Required Report - public distribution

**Date:** 11/14/2005

**GAIN Report Number:** MX5105

MX0000

**Mexico**

**Citrus**

**Annual Report**

**2005**

**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 decrease in MY
2005/06, primarily due to adverse weather conditions. Lime production is
forecast to increase slightly, due to more trees coming into production.
Fresh concentrate orange juice is forecast to decrease in MY 2006, due
to a lower fresh orange crop yield.

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)

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

[Grapefruit Wholesale Prices 9](#grapefruit-wholesale-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 2005/06 is 3.9 MMT, a
9.6-percent decrease from MY 2004/05 production. This decrease is due to
very dry weather conditions in the northern states during the first
quarter of 2005 that affected the flowering of trees, and was compounded
by strong rainfalls caused by hurricanes during September and October.
The volume of exports of fresh oranges is forecast to remain similar to
MY 2004/05. Frozen concentrate orange juice (FCOJ) production for MY
2006 is forecast to decrease compared to MY 2005 because of a decrease
in supply of fresh oranges.

Total production for Key Limes and Persian Limes for MY 2005/06 is
forecast at 1.9 MMT, slightly higher than MY 2004/05, because more trees
have come into production. Exports are forecast at 375,000 MT, a 1.8
percent decrease compared to MY 2004/05, due to weather conditions that
could affect the quality of limes for export.

Grapefruit production for MY 2005/06 is forecast at about 330,000 MT.
The dry weather conditions during tree flowering in spring, and late
rainfall due to the hurricanes, will affect overall yields and fruit
quality. Grapefruit exports for MY 2005/06 are forecast at about 8,000
MT, but could increase due to strong demand on the international market.

# SECTION II. STATISTICAL TABLES

# 

## Fresh Orange Table

## 

##  

+---------------+--------+--------+-------+--------+--------+--------+
| Mexico        |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Oranges,      |        |        | (HECT |        |        |        |
| Fresh         |        |        | ARES) |        |        |        |
|               |        |        | (1000 |        |        |        |
|               |        |        | T     |        |        |        |
|               |        |        | REES) |        |        |        |
|               |        |        | (1000 |        |        |        |
|               |        |        | MT)   |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
|               | 2003   | R      | 2004  | Es     | 2005   | Fo     |
|               |        | evised |       | timate |        | recast |
+---------------+--------+--------+-------+--------+--------+--------+
|               | USDA   | Post   | USDA  | Post   | USDA   | Post   |
|               | Of     | Es     | Off   | Es     | Of     | Es     |
|               | ficial | timate | icial | timate | ficial | timate |
|               | \      |        | \[    |        | \      |        |
|               | [Old\] | \      | Old\] | \      | [Old\] | \      |
|               |        | [New\] |       | [New\] |        | [New\] |
+---------------+--------+--------+-------+--------+--------+--------+
| Market Year   | 1      |        | 11    |        | 1      |        |
| Begin         | 1/2003 |        | /2004 |        | 1/2005 |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Area Planted  | 349705 | 349705 | 3     | 334000 | 0      | 334000 |
|               |        |        | 46000 |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Area          | 334274 | 334274 | 3     | 330000 | 0      | 328000 |
| Harvested     |        |        | 36000 |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Bearing Trees | 67523  | 67523  | 67872 | 66660  | 0      | 66256  |
+---------------+--------+--------+-------+--------+--------+--------+
| Non-Bearing   | 3117   | 3117   | 2222  | 810    | 0      | 1212   |
| Trees         |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| TOTAL No. Of  | 70640  | 70640  | 70094 | 67470  | 0      | 67468  |
| Trees         |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Production    | 3901   | 3901   | 4120  | 4300   | 0      | 3900   |
+---------------+--------+--------+-------+--------+--------+--------+
| Imports       | 18     | 18     | 18    | 20     | 0      | 18     |
+---------------+--------+--------+-------+--------+--------+--------+
| TOTAL SUPPLY  | 3919   | 3919   | 4138  | 4320   | 0      | 3918   |
+---------------+--------+--------+-------+--------+--------+--------+
| Exports       | 13     | 13     | 20    | 20     | 0      | 20     |
+---------------+--------+--------+-------+--------+--------+--------+
| Fresh Dom.    | 3706   | 3706   | 3618  | 3650   | 0      | 3478   |
| Consumption   |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
| Processing    | 200    | 200    | 500   | 650    | 0      | 420    |
+---------------+--------+--------+-------+--------+--------+--------+
| TOTAL         | 3919   | 3919   | 4138  | 4320   | 0      | 3918   |
| DISTRIBUTION  |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+
|               |        |        |       |        |        |        |
+---------------+--------+--------+-------+--------+--------+--------+

