Sweet cherry – analysis of the prospects for the season, taking into account the situation in the EU, Russia and Central Asia


Sweet cherry – analysis of the prospects for the season, taking into account the situation in the EU, Russia and Central Asia

05/04/2020

The total loss of cherry exporters this year may be from $ 700 to $ 900 million

Harvesting early varieties of cherries is already in full swing in Uzbekistan, Tajikistan and Turkey. The sweet cherry season has also started in the southern EU countries: Spain, Italy and Greece. Therefore, EastFruit analysts tried to assess the prospects for the development of this market taking into account potential changes in demand and supply due to the coronacrisis, low oil prices and frosts.

Let’s start with a proposal that gardeners are usually more interested in than demand itself. In almost all European countries there were problems with frost and frost, which significantly reduced the potential for the production of cherries. There were problems in the countries of Central Asia, however, according to our estimates, the damage was insignificant, as snowfalls helped save the crop rather than negatively impacted it.

Uzbekistan – the largest producer and exporter of sweet cherries in our region, this year it will lose from 15 to 20% of the sweet cherry harvest, according to preliminary estimates. This country is one of the three world leaders in terms of sweet cherry production, second only to Turkey and the United States. Late varieties of cherries, which are exported, usually in June, will suffer most. That is, it is in the hands of Ukraine and Moldova, since the intersection in the season will be less. By the way, despite the decrease in yield in Uzbekistan, the total production may not even decrease, because new cherry orchards come into fruition. As for the estimation of the export volumes of Uzbek sweet cherries, we had a very extensive investigation on this issue, which can be found here. In short, according to market participants, Uzbekistan can export from 35 to 50 thousand tons of cherries.

Iran produces, according to FAO, about 140 thousand tons of cherries per year. It is possible that even more. However, official statistics on world trade only fix a small part of Iranian exports – about 5 thousand tons. At the same time, according to EastFruit analysts, Iran exports to Russia at least 30 thousand tons of fresh cherries only to Russia. Helps Iran in this, in particular, Azerbaijan. This year, no significant loss of sweet cherry harvest is expected in Iran, which means that its supply will be no less than usual.

Tajikistan and Kyrgyzstan – These are relatively large producers of cherries, but not as large as Uzbekistan or Iran. These countries export cherries, mainly to Russia. The damage from frost in these countries was comparable to that in Uzbekistan. Although, perhaps, it was 5-10 percentage points lower. In other words, the supply of cherries from these countries, most likely, will not substantially change.

Moldova part of the cherry crop is also missing. Here, frosts damaged the crop very unevenly. The most interesting thing is that in the northern regions, it seems, the damage was lower than in the central and southern ones. According to preliminary estimates, the losses will be about 30-40%, since Moldova usually exports about 8-10 thousand tons of sweet cherries, while fruit traders believe that part of this sweet cherry is re-export from Poland and Ukraine, most likely fruit available for export will be less by approximately 2-3 thousand tons. At the same time, it is expected that more sweet cherries from Moldova can be exported this year to EU countries.

Ukraine this year is likely to lose up to 70% of the cherry crop. In some gardens, the cherry yield is almost completely lost. That is, talking about some kind of systemic export, most likely, is not necessary. But imports may well be a record in 2020, despite a decline in household incomes.

Poland It is also a significant regional exporter of fresh cherries. However, here, frosts greatly reduced the yield potential – in some regions even by more than 50%. In the whole country, we estimate losses in a third of potential production. This means that exports can be relatively small.

Turkey – This is the largest producer of cherries in our region, exporting annually up to 80 thousand tons of fresh cherries. This year, the season began here in mid-April, and the first batches of cherries have already been exported. Unlike other countries in the region, Turkey did not have any problems with frost, so it may well get a record harvest of cherries and take advantage of the poor harvest of these stone fruits in other regions.

Serbia according to various estimates, it lost up to 30-40% of the sweet cherry crop due to the same frosts that damaged gardens in Italy in late March and early April. If you do not take into account the volumes of re-exported fruits, Serbia annually sells for export about 3 thousand tons of its own sweet cherry, mainly to the market of the Russian Federation. It is possible that this year the volume of exports will decrease, while we believe that it will be more profitable for Serbs to sell cherries in the EU, so their export to EU countries may increase.

In Italy frosts, according to preliminary estimates, will reduce the cherry yield by 30-40%. Early varieties were particularly affected. By the way, last year, the situation was even worse. So in general, compared with last year, production can even grow. At the same time, Italy is a net importer of cherries (imports reach 8–11 thousand tons, and exports reach about 5–10 thousand tons), so, theoretically, cherries import into this country may be at the level of last year or slightly lower if Of course, demand will not decrease even more than production. But more on that later.

