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Brazil will increase its FCOJ price.
Dec 11, 2017
The forecast for the orange juice production in Brazil is a 18% lower than last season. Consequently, the Brazilian company Cutrale (the largest orange juice processor in the world), has announced a price increase for its frozen concentrated orange juice (FCOJ). It was around USD 1,850-1,900 per tonne, and the intent to raise the price to USD 2,300/tonne has been quite shocking.
A price increase was expected by the industry, but they were expecting a gradual one and, finally, a further increase in October during SIAL food fair in Paris.
Cutrale has been the only company who has shown its price proposal but it is expected that other companies (such as Citrosuco or Louis Dreyfus) announce a somewhat similar price.
A delay in this price increase would benefit bottlers and supermarkets chains. On the one hand, they could prepare their clients for new prices. On the other hand, they could increase the price of other kinds of juices. Today, apple juice and grape juice are quite cheaper than orange juice and pineapple juice. It would be an intelligent strategy for blenders, supermarkets chains and bottlers to increase the price of apple juice and grape juice with two purposes: in the first place, they could obtain higher benefits; secondly, it would be a smaller gap between the price of apple and grape juices, and orange and pineapple juice. In this way, orange juice price would not seem so high.
With regard to not from concentrate orange juice (NFC orange juice), Brazil has not announced any price yet. This country always tries to set a price for NFC orange juice that can compete with European manufacturers and processors. The lower orange production of the South American country is seen as an opportunity for Europe to offer cheaper prices than Brazil.