##  

## Fresh Citrus, Other Table

## 

##  

+---------------+-------+--------+-------+--------+-------+--------+
| Mexico        |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Citrus,       |       | (HEC   |       |        |       |        |
| Other, Fresh  |       | TARES) |       |        |       |        |
|               |       | (1000  |       |        |       |        |
|               |       | TREES) |       |        |       |        |
|               |       | (1000  |       |        |       |        |
|               |       | MT)    |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
|               | 2003  |        | 2004  |        | 2005  |        |
|               | Re    |        | Est   |        | For   |        |
|               | vised |        | imate |        | ecast |        |
+---------------+-------+--------+-------+--------+-------+--------+
|               | USDA  | Post   | USDA  | Post   | USDA  | Post   |
|               | Off   | Es     | Off   | Es     | Off   | Es     |
|               | icial | timate | icial | timate | icial | timate |
|               | \[    |        | \[    |        | \[    |        |
|               | Old\] | \      | Old\] | \      | Old\] | \      |
|               |       | [New\] |       | [New\] |       | [New\] |
+---------------+-------+--------+-------+--------+-------+--------+
| Market Year   | 11    |        | 11    |        | 11    |        |
| Begin         | /2003 |        | /2004 |        | /2005 |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Area Planted  | 1     | 145829 | 1     | 144000 | 0     | 145000 |
|               | 45430 |        | 46500 |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Area          | 1     | 139410 | 1     | 139000 | 0     | 140000 |
| Harvested     | 34000 |        | 34100 |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Bearing Trees | 26130 | 27185  | 26150 | 27105  | 0     | 27300  |
+---------------+-------+--------+-------+--------+-------+--------+
| Non-Bearing   | 2228  | 1252   | 2418  | 975    | 0     | 975    |
| Trees         |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| TOTAL No. Of  | 28358 | 28437  | 28568 | 28080  | 0     | 28275  |
| Trees         |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Production    | 1820  | 1913   | 1730  | 1890   | 0     | 1900   |
+---------------+-------+--------+-------+--------+-------+--------+
| Imports       | 1     | 1      | 1     | 1      | 0     | 1      |
+---------------+-------+--------+-------+--------+-------+--------+
| TOTAL SUPPLY  | 1821  | 1914   | 1731  | 1891   | 0     | 1901   |
+---------------+-------+--------+-------+--------+-------+--------+
| Exports       | 355   | 372    | 330   | 382    | 0     | 375    |
+---------------+-------+--------+-------+--------+-------+--------+
| Fresh Dom.    | 1160  | 1220   | 1121  | 1192   | 0     | 1207   |
| Consumption   |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Processing    | 306   | 322    | 280   | 317    | 0     | 319    |
+---------------+-------+--------+-------+--------+-------+--------+
| TOTAL         | 1821  | 1914   | 1731  | 1891   | 0     | 1901   |
| DISTRIBUTION  |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+

##  

## Fresh Grapefruit Table

## 

<table style="width:100%;">
<colgroup>
<col style="width: 21%" />
<col style="width: 12%" />
<col style="width: 12%" />
<col style="width: 2%" />
<col style="width: 11%" />
<col style="width: 3%" />
<col style="width: 12%" />
<col style="width: 2%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="2">Mexico</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Grapefruit, Fresh</td>
<td></td>
<td colspan="9">(HECTARES) (1000 TREES) (1000 MT)</td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">2003 Revised</td>
<td colspan="4">2004 Estimate</td>
<td colspan="4">2005 Forecast</td>
</tr>
<tr class="even">
<td></td>
<td>USDA Official [Old]</td>
<td><p>Post Estimate</p>
<p>[New]</p></td>
<td colspan="2">USDA Official [Old]</td>
<td colspan="2"><p>Post Estimate</p>
<p>[New]</p></td>
<td colspan="2">USDA Official [Old]</td>
<td colspan="2"><p>Post Estimate</p>
<p>[New]</p></td>
</tr>
<tr class="odd">
<td>Market Year Begin</td>
<td colspan="2">11/2003</td>
<td colspan="4">11/2004</td>
<td colspan="4">11/2005</td>
</tr>
<tr class="even">
<td>Area Planted</td>
<td>18000</td>
<td>18000</td>
<td colspan="2">18400</td>
<td colspan="2">18210</td>
<td colspan="2">0</td>
<td colspan="2">18230</td>
</tr>
<tr class="odd">
<td>Area Harvested</td>
<td>14400</td>
<td>16778</td>
<td colspan="2">14800</td>
<td colspan="2">16700</td>
<td colspan="2">0</td>
<td colspan="2">16000</td>
</tr>
<tr class="even">
<td>Bearing Trees</td>
<td>2707</td>
<td>3154</td>
<td colspan="2">2782</td>
<td colspan="2">3139</td>
<td colspan="2">0</td>
<td colspan="2">3008</td>
</tr>
<tr class="odd">
<td>Non-Bearing Trees</td>
<td>676</td>
<td>267</td>
<td colspan="2">676</td>
<td colspan="2">283</td>
<td colspan="2">0</td>
<td colspan="2">419</td>
</tr>
<tr class="even">
<td>TOTAL No. Of Trees</td>
<td>3383</td>
<td>3421</td>
<td colspan="2">3458</td>
<td colspan="2">3422</td>
<td colspan="2">0</td>
<td colspan="2">3427</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>288</td>
<td>409</td>
<td colspan="2">310</td>
<td colspan="2">360</td>
<td colspan="2">0</td>
<td colspan="2">330</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>8</td>
<td>9</td>
<td colspan="2">8</td>
<td colspan="2">9</td>
<td colspan="2">0</td>
<td colspan="2">9</td>
</tr>
<tr class="odd">
<td>TOTAL SUPPLY</td>
<td>296</td>
<td>418</td>
<td colspan="2">318</td>
<td colspan="2">369</td>
<td colspan="2">0</td>
<td colspan="2">339</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>7</td>
<td>10</td>
<td colspan="2">7</td>
<td colspan="2">11</td>
<td colspan="2">0</td>
<td colspan="2">8</td>
</tr>
<tr class="odd">
<td>Fresh Dom. Consumption</td>
<td>241</td>
<td>339</td>
<td colspan="2">261</td>
<td colspan="2">246</td>
<td colspan="2">0</td>
<td colspan="2">219</td>
</tr>
<tr class="even">
<td>Processing</td>
<td>48</td>
<td>69</td>
<td colspan="2">50</td>
<td colspan="2">112</td>
<td colspan="2">0</td>
<td colspan="2">112</td>
</tr>
<tr class="odd">
<td>TOTAL DISTRIBUTION</td>
<td>296</td>
<td>418</td>
<td colspan="2">318</td>
<td colspan="2">369</td>
<td colspan="2">0</td>
<td colspan="2">339</td>
</tr>
</tbody>
</table>

