FRUIT AND TREE NUTS -- SUMMARY March 25, 1999 March 1999, ERS-FTS-285 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of FRUIT AND TREE NUTS will be available elctronically in about a week following release of this summary. --------------------------------------------------------------------------- Higher Fruit Prices Likely In First-Half 1999 The index of prices received by growers for fruit and nuts has been higher during the first 2 months of 1999 than for any previous January-February since 1993. Higher prices, mainly for citrus fruits, have been boosting the overall index. Prices are expected to remain above a year ago through the first half of 1999, particularly for oranges, grapefruits, lemons, specialty citrus, and pears. Continued lower prices for apples in the 1998/99 marketing season and expectations of increased strawberry supplies from California will offset some of the upward pressure on fruit prices. Retail prices in January and February 1999 averaged above a year ago for many fresh fruit, including bananas. As of March 1, 1999, the 1998/99 U.S. orange crop is forecast at 10.2 million short tons, down 27 percent from the record crop last year and smaller than any crop since 1991/92. Crops are expected to be smaller in all producing areas except Arizona, with declines greatest in California and Florida. This year's crop was not only smaller but later to mature. Both these factors helped put upward pressure on prices so far in 1998/99. The size of California's 1998/99 orange crop fell drastically after 4 days of freezing weather this past December. The navel crop suffered the brunt of the freeze and only 712,500 tons are expected to be harvested, down 57 percent from a year ago. The Valencia crop, reduced 37 percent from the previous year, is also expected to yield 712,500 tons. California is a major supplier of fresh oranges to domestic and export markets. Due to reduced availability of fresh oranges this year, higher prices and lower exports and domestic consumption are expected. Florida is expected to produce 19 percent fewer early- to mid-season oranges and 25 percent fewer Valencia oranges than a year ago, mostly attributed to El Nio's effects on the fruit set. Orange juice production is forecast at 1.3 billion single-strength equivalent (sse) gallons, down from the last 2 years, but the third highest on record. U.S. grapefruit production is forecast at 2.6 million tons in 1998/99, down 1 percent from the previous year. Due to a slightly smaller crop this year, grower prices appear to be improving from last year's low returns. The 1998/99 lemon crop is forecast to decline 14 percent from last year, to 806,000 tons. The December freeze destroyed the entire remaining lemon crop in the San Joaquin Valley, the area that supplies approximately 20 percent of California's lemon output. Most of California's lemon crop is planted south of the area affected by the frost. Lemon grower prices in California have averaged sharply higher than a year ago thus far, but should moderate with sufficient supplies from southern California as the season progresses. Specialty citrus crops, such as tangerines, tangelos, and Temples, are expected to be smaller for the second year in a row. Tangerines, the largest crop among the specialty varieties, are expected down 15 percent from 1997/98, to 307,000 tons. The 1998 utilized production of noncitrus fruit decreased 12 percent from the 1997 record of 18.4 million tons. Heavy winter rains, flooding, and windy conditions, especially in Florida and California, and drought conditions in several other States throughout the summer delayed crop maturity and reduced crop size. The value of noncitrus fruit production in 1998 is estimated at $7.1 billion, down 13 percent from the previous year's record. The Washington apple crop in 1998 was estimated up 20 percent from the previous year--the largest crop on record. While production declined in other important apple-producing States (New York, Michigan, California, and Pennsylvania), the 1998 U.S. apple crop increased 6 percent and was second only to the record U.S. crop in 1994. With the record crop in Washington, fresh-market supplies during the 1998/99 marketing season are likely to exceed the year before, and apple prices are likely to average lower. Increased strawberry supplies are expected this year from California, where production averages about 83 percent of the U.S. total and supplies are year-round. According to the California Strawberry Commission, planted acreage will be up slightly in 1999. Also, generally favorable weather thus far has led to normal crop development, good yields, and better-quality berries. Increased supplies are putting downward pressure on prices. The December freeze and pest problems have reduced the size of the 1998/99 California crop, and avocado prices are likely to average stronger. Over 85 percent of the U.S. avocado crop is produced in California. Mexico, the world's largest avocado producer, will continue to increase its presence in the U.S. avocado market. During the Northern Hemisphere winter season, imports--virtually all from Chile--dominate the U.S. market for fresh grapes. Although Chilean production is forecast down, improved quality supports only a marginal export decline. Production decreased sharply in 1998 from the previous year's record for all major tree nuts, except pistachios. Production for the six major tree nuts (almonds, hazelnuts, walnuts, pistachios, pecans, and macadamia) totaled 903,000 tons, in-shell equivalent, down 25 percent from the previous year's record. The value of production also fell sharply from the prior year's record, to $1.64 billion. Printed copies of the Fruit and Tree Nuts Situation and Outlook Report will be available in about 2 weeks. This issue also includes a special article: "Integration, Coordination, and Concentration in the Fresh Fruit and Vegetable Industry." For more information, contact Agnes Perez (202) 694-5255. Full text of the report also will be available on the ERS website at www.econ.ag.gov. END_OF_FILE