In Spain sweet cherry producers have avoided significant frost losses. The country annually exports more than 30 thousand tons of cherries. It is expected that this season, exports can remain at the same level if it is possible to collect the entire crop, given the problems with labor, and if there are no problems with demand in countries where sweet cherries are usually exported. There was minor damage from the hail, which, incidentally, also caught France.

Greece, exporting up to 20 thousand tons of cherries per year, it seems, avoided significant losses of these fruits from frost. Therefore, the supply of cherries from Greece in 2020, most likely, will not substantially change.

As you can see, in the main exporting countries (Turkey, Iran, Spain and Greece), there was no significant damage to the cherry crop from frost and other factors.

See also: Fruit ghost or how many cherries and from which countries does Russia actually import?

Now let’s move on to the most difficult – to assess the level of demand for cherries

Russia It is the main market for sweet cherries throughout the region. Last year, according to official figures, Russia imported about 75 thousand tons of cherries, and according to EastFruit estimates – more than 100 thousand tons. Russia is also actively developing its own production of cherries. However, it is obvious that frosts in April damaged the cherry crop in Russia more than in other countries. Accordingly, the supply of locally produced cherries will sharply decrease and will be minimal.

On the other hand, record low oil prices, a sharp drop in Russia’s revenues from gas and many other commodity exports, a sharp increase in unemployment due to the coronary crisis, will sharply reduce the demand for cherries. According to Andrei Yarmak, an economist at the investment department of the Food and Agriculture Organization of the United Nations (FAO), cherries are not critical for consumption, so many consumers in Russia may not buy it in 2020. “We expect that the demand for cherries in Russia, with the most favorable forecasts for the development of the situation with the coronavirus pandemic, will decrease by about 22-24%. However, a sharper fall in demand is also possible. Given the devaluation of the ruble and the increase in transportation costs, the main suppliers of cherries to Russia – Turkey, Iran, Uzbekistan and Moldova, will have to make serious price concessions, because the market volume will fall immediately by 20-25 thousand tons, ”notes Andrei Yarmak.

Since in Turkey and Iran and Uzbekistan no significant decrease in the cherry yield is expected, they will have to look for alternatives to the Russian cherry market. Turkey may increase shipments to the EU, in particular to Germany. But other important markets for Turkish cherries are also experiencing serious difficulties – Iraq and other countries in the Middle East have lost revenues from oil exports, and the UAE has also lost from tourism, which is why difficulties are expected here. Therefore, it is expected that cherries from Uzbekistan, Turkey and Iran will be offered at a fairly competitive price this year.

In the EU countries demand for cherries will also fall. At the same time, a decrease in population incomes will have a minimal impact on this indicator, since cherries will still be affordable for most residents. But a decrease in the number of tourists will have a decisive influence on the demand for cherries. Therefore, it is possible that here the drop in demand will exceed losses from frost. This means that suppliers will not be able to sell cherries more expensive in this direction.

The largest importers of sweet cherry in the EU are: Germany (45 thousand tons per year), Austria (20 thousand tons), Great Britain, which is in the process of Brexit (about 15 thousand tons per year), and Italy and France, each importing up to 10 thousand tons of cherries per year.

As we have said, the Middle East is unlikely to help save the situation, as the demand for cherries there will also drop sharply.

Asia (China, Singapore, Hong Kong) already failed the main import season for cherries in January-March, because at that time the region was in quarantine. In the summer season, self-produced cherries are usually more or less sufficient to meet demand. Insignificant volumes from Turkey will also be delivered there, however, a decrease in air transportation volumes will greatly affect the export of cherries to Asia from Europe. So there is and will be a problem with the demand for this fruit.

Summary – the season, despite losses from frost, most likely does not promise high demand and high prices for cherries. Almost certainly, the main exporting countries will face serious logistical problems and the need to find new distribution channels. Moreover, the lack of thematic fruit and vegetable exhibitions, trade forums, conferences and the ability to go to meetings with customers will greatly limit the ability to search for new customers and will further exacerbate the sales problem.

The total losses of sweet cherry exporters this year can range from $ 700 to $ 900 million. The global trade in sweet cherries will decrease approximately this way. But the processors this year will probably have no end to those who want to sell cherries for the production of juices and concentrates, and the cost of raw materials may be quite acceptable.

Eastfruit

Key news and analysis of the fruit and vegetable market on Facebook and Telegram East-Fruit.com

Subscribe!

Using the materials of the site is free if there is a direct, open to search engines, hyperlink to a specific publication of the analytical platform East-fruit.com.






->

.