## 

##  

## Frozen Concentrate Orange Juice

## 

+---------------+-------+--------+-------+--------+-------+--------+
| Mexico        |       |        |       | 65     |       |        |
|               |       |        |       | D      |       |        |
|               |       |        |       | egrees |       |        |
|               |       |        |       | Brix   |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Orange Juice  |       |        |       |        | (MT)  |        |
+---------------+-------+--------+-------+--------+-------+--------+
|               | 2003  |        | 2004  |        | 2005  |        |
|               | Re    |        | Est   |        | For   |        |
|               | vised |        | imate |        | ecast |        |
+---------------+-------+--------+-------+--------+-------+--------+
|               | USDA  | Post   | USDA  | Post   | USDA  | Post   |
|               | Off   | Es     | Off   | Es     | Off   | Es     |
|               | icial | timate | icial | timate | icial | timate |
|               | \[    |        | \[    |        | \[    |        |
|               | Old\] | \      | Old\] | \      | Old\] | \      |
|               |       | [New\] |       | [New\] |       | [New\] |
+---------------+-------+--------+-------+--------+-------+--------+
| Market Year   | 01    |        | 01    |        | 01    |        |
| Begin         | /2004 |        | /2005 |        | /2006 |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Deliv. To     | 2     | 200000 | 5     | 650000 | 0     | 420000 |
| Processors    | 00000 |        | 00000 |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Beginning     | 1000  | 1000   | 1000  | 1000   | 3000  | 3000   |
| Stocks        |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Production    | 20100 | 20100  | 50000 | 65000  | 0     | 42000  |
+---------------+-------+--------+-------+--------+-------+--------+
| Imports       | 400   | 617    | 400   | 620    | 0     | 620    |
+---------------+-------+--------+-------+--------+-------+--------+
| TOTAL SUPPLY  | 21500 | 21717  | 51400 | 66620  | 3000  | 45620  |
+---------------+-------+--------+-------+--------+-------+--------+
| Exports       | 16035 | 16035  | 43600 | 58820  | 0     | 37620  |
+---------------+-------+--------+-------+--------+-------+--------+
| Domestic      | 4465  | 4682   | 4800  | 4800   | 0     | 5000   |
| Consumption   |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+
| Ending Stocks | 1000  | 1000   | 3000  | 3000   | 0     | 3000   |
+---------------+-------+--------+-------+--------+-------+--------+
| TOTAL         | 21500 | 21717  | 51400 | 66620  | 0     | 45620  |
| DISTRIBUTION  |       |        |       |        |       |        |
+---------------+-------+--------+-------+--------+-------+--------+

##  

## Key Lime Wholesale Prices

+------------------+-----------------+-----------------+---------------+
| **[Key Lime      |                 |                 |               |
| Wholesale Prices |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| **Month**        | **2004**        | **2005**        | **Change**    |
|                  |                 |                 |               |
|                  |                 |                 | **%**         |
+------------------+-----------------+-----------------+---------------+
| January          | 4.07            | 2.12            | (47.91)       |
+------------------+-----------------+-----------------+---------------+
| February         | 2.55            | 2.30            | (9.80)        |
+------------------+-----------------+-----------------+---------------+
| March            | 1.91            | 2.29            | 19.89         |
+------------------+-----------------+-----------------+---------------+
| April            | 1.87            | 2.17            | 16.04         |
+------------------+-----------------+-----------------+---------------+
| May              | 1.77            | 1.82            | 2.82          |
+------------------+-----------------+-----------------+---------------+
| June             | 1.92            | 2.07            | 7.81          |
+------------------+-----------------+-----------------+---------------+
| July             | 1.86            | 2.11            | 13.44         |
+------------------+-----------------+-----------------+---------------+
| August           | 2.42            | 2,15            | (11.15)       |
+------------------+-----------------+-----------------+---------------+
| September        | 2.33            | 2.25            | (3.43)        |
+------------------+-----------------+-----------------+---------------+
| October          | 2.15            | 2.58\*          | (1.14)        |
+------------------+-----------------+-----------------+---------------+
| November         | 2.61            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 2.47            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| **[SOURCE:       |                 |                 |               |
| Servicio         |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercado          |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[Avr. exchange |                 |                 |               |
| rate for 2004    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 11.29            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[exchange rate |                 |                 |               |
| Oct. 12, 2005    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 10.80            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **\*As 1er Week  |                 |                 |               |
| of October       |                 |                 |               |
| 2005**           |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

