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Demand for Imported Citrus Softens in China

In line with historical trends, fresh citrus production and consumption are forecast to continue upward in MY2020/21 to 35.6 MMT and 34 MMT, respectively. However, looking ahead, the rate of production growth is expected to slow as prices drop and consumer demand reaches its saturation point. Demand for imported citrus in MY2020/21 is expected to remain soft, down 25% overall from pre-COVID levels, though will return as the economy rebounds. Lower frozen concentrate orange juice imports and production show domestic industry challenges and signal consumers’ changing preferences to juices made from fresh fruits. Chinese countermeasures for COVID-19 will continue to add complication and cost to cold chain imports, including citrus. 

Post forecasts total citrus production for marketing year (MY) 2020/21 will continue to grow because:

  • –  New trees planted 3-4 years ago start to produce more fruits.

  • –  New growing areas in various provinces.

  • –  New varieties are planted to replace the outdated ones.

  • –  Grafting and growing techniques shorten the time to bear fruits.

  • –  Increasing greenhouse planting for tangerines and mandarins.

    Despite the sustained growth, industry insiders speculate citrus production growth will slow in the next few years as the industry reaches what they believe to be the consumption saturation point.

    Prices: Overall citrus prices dropped in MY2019/20 with a larger crop. This downward pressure on prices will continue for MY2020/21 with an even larger crop forecasted. However, it is expected that the prices for premium fruits will remain high assuming the pandemic will be better controlled in MY2020/21 and Chinese consumers have stronger confidence in spending.

    The unprecedented surge and spread of COVID-19 in MY2019/20 had some key impacts on the Chinese citrus market:

  • –  The economic slowdown in 2020 made Chinese consumers more price sensitive and conservative in spending.

  • –  Major local citrus importers who purchased southern hemisphere products in early CY2020 encountered decreasing market demand and lost money, especially on imported oranges. As a result, for part of MY2019/20, they were hesitant to place further orders for imported fruits given the uncertainty of COVID-19 and challenges with trade.

  • –  Lockdowns and higher operational costs limited exports in MY2019/20, leaving more in the domestic market and creating downward pressure on prices.

  • –  Labor shortages and port backups in China and elsewhere had some negative impact on Chinese imports and exports in early CY2020.

  • –  Fewer imported fruits available in the wholesale market are leading some Chinese traders to put increasing attention on domestic fruit trade.

  • –  The disinfection measures required at Chinese ports for all cold chain food products starting in late MY2019/20 further raise the import costs.

  • –  Post believes consumers’ adoption of online and digital sales in the first half of 2020 will create lasting changes for offline retail stores.

  • –  Brand building, even in fruit, is becoming more important to attract high-end consumers.

  • –  The appreciation of the Chinese RMB in CY2019/20 will make it less expensive to import and more expensive to export possibly leaving more fruits in the domestic market. — Read the full report from the USDA Foreign Agricultural Service HERE.

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