 21, 2004. Parameters for cost
analysis are as follow:

-   Florida: Valencia/Hamlin; 10 year old grove; 315 trees/hectare; 993
    boxes/hectare; 3.2 box/tree; irrigated grove.

-   Sao Paulo: Valencia; 10 year old grove; 333 trees/hectare; 800
    boxes/hectare; 2.4 box/tree; non irrigated grove.

![](media/image8.wmf)

![](media/image9.wmf)

![](media/image10.wmf)

## 

## Producers' Prices

The Orange Index price series released by the University of Sao Paulo's
College of Agriculture "Luiz de Queiroz" (ESALQ) for both the fresh
domestic market and product delivered to orange juice processing plants
in the state of Sao Paulo follows. Both series track orange prices since
September 1994. Prices for the fresh market are for fruit on the tree.
Note the increase of fruit prices as of November 2004. According to post
contacts, processing plants have been strongly purchasing fruit in the
spot market and the crushing season should be extended through February
2005. Higher market prices could also be the signal of the lower
availability of the product for MY 2005/06.

![](media/image11.wmf)

![](media/image12.wmf)

## 

# Consumption

Total Brazilian orange consumption for MY 2005/06 is projected at 123
Mbx, relatively stable compared to the revised figure for MY 2004/05
(126 Mbx). Note that these figures include actual domestic consumption
plus losses from natural drop, harvesting, transportation and packing.
Fruit delivered to processors for "not from concentrated (NFC)" orange
production for the domestic market is also included in these figures.
Domestic consumption estimates are taken as the difference between
production estimates and the volume of oranges delivered to processors
for FCOJ and NFC produced for exports.

## 

# Trade

ATO/Sao Paulo projects total fresh orange exports for MY 2005/06 at 2
Mbx, similar to the export estimate for MY 2004/05 (2 Mbx), based on
updated information from the Brazilian Secretariat of Foreign Trade
(SECEX). The table below shows official fresh orange exports (NCM
080510.00) by country of destination, for MY 2003/04 and 2004/05,
according to SECEX.

![](media/image13.wmf)

# FCOJ (FROZEN CONCENTRATED ORANGE JUICE)

# PS&D Table

# 

![](media/image14.wmf)

# Production

## PS&D Tables

The following tables provide revised data for Sao Paulo and total
Brazilian frozen concentrated orange juice (FCOJ) production, supply and
demand (PS&D) for marketing years (MY) 2003/04, 2004/05 (July-June) and
the initial forecast for MY 2005/06.

![](media/image15.wmf)

![](media/image16.wmf)

## General

ATO Sao Paulo forecasts total Brazilian FCOJ production for MY 2005/06
(July-June) at 1.135 million metric tons (mmt), 65 Brix, down 195,000 mt
compared to the revised estimate for MY 2004/05 (1.33 mmt), due to
expected lower availability of fruits for processing. The Sao Paulo
industry is likely to contribute 260 Mbx of oranges for FCOJ processing,
which should yield 1.085 mmt of the product. Other producing states
should deliver 12 Mbx for processing (50,000 mt of FCOJ).

Total Brazilian FCOJ production for MY 2004/05 has been revised upward
to 1.33mmt, 65 Brix, up 38,000 mt from the previous estimate. In spite
of the lower industrial yield reported by the processing plants, a
higher volume of fruits is expected to be crushed. The Sao Paulo
industry is expected to crush 310 Mbx, up 15 Mbx from our previous
estimate, whereas other FCOJ processing states should crush 12 Mbx, down
1 Mbx compared to the previous figure. MY 2004/05 crushing has moved
along well, and the crushing season is expected to extend through
February.

Cargill announced on July 2 that the company was selling its Brazilian
juice operations, which include four citrus production farms, two
processing plants, fruit supply agreements and related assets, to the
Brazilian companies, Citrosuco and Cutrale, in separate transactions.
According to the agreement (released by the press), Citrosuco acquired
the Bebedouro plant, 2 farms and part of the fruit contracts, while
Cutrale bought the Uchoa plant, 2 other farms and the remaining fruit
contracts.

In addition, Citrovita, a company of the Votorantim corporation, is
negotiating the acquisition of Sucorrico for the value of US\$75
million. Citrovita is the third largest company in the sector, following
only Cutrale and Citrosuco. The Sucorrico plant is located in Araras,
Sao Paulo and has a current industrial capacity to crush 16 MBx of
fruit, but more capacity is expected to be added to the plant.

[]{.mark}

# Consumption

ATO/Sao Paulo projects FCOJ domestic consumption for MY 2004/05 at
18,000 mt, 65 Brix, similar to MY 2004/05 (18,000 mt).

## 

# Trade

ATO/Sao Paulo forecasts total Brazilian FCOJ exports for MY 2005/06 at
1.225 mmt, 65 Brix, similar to a revised forecast for MY 2004/05, due to
stable demand for the product. The Sao Paulo industry should account for
1.175 mmt, 65 Brix, whereas the reminder should come from other FCOJ
producing states. In spite of lower orange juice production in Brazil
for MY 2005/06, export levels should not drop sharply, sustained by high
MY 2004/05 carryover stocks.

FCOJ exports for MY 2004/05 were revised downward to 1.225mmt, 65 Brix,
down 2 percent from our previous estimate, based on information provided
by SECEX and post contacts. The world demand has been stable and exports
to new markets such as China do not represent a significant increase in
export volumes. Current FCOJ export prices are reported at US\$ 850-900
per metric ton (bulk), free on truck (FOT).

FCOJ exports for MY 2003/04 were revised upward to 1.242 mmt, 65 Brix,
down 10,000 mt from the previous estimate, based on updated information
from the Brazilian Secretariat of Foreign Trade (SECEX) and post
contacts.

The tables below show official FCOJ exports (NCM 2009.11.00 and
2009.19.00) by country of destination for MY 2003/04 and 2004/05,
according to SECEX. Note that the "Others" category includes both FCOJ
and Not From Concentrate (NFC) exports. Post considers the average
monthly price by country of destination for the "Others" category as a
criterion to distinguish between FCOJ and NFC exports. Note that
following the aforementioned criteria, approximately 216,000 and 33,700
mt of orange juice exported under the "Others" category for MY 2003/04
refer to FCOJ and NFC, respectively.

![](media/image17.wmf)

![](media/image18.wmf)

# 

# Stocks

Total ending stocks for MY 2005/06 are projected at 51,000 mt, 65 Brix,
down 108,000 mt compared to our revised MY 2004/05 estimate (159,000
mt), due to expected lower availability of fruit for crushing. Brazilian
owned FCOJ carryover stocks worldwide for MY 2003/04 and 2004/05 are
reported at approximately 380,000 and 800,000 mt, respectively.

# NFC (NOT FROM CONCENTRATE)

There is no official estimate for NFC supply and demand in Brazil.
ATO/Sao Paulo projects that approximately 17 Mbx will be crushed for MY
2005/06 NFC exports, similar to revised number for MY 2004/05 (17 Mbx).
Post estimates that approximately 350,000 metric tons of NFC, 11.8 Brix,
were exported for MY 2004/05. Note that current PS&D tables consider NFC
production for exports as a different entry (see Tables in PS&D
section).

The following table shows "Orange Juice, Not Concentrated and Brix under
20" (NCM 2009.12.00) exports by country of destination for MY 2003/04
and 2004/05, according to SECEX. Note that part of the NFC exports is
included in the "Others" category (see FCOJ Trade section).

![](media/image19.wmf)

# Exchange Rate

![](media/image20.wmf)

\##