## 

## Persian Lime Wholesale Prices

+-----------------+----------------+----------------+-----------------+
| **[Persian Lime |                |                |                 |
| Wholesale       |                |                |                 |
| Prices          |                |                |                 |
| (Pesos/Kg)      |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
+-----------------+----------------+----------------+-----------------+
| **Month**       | **2004**       | **2005**       | **Change**      |
|                 |                |                |                 |
|                 |                |                | **%**           |
+-----------------+----------------+----------------+-----------------+
| January         | 2.74           | 2.82           | 2.91            |
+-----------------+----------------+----------------+-----------------+
| February        | 2.50           | 3.57           | 42.80           |
+-----------------+----------------+----------------+-----------------+
| March           | 3.21           | 4.20           | 30.84           |
+-----------------+----------------+----------------+-----------------+
| April           | 6.00           | 4.12           | (31.33)         |
+-----------------+----------------+----------------+-----------------+
| May             | 3.07           | 3.83           | 24.75           |
+-----------------+----------------+----------------+-----------------+
| June            | 1.85           | 2.85           | 54.05           |
+-----------------+----------------+----------------+-----------------+
| July            | 1.51           | 1.94           | 28.47           |
+-----------------+----------------+----------------+-----------------+
| August          | 1.71           | 1.93           | 12.86           |
+-----------------+----------------+----------------+-----------------+
| September       | 1.57           | 2.02           | 17.44           |
+-----------------+----------------+----------------+-----------------+
| October         | 1.72           | 2.06\*         | 19.76           |
+-----------------+----------------+----------------+-----------------+
| November        | 2.19           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| December        | 2.90           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| **[SOURCE:      |                |                |                 |
| Servicio        |                |                |                 |
| Nacional de     |                |                |                 |
| Informacion de  |                |                |                 |
| Mercados        |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[Avr.         |                |                |                 |
| exchange rate   |                |                |                 |
| for 2004        |                |                |                 |
| US\$1.00 = \$   |                |                |                 |
| 11.29           |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[exchange     |                |                |                 |
| rate Oct. 12,   |                |                |                 |
| 2005 US\$1.00 = |                |                |                 |
| \$ 10.80        |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **\*As 1er Week |                |                |                 |
| of October      |                |                |                 |
| 2005**          |                |                |                 |
+-----------------+----------------+----------------+-----------------+

## Wholesale Orange Prices

+--------------+------------+------------+--------------+------------+
| **[Wholesale |            |            |              |            |
| Orange       |            |            |              |            |
| Prices       |            |            |              |            |
| (            |            |            |              |            |
| Pesos/Kg)]{. |            |            |              |            |
| smallcaps}** |            |            |              |            |
+--------------+------------+------------+--------------+------------+
| **Month**    | **2003**   | **2004**   | **2005**     | **Change % |
|              |            |            |              | 04/05**    |
+--------------+------------+------------+--------------+------------+
| January      | 1.62       | 1.63       | 1.35         | (17.17)    |
+--------------+------------+------------+--------------+------------+
| February     | 1.74       | 1.63       | 1.38         | (15.33)    |
+--------------+------------+------------+--------------+------------+
| March        | 2.23       | 1.78       | 1.44         | (19.10)    |
+--------------+------------+------------+--------------+------------+
| April        | 2.61       | 1.93       | 1.49         | (22.79)    |
+--------------+------------+------------+--------------+------------+
| May          | 3.05       | 2.08       | 1.67         | (19.71)    |
+--------------+------------+------------+--------------+------------+
| June         | 4.64       | 2.23       | 2.74         | 22.86      |
+--------------+------------+------------+--------------+------------+
| July         | 4.46       | 2.33       | 3.61         | 54.93      |
+--------------+------------+------------+--------------+------------+
| August       | 3.78       | 3.12       | 3.99         | 27.88      |
+--------------+------------+------------+--------------+------------+
| September    | 3.01       | 3.07       | 3.35         | 9.12       |
+--------------+------------+------------+--------------+------------+
| October      | 2.39       | 2.15       | 2.68\*       | 24.65      |
+--------------+------------+------------+--------------+------------+
| November     | 1.84       | 1.66       | N/A          | N/A        |
+--------------+------------+------------+--------------+------------+
| December     | 1.81       | 1.50       | N/A          | N/A        |
+--------------+------------+------------+--------------+------------+
| [SOURCE:     |            |            |              |            |
| Servicio     |            |            |              |            |
| Nacional de  |            |            |              |            |
| Informacion  |            |            |              |            |
| de           |            |            |              |            |
| Mercados]    |            |            |              |            |
| {.smallcaps} |            |            |              |            |
|              |            |            |              |            |
| [Avr.        |            |            |              |            |
| exchange     |            |            |              |            |
| rate for     |            |            |              |            |
| 2004         |            |            |              |            |
| US\$1.00 =   |            |            |              |            |
| \$ 11.29     |            |            |              |            |
| pesos]       |            |            |              |            |
| {.smallcaps} |            |            |              |            |
|              |            |            |              |            |
| [exchange    |            |            |              |            |
| rate October |            |            |              |            |
| 12, 2005     |            |            |              |            |
| US\$1.00 =   |            |            |              |            |
| \$ 10.80     |            |            |              |            |
| pesos]       |            |            |              |            |
| {.smallcaps} |            |            |              |            |
|              |            |            |              |            |
| \*Data as of |            |            |              |            |
| 1er Week of  |            |            |              |            |
| October,2005 |            |            |              |            |
+--------------+------------+------------+--------------+------------+

