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US Counting on Brazil to Quench Its Orange Juice Thirst

Orange plantation in Brazil Brazil seems poised to increase its market share of oranges in the United States. In spite of the increase in this year's US harvest over the 2006/2007 crop, a new report projects that in the long-term "even the best case scenario" shows production will remain stagnant over the next 10 years.

According to a Rabobank  report, "Brazilian Orange Juice: Opportunities and challenges in the global market," this stagnation will provide other orange producing countries the opportunity to expand orange juice exports to the United States.

"Stakeholders in Brazil's orange juice sector have a unique opportunity before them," says Rabobank Food and Agricultural Research vice president Stephen Rannekleiv. "Growing international demand for orange juice and decreased US production give Brazil the opportunity to step up and fill the gap."

In Florida, hurricanes and plant diseases – such as canker – have led to a decline in total acreage as well as a decrease in yields per acre. In addition, urban encroachment is raising land values for many growers, which is enticing many farmers to sell their land and to get out of citrus farming.

As there are few countries able to fill the emerging gap between declining output and consumer demand, there is an increasingly attractive opportunity emerging for Brazil.

However, "these pressures on the US orange juice market, teamed with disease and weather troubles in Florida's orchards, have created opportunities for the United States and Brazil to create strategic alliances," said Rannekleiv.

"Those alliances give US beverage companies a reliable and efficient orange juice supply, so that they can focus on domestic marketing and creating products that are more cost effective."

Besides being responsible for half of the world's supply of oranges, Brazil and the United States account for 85% of the world's orange juice processing capacity. While Brazilian companies focus on orange crushing and export logistics, US companies have been increasingly focusing on the domestic ready-to-drink and not from concentrate juice markets.

Although Brazil is theoretically well positioned to make up for declining production in the United States, it also faces it own set of challenges. Rising oil prices have increased demand for ethanol in Brazil, which has led to an increase in demand for sugar cane. Sugar cane is increasingly competing for land in the traditional citrus growing regions.

In addition, the declining US dollar has reduced the profitability of exporting to the US which has placed pressure on the margins of Brazilian growers.

"Given Brazil's dominance of global citrus production, it would seem to have a clear opportunity to increase its share of the US orange juice market." Rannekleiv said. "However, to do so will require Brazilian growers and processors to overcome their own set of challenges."

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  • Show Comments (8)

  • JR

    Brazilian Debt to US . . .
    Brazilian payments to US Banks – Called in NOW
    Everyone – debt forgiven
    LOL!

  • Jc

    to joao abou the “Illusions and delusions of a demagogue called Ch.c”
    No Brazilians or S. Americans. That was my second question to him; the majority is from charter groups from the Key West operating in the South Caribbean area, Singaporean and a New Zealander are also included. Keep it in mind that the lead-time right now is about 5 to 6 years. He would had to have ordered “his” at least 5 years ago unless he is buying a used boat which then would had been no reason for him to go to France since the ones for sale are in the Caribbean. Laugh laugh
    So my friend JoaoÀ¢€¦ this bastard has no credentials or credibility; and that is why nobody cares nor lesson to what he has to sayÀ¢€¦ Please give À¢€œPinocchioÀ¢€Â this messageÀ¢€¦We are closing in!!!
    Hve a great new year Joao!

  • João da Silva

    JC
    [quote]I found out that there’s only one European businessman order for the new À¢€œ95 footerÀ¢€Â but he is not from Switzerland???? [/quote]

    Are there some S.Americans (Especially Brazilians) in the list?

    Regardless, have a great 2008.

  • Jay Glenn

    We will have to take it then.
    US price = US$500 / OJ Barrel

    Everybody else = Market Price

    Costinha

  • Jc

    costinha!!
    Bota pra quebrar nesTe FDP!!!!

  • Jc

    ch.c !!! Guess what??
    I couldn’t resist calling a friend of my that works for Yapluka and ask him of new commissions… I found out that there’s only one European businessman order for the new À¢€œ95 footerÀ¢€Â but he is not from Switzerland???? So are you lying about this also???
    Of course you are!!! The only one that believes in you is Joao da Silva!!! Laugh laugh laugh laugh laugh laugh….
    You PAHETHIC S.O.B. sack of human fesses!!!

  • I say…
    US price = US$500 / OJ Barrel

    Everybody else = Market Price

    Costinha

  • ch.c.

    WRONG !
    ” Rising oil prices have increased demand for ethanol in Brazil, which has led to an increase in demand for sugar cane.”

    Curiously the sugarcane, sugar and ethanol prices DECLINED SHARPLY when oil prices nearly DOUBLED IN THE LAST 2 YEARS !

    Simple proof that sugarcane, sugar and ethanol HAVE NO PRICE CORRELATION WITH…..OIL PRICES !!!!!
    Otherwise your sugarcane industry should be highly profitable and not struggling as they are now !
    😀 😉 😀 😉

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