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Article: A lifeline for pineapple juice - Covid-19
22 July 2020
Or not quite. Pineapple juice, like so many juices, is enjoying
something of a rehabilitation but while it is reappearing on
supermarket shelves in Europe, anyway, as retailers rationalise
their juice listings, demand is still small (but, we think,
increasing slowly) and most buyers are covered.
The year began with a lacklustre performance from Thailand. The
2019 summer crop had been poor and the winter crop was even worse.
Processors shut down early. A meagre raw material supply meant high
fruit prices and Thailand couldn't really raise its prices much
above USD1,500 per tonne fob because buyers in Europe were sitting
on inventory anyway and reckoned that price increases would kill
what little demand there was.
While it takes some time for customs import and export data to
come through, January's figures for the last quarter of 2019 showed
that Thailand was already losing export markets to Costa Rica and
the Philippines: its exports were down by nearly half.
Worryingly for Thailand, Costa Rican juice concentrate was only
slightly more expensive than Thai, and Costa Rica enjoys a brix
advantage as well as the advantage of being able to trade on the
fact that its MD2 pineapple variety is considered a premium
product. "Thailand is losing ground," observed an IHS Markit
source.
In December, Thailand's exports crashed to a historic low. In
Europe, price ideas were all over the place. Some sellers were
offering 2018 product from inventory, some were trying to offer
based on Thailand's latest price ideas, and (apparently) some were
offering blends of 2018 and late 2019 product.
Thailand's raw material price went up to THB10 per kilo
(equivalent to USD0.32 per tonne), then THB12/kg, and then higher,
touching THB15/kg at one point.
And then, of course, the coronavirus reached Thailand. This
brought more problems because lockdowns started in the Far East and
farmers, worried that their workers might flee back to their homes,
decided to harvest early, while they still could, and never mind
the consequences. This has naturally resulted in smaller sized
fruit - a problem for processors looking for decent sized rings for
canning - and brix and ratio not of the best.
In the first quarter of this year, one Thai processor told IHS
Markit that the company had received a mere 257,000 tonnes of
fruit, compared with about 410,000 tonnes of fruit in January-March
last season and 670,500 tonnes in the first quarter of 2011. Even
that paled into insignificance with the 786,000 tonnes recorded in
2006. The bald facts are that the Philippines is now the world's
largest pineapple juice supplier. Indonesia is doing relatively
well, and Costa Rica has always been able to major on its premium
not from concentrate juice.
From here to December
What is interesting is that buyers seem to be looking for
alternative sources for pineapple juice. Vietnam grows Cayenne
fruit these days (a few years ago it just produced Queen). Mexico
grows MD2 fruit and has received enquiries for juice. Ghana grows
MD2 but in Africa, Kenya is the important origin and also grows
MD2. Kenyan concentrate is presently priced around USD1,890/tonne
cfr Europe, according to one IHS Markit source, while Vietnamese
Cayenne concentrate is slightly cheaper at USD1,900/tonne cfr.
IHS Markit expects that buyers will extend their choice of
sources. This is not just because they may be able to source
cheaper (though they may) but also because, at a time when supply
chains are under severe stress and delivery delays or shortages are
very likely, it makes sense to have a Plan B; or even C.
Will demand increase? Quite possibly, at least for the next few
months. Beyond the end of the year? That depends on consumer demand
and that, quite possibly, depends on the way the whole retail
market is changing.