## 

## Grapefruit Wholesale Prices

+--------------+--------+--------+--------+---+--------+--------+---+--------+
| *            |        |        |        |   |        |        |   |        |
| *[Grapefruit |        |        |        |   |        |        |   |        |
| Wholesale    |        |        |        |   |        |        |   |        |
| Prices]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[By Main   |        |        |        |   |        |        |   |        |
| Producer     |        |        |        |   |        |        |   |        |
| States]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| **[Month]{.  | **[    |        | **[T   |   |        | **     |   |        |
| smallcaps}** | Michoa |        | amauli |   |        | [Verac |   |        |
|              | can]{. |        | pas]{. |   |        | ruz]{. |   |        |
|              | smallc |        | smallc |   |        | smallc |   |        |
|              | aps}** |        | aps}** |   |        | aps}** |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
|              | **     | **     | **     |   | **     | **     |   | > **   |
|              | 2004** | 2005** | 2004** |   | 2005** | 2004** |   | 2005** |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [January]    |        |        |        |   |        | 1.71   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 0 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [February]   |        |        |        |   |        | 1.66   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 7 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [March]      |        |        |        |   |        | 1.74   | 4 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 0 |        |
|              |        |        |        |   |        |        | 4 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [April]      |        |        |        | 4 |        | 1.89   | 4 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 5 |        |        | 2 |        |
|              |        |        |        | 0 |        |        | 9 |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [May]        | 2.65   | 4.70   | 3.30   | 4 |        | 2.50   | 4 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 5 |        |        | 6 |        |
|              |        |        |        | 0 |        |        | 2 |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [June]       | 2.80   | 4.77   | 3.40   | 6 |        | 2.90   | 5 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [July]       | 3.31   | 5.03   | 3.20   | 6 |        | 3.08   | 5 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [August]     | 3.45   | 5.44   |        |   |        | 3.80   | 4 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 5 |        |
|              |        |        |        |   |        |        | 0 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [September]  | 2.85   | 2.85   |        | 4 |        | 2.88   | 5 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | 0 |        |        | 0 |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [October]    |        |        |        | 3 |        | 2.86   |   |        |
| {.smallcaps} |        |        |        | . |        |        |   |        |
|              |        |        |        | 5 |        |        |   |        |
|              |        |        |        | 0 |        |        |   |        |
|              |        |        |        | Θ |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [November]   |        |        |        |   |        | 2.64   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [December]   |        |        |        |   |        | 3.02   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| **[SOURCE:   |        |        |        |   |        |        |   |        |
| Servicio     |        |        |        |   |        |        |   |        |
| Nacional de  |        |        |        |   |        |        |   |        |
| Informacion  |        |        |        |   |        |        |   |        |
| de           |        |        |        |   |        |        |   |        |
| Mercados]{.  |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[Avr.      |        |        |        |   |        |        |   |        |
| exchange     |        |        |        |   |        |        |   |        |
| rate for     |        |        |        |   |        |        |   |        |
| 2004         |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 11.29     |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[exchange  |        |        |        |   |        |        |   |        |
| rate Oct.    |        |        |        |   |        |        |   |        |
| 21, 2005     |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 10.83     |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| CIF --       |        |        |        |   |        |        |   |        |
| Mexico City  |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| Θ CIF -San   |        |        |        |   |        |        |   |        |
| Luis Potosí  |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+

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

# 

# FRESH ORANGES

## PRODUCTION

Although there is not an official SAGARPA forecast for MY 2005/06
(November-October) fresh orange production, sources have indicated that
production will be roughly 3.9 MMT, a 9.6-percent decrease from MY
2004/05 production. This decrease is due to very dry weather conditions
in the northern states during the first quarter of 2005 that affected
the flowering of trees, as well as strong rainfalls caused by hurricanes
during September and October. There were fewer February/March blooms
compared to 2004 blossoms, resulting in lower volumes of Valencia
oranges that will be harvested from December to early April 2006. Second
blooms also showed a decline, thus the May 2006 crop might be lower
compared to the May 2005 crop. Area planted for oranges is forecast to
remain at 334,000 hectares for MY 2005/06. Producers do not expect an
increase in the number of groves. In general, growers have been
abandoning groves, or switching to other crops, due to high production
costs, wide swings in fresh orange prices, and marketing problems.
Increases in orange production are more a result of increased tree
density than of expansion in area planted. However, the rate of
abandoned groves seems to have increased in Veracruz and San Luis
Potosi. The MY 2004/05 orange production estimate was revised upward to
4.3 MMT, due to higher than expected yields and good weather conditions.
Area planted and harvested was revised downward for MY 2004/05 based on
official estimates and a trend towards downsizing of groves. Data for MY
2003/04 remains unchanged.

The MY 2005/06 forecast for oranges destined for processing is
approximately 420,000 MT, a decrease compared to MY 2004/05, due to
expected lower supplies of fresh oranges. The estimates for oranges
destined for processing for MY 2004/05 were revised upward due to more
fresh oranges available to the industry and stronger demand for FCOJ on
the international market. The MY 2003/04 estimate of oranges destined
for the processing industry remains unchanged. The industry has
indicated that low international prices for frozen concentrate orange
juice (FCOJ) have caused a decline in FCOJ production in Mexico in
recent years. However, market conditions improved in MY 2005 and should
remain strong in 2006.

Countrywide orange yields for MY 2005/06 are forecast at 11.9 MT/ha due
to adverse weather conditions. This estimate is lower than MY 2004/05
when favorable weather led to yields of roughly 13MT/ha. Orange yields
differ widely depending on the production area. Typically, Veracruz
yields range from 10 to 20 MT/ha. Yields in Nuevo Leon range from 12 to
15 MT/ha. And, 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 fertilizer and pesticide applications, tree density, and quality of
the terrain.

