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Foodnews - 09/30/2011

Friday September 30 2011

Volume: 39  Issue: 39


BRAZIL's orange juice industry, which exports around 98% of its output, has been buoyed by a recent strengthening of the US dollar in relation to the Brazilian Real, industry officials revealed.

"The US dollar above BRL1.70 ensures that the orange juice industry remains viable, while production at lower levels is practically suicide for the industry," said Christian Lohbauer, president of Brazil's Association of Citrus Exporters (CitrusBR).

Lohbauer admitted that the industry needs to restructure in order to avoid shrinking, as global sales are currently stagnating, reported Brazilian daily Diario Comércio Industria on 21 September. "I do not think the industry is doomed to disappear, but it entered a period of stagnation that may be chronic," he explained.

One of the measures that could give new wind to the industry is the setting up of Consecitrus, a new body that will assemble Brazil's orange juice industry and crop producers.

The body could be up and running by mid-2012, said the CitrusBR president.

A consultancy has been signed up to prepare a study on production costs inside the Brazilian orange juice chain, said Lohbauer. The study should be ready in October. "We will find out who is competitive and who is not, who is in the game and who is out," Lohbauer disclosed.

Neil Murray writes: the stronger dollar has also come as welcome news to Chilean exporters. In the first week in September, the dollar was trading at around 460 pesos, well below what Chilean producers consider to be their break-even point. At the time of going to press, one dollar is worth 512 pesos.

"The dollar is getting stronger because the copper price is going down and also because of the problems in Europe and the US," an exporter in Chile told FOODNEWS. "It is good for exporters but we need a few more days to make a real conclusion."

A source at a major Chilean processing company confirmed that the falling price of copper had contributed to the drop in value of the peso (as opposed to the strengthening of the dollar) and added that foreign investors have been withdrawing from Chile (which was very recently the recipient of more inward foreign investment than any other country in Latin America).

"This is very good news, especially for those that can afford to use these exchange rates and hedging," he commented. "As not all companies can manage to do so, because of limits in credit from the banks, those with broad shoulders can make use of it. But if it keeps high until the end of this year, wonderful. My only doubt is if this could affect consumption abroad, which is not the case yet."

Chile is now entering its springtime, and its peaches will be ready for processing in about three months' time. Its main competitor, Greece, is sold out of peach purée. A Greek processor said to FOODNEWS: "The Chileans will sell their peach purée at any price they offer: the world is thirsty for peach and Greece's production is not able to cover it. Of course, if the situation with the euro stays as it is it will be a small push for Greek exports generally. Keep in mind that the exchange should have been one dollar to one euro, to play fair."



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