Production costs vary amongst citrus regions and producers. The average
cost of production in some areas in Veracruz for a traditional grove
with little intensive cultivation is approximately \$4,680 pesos/Ha
(US\$433.30/Ha), while the average cost for a more intensively-farmed
grove in Veracruz is \$8,900 pesos/Ha (US\$824) or higher. Costs in
Nuevo Leon range from \$8,900 to \$13,000 pesos/Ha (US\$824 to
\$1,204/Ha), significantly higher than those in Veracruz. Higher
production costs are primarily attributed to irrigation costs, but can
also be due to fertilization and pest control costs. These last two
inputs account for approximately 40 percent of total production costs in
Nuevo Leon, as this state is striving to be recognized as a low
prevalence fruit fly area. According to growers, a further increase in
some fertilizer prices is expected in MY 2005/06, due to the increase in
world oil prices. Average field worker wages are about \$70 pesos
(US\$6.48) per day, but often producers have to pay \$90 pesos
(US\$8.33) per day or more to attract enough workers.

Farm gate prices in Northern Veracruz began in October 2005 between
\$700 and \$1,200 pesos/MT (US\$64.80 and \$111.10/MT) for the early
varieties. Prices are expected to continue to be high 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\$232 to \$277.75 per 10 MT) for one-day delivery.

[]{.mark}

## CONSUMPTION

Fresh orange consumption for MY 2005/06 is forecast at 3.4 MMT, a 4.7
percent decrease from MY2004/05, due to lower supplies and higher
prices. Most of the oranges in the fresh market are destined for
domestic fresh squeezed juice. Final domestic consumption estimates,
however, will depend on the final volume purchased by the processing
industry. The fresh orange consumption estimate for MY 2004/05 was
revised upward from the previous forecast to 3.65 MMT. This revision is
mainly due to greater availability of fresh oranges at competitive
prices than initially expected. However, final consumption estimates
will depend on the final volume purchased by the processing industry.
Representatives of the processing industry indicated that greater
supplies of oranges available at lower prices have resulted in greater
volumes of oranges destined for processing. The MY 2003/04 consumption
estimate remains unchanged. []{.mark}

## []{.mark}

## TRADE

Mexican orange exports for MY 2005/06 are forecast at 20,000 MT, the
same as MY 20004/05, due to consistent demand on the international
market. However, the final export figures will depend on U.S. demand and
orange supplies from California and Florida. Most of Mexico's oranges
that are exported to the United States are from Sonora, a state that
produces very high-quality oranges, but Nuevo Leon is also increasing
its orange exports to both the Unites States and Canada. The estimates
for fresh orange exports for MY 2003/04 and 2004/05 remain unchanged.
The United States continues to be the largest export market for Mexican
oranges. Under NAFTA, tariffs and TRQs for fresh oranges have already
been eliminated between Mexico and the United States.

[]{.mark}

Citrus producers indicated that they are pushing for USDA recognition of
northern Tamaulipas and Nuevo Leon as a low prevalence fruit-fly area.
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.

[]{.mark}

Mexico will have more opportunities to expand its fresh orange exports
to Japan under the new trade agreement that entered into effect on April
1, 2005. Under this agreement, Mexico will have a duty-free annual quota
of 10 MT of oranges during the first two years (i.e., MY 2005/06 and
2006/07) -- a small volume which is to be used mainly for promotional
purposes. In MY 2007/08, the duty-free annual quota goes up to 2,000 MT
and increases by 1,000 MT each year until it reaches 4,000 MT in MY
2009/10. After this time, Mexico's access to the Japanese market must be
renegotiated.

Mexican orange imports for MY 2005/06 are forecast at about 18,000 MT.
Mexico is a price sensitive market, and U.S. orange prices are
relatively high compared to the domestic product. The import estimate
for MY 2004/05 was revised upward due to stronger demand from the
processing industry. MY 2003/04 orange imports remain unchanged. U.S.
orange prices are usually higher than those for Mexican oranges.

## 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 in
northern Veracruz, followed on a smaller scale by the states of Tabasco,
Oaxaca, Puebla, and Yucatan.

Although there are no official estimates, total MY 2005/06 production
for both limes is forecast at 1.9 MMT, slightly higher than MY 2004/05
due to more trees coming into production. MY 2004/05 production was
revised upward due to more acreage coming into production. Although
excess rainfall resulting from the recent hurricanes has at times
prevented the harvesting of limes, growers indicate that losses have
been minimal. MY 2003/04 production was revised upward slightly as there
was more area harvested than previously expected.

Area planted to both Persian and Key Limes has increased in Mexico, due
to the fact that limes command higher prices on the international
market, and they generate few phytosanitary concerns. Persian Limes
planted area in Veracruz has grown at a faster rate and Key Limes. In
fact, many producers have replaced orange and grapefruit groves with
Persian Limes in order to take advantage of the strong international
demand and higher prices. Key Lime planted area has increased at lower
rates due to swings in the domestic price. Approximately 33 percent of
total area planted is Persian Limes, and 67 percent is Key Limes.
Michoacan has an excellent winter window (December -- February), which
allows its Key Limes to hit the domestic market first; therefore,
planted area has tended to expand more in this state. According to
producers, however, the domestic market is nearly saturated with Key
Limes, and therefore a substantial increase in Michoacan's area planted
could lower prices for Key Limes on the international market.

Therefore, area planted for MY 2005/06 is forecast at 145,000 hectares,
a less than one percent increase compared to MY 2004/05, due to concerns
that the market may be close to saturation. Estimates for area planted
for MY 2004/05 were revised downward slightly, and area harvested was
revised upward, due to more trees coming into production. Area planted
and harvested for MY 2003/04 were adjusted upward based on official
estimates, showing an increase in acreage in the states of Colima,
Michoacan, and Veracruz.

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 also 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 who have
achieved efficiencies of scale, and thereby have reduced production
costs. Persian Lime production costs average from \$8,800 pesos/Ha to
\$10,400 pesos/Ha (US\$950.40 to \$962.96/Ha) or more. These costs are
due to higher prices for imported inputs such as fertilizers,
pesticides, and other agrochemical products. Well-tended areas can have
production costs as high as \$14,500 pesos/Ha (US\$1,342.59/Ha).
Transportation costs from Veracruz to Mexico City are usually \$3,600 to
\$4,200 pesos/truck (US\$333.34 to \$388.85/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 \$7,300 pesos/Ha to \$16,600 pesos/Ha
(US\$675.92 to \$1,537.00/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.

Grower prices for Persian Limes range from \$400 to \$800 pesos/MT
(US\$37.00 to \$74.00/MT) for the domestic market, and \$600 to \$3,000
pesos/MT (US\$55.50 to \$277.70/MT) for the export market during January
to April. Grower prices for Key Limes fluctuate more than prices 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\$74.00 to \$277.70/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 2005/06 is
forecast at 1.2 MMT, a 1.2 percent increase compared to MY 2004/05, due
to expected higher prices. Consumption for MY 2003/04 and 2004/05 was
revised upwards due to stronger demand at available 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 the 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 Limes decrease and both crops compete 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 2005/06 are forecast at 375,000 MT,
a 1.8 percent decrease compared to MY 2004/05. This slight decrease is
due to weather conditions that could affect quality for export purposes.
Export estimates for MY 2003/04 and 2004/05 were revised upward, due to
greater international demand and higher prices. 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 between US\$20-\$30 per
40-pound box. MY 2004/05 prices for Persian Limes at the international
market were higher during winter, and decreased to US\$8 to \$13 per
40-pound box at the end of the season in October 2005.

Lime imports continue to be minimal due to ample domestic supplies. MY
2005/06 imports are forecast at 1,000 MT. Data for MY 2003/04 and
2004/05 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
2005/06, producers believe production will be about 330,000 MT, a nearly
10 percent decline from MY 2004/05. The alternate production cycle, dry
weather conditions during tree flowering in spring, and late rainfall
due to the hurricanes, will affect overall yields and fruit quality,
mainly in Veracruz, Tamaulipas, and Nuevo Leon. Michoacan was not as
affected as the other grapefruit producing states. Grapefruit production
for MY 2004/05 was revised upward to 360,000 MT due to more acreage
coming into production and relatively good weather conditions.
Production estimates for MY 2003/04 were also revised upward based on
official estimates and more acreage coming into production. Though
Michoacan's grapefruit groves are relatively new, they seem to have
reached their commercial-bearing potential.

Area planted for MY 2005/06 is forecast at 18,230 hectares. The rate of
growth has decreased as farmers in Michoacan are opting for more
profitable crops or abandoning groves entirely. Area planted for MY
2004/05 was revised downward as the rate of growth in newly developed
areas decreased. 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. Area harvested for MY 2003/04 and 2004/05 were
revised upward as more trees came into production, mainly in the state
of Michoacan. Area planted for MY 2003/04 remains unchanged. Costs of
production, such as imported agrochemicals and fertilizers, will be
higher for MY 2005/06, due to the increase in world oil prices.

There are two types of grapefruits 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 grew
because of increased export demand.

According to growers and the industry, about 16 to 18 percent of
grapefruit production is destined for processing. However, that number
largely depends on demand for peeled fruit on the international market,
and demand for juice on the domestic and international market. Due to
the large demand for grapefruit juice from the United States the MY
2005/06 forecast for grapefruit destined for processing is at 112,000
MT. MY 2004/05 estimates for grapefruit destined for processing was also
revised upward to 112,000 MT due to a larger demand for juice from the
United States. However, this information is difficult to verify since it
is not published by official sources and companies treat it as
confidential information. The MY 2003/04 estimates for grapefruit
destined for processing were revised upward due to more availability of
fruit and more demand from the international market for peeled
grapefruit.

Overall average yields for MY 2005/06 are forecast at 20.6 MT/Ha, or
lower compared to MY 2004/05 due to weather related problems. Average
yields for MY 2004/05 are estimated at 21.5 MT/Ha. 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 14
percent of production and yields of between 9 to 15 MT/Ha. Nuevo Leon
accounts for almost 8 percent of total production of grapefruit with
yields of 16 to 21 MT/Ha. In other states, yields vary from 7 to 15
MT/Ha.

Due to a smaller production in Veracruz, grower prices for MY 2005/06
for October 2005 were approximately \$1,000 to \$1,300 pesos/MT
(US\$92.59 to \$120.37/MT) for the red varieties, but have increased to
\$2,000 to \$2,500 pesos/MT in November (US\$185.18 to \$231.14/MT). The
grower price of the white variety of grapefruit is cheaper at about
\$600 to \$800 pesos/MT (US\$55.55 to \$74.00/MT). However processing
plants are paying \$950 pesos/MT (US\$83.33/MT) for white varieties.
Although prices tend to drop by November, prices in fact are increasing
due to higher demand and lower production. Average grower prices for
Nuevo Leon in October 2005 were between \$2,000 and \$2,500 pesos/MT
(US\$185.18 to \$231.15/MT), compared to \$1,000 pesos/MT (US\$86.95/MT)
in 2004. 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 2005/06 is forecast at 219,000 MT,
or 11 percent less than MY 2004/05 consumption, due to lower
availability of fruit at higher prices. Grapefruit fresh consumption for
MY 2004/05 is estimated at 246,000 MT, a decrease of 6 percent, because
more grapefruit was diverted for processing. Consumption estimates for
MY 2003/04 were revised upward due to consumer demand for low calorie
foods and affordable prices. Wholesale prices for the red grapefruit
variety for November 2005 in Mexico City began at approximately
\$4.00/kg (US\$0.37/kg) for the Veracruz crop, an increase compared to
last year's October price of \$2.80 (US\$0.23/kg). Retail prices for
November 2005 began at \$5.20 pesos/kg (US\$0.48/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 \$5.00/Kg (US\$0.26 to \$0.46/kg).

## TRADE

Grapefruit exports for MY 2005/06 are forecast at about 8,000 MT, but
could increase since there is high demand on the international market.
According to growers, demand from Europe is weaker because the
international market is saturated with product from South Africa. There
are also quality problems from excess rainfall. Grapefruit exports for
MY 2004/05 were revised upward to 11,000 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 2003/04 were revised upward, due
to increased international demand mainly from European countries.

Grapefruit imports for MY 2005/06 are forecast at 9,000 MT. Imports for
MY 2003/04 and MY 2004/05 were revised upward to 9,000 MT, due to
increased demand from the processing industry. Although U.S. grapefruit
exports to Mexico are growing, exports to Mexico will still be
relatively insignificant. According to sources, most of the imported
grapefruit from the United States is further processed for re-export to
the U.S. and European markets.

# 

# 

# FROZEN CONCENTRATE ORANGE JUICE

## PRODUCTION

Reliable frozen concentrate orange juice (FCOJ) production numbers are
difficult to obtain, as there are no official statistical data
available. Industry tends to keep partial information, most of which is
proprietary. According to industry sources, FCOJ production for MY 2006
(January-December) is forecast at 42,000 MT, a lower production number
compared to MY 2005. This is due to an anticipated lower volume of fresh
oranges available for the processing industry. However, juice production
depends heavily on the international price of FCOJ. Higher prices
realized on the international market enable processors to increase the
price paid to fruit producers. FCOJ March future contracts for CY 2006
are at approximately US\$1.15/lb, compared to CY 2005 prices of
US\$0.80/lb. This increase is primarily due to orange production
problems in Florida. The FCOJ production estimate for MY 2005 was
revised upward to 65,000 MT due to higher fresh orange production, lower
orange prices available to the industry, and better international prices
for FCOJ. The present situation of higher FCOJ prices allows for better
industry profit margins. The industry is buying fruit at approximately
\$300 to \$380 pesos/ton (US\$27.77 to \$38.18/ton). To encourage
producers to sell oranges to the processing industry, the government has
set a special program where producers are paid \$0.40/kg (US\$0.037/kg)
for oranges delivered to the plants. However, some producers believe
that due to this program some processing companies have lowered prices
paid to the growers. FCOJ production for MY 2004 remains unchanged.

Due to financial problems of the processing industry, there has been a
concentration in ownership. Of the 22 Mexican juice plants previously in
operation, only 7 plants are currently running.

## CONSUMPTION

MY 2006 FCOJ consumption is forecast at 5,000 MT, an increase of 4
percent compared to MY 2005, 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 2005 remain unchanged, while estimates for
MY 2004 were revised upward due to increased demand from 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.

## TRADE

Exports of FCOJ for MY 2006 are forecast to reach approximately 37,600
MT assuming that international demand remains strong. Exports could be
higher if demand from Florida continues to increase. 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.
The export estimates for FCOJ for MY 2005 were revised upward due to
strong international demand and high prices. The United States is the
main market for Mexican FCOJ, followed by Japan and European countries.
According to industry, Mexico is exporting more juice to Europe and
Japan to take advantage of the lower tariffs it enjoys under the
respective trade agreements it has with those countries. Exports for MY
2004 remain unchanged. FCOJ is imported to cover industry needs for
mixing purposes and demand from hotels and restaurants. However, these
imports are still marginal compared to domestic production. FCOJ imports
for MY 2006 are forecast at 620 MT, the same as in MY 2005. Imports for
MY 2004 and MY 2005 were revised upward due to greater demand from the
industry.

FCOJ is one of the few remaining agricultural products still subject to
a tariff and TRQ under NAFTA. For U.S. FCOJ imports into Mexico, the TRQ
is 734,670 liters and the tariff is one-half the MFN rate, or 4.625
percent. For Mexican FCOJ imports into the United States, the TRQ is
151,416,000 liters and the tariff is one-half the MFN rate, or 4.625
percent. Both duties go down to zero in MY 2006, but the TRQ volume
amount for both remains in effect until 2008. During MY 2005, Mexico is
expected to fill the TRQ to the U.S.

Under Mexico's free trade agreement with the European Union (EU), the EU
allows 30,000 MT of FCOJ under a quota with a tariff of 25 percent below
the MFN duty. Mexico will also send product to Japan under the trade
agreement that allows a TRQ of 3,850 MT at one-half of the MFN tariff
duty. During MY 2005, Mexico exported about 6,500 MT to the EU and
Japan.