2016 Mango monthly review: repeated difficulties tailoring supply to demand

  • Published on 5/04/2017 - Published by GERBAUD Pierre
  • FruiTrop n°247 , Page From 65 to 67
  • Free

EUROPEAN MANGO MARKET

Open/Close Shop

A difficult start to the year

2016 got off to a bad start, with Brazilian and Peruvian imports far exceeding market absorption capacities. In mid-January, the combined shipments from the two sources exceeded 200 containers per week. These excessive quantities weighed heavily on transactions, with low prices charged. In spite of Brazil’s fairly rapid ebb in January, the tonnages available remained large because of stocks. This left a two-speed market, with on the one hand some merchandise sold off at low prices, due to being less compatible with demand in terms of variety, size and quality, and on the one hand, newly arriving merchandise, more in line with demand, and which saw slightly strengthening prices.

Balance restored in February-March 

The market’s revitalisation was actually for a purely meteorological reason. Violent storms in the North Atlantic in February caused logistical disruptions and shipping delays, which aided the sale of available stocks, and contributed to settling the market. In mid-March, Peruvian volumes dominated the European market, yet Brazilian volumes remained fairly stable.  European markets saw a wide range of conditions, with considerable price variations.

The US market was under-supplied due to the early and rapid end of the Peruvian campaign. Mexican shipments took over, but made slow progress.

Mixed results for the first transition in April

The supply to Europe, until then dominated by Peru, switched to the West African sources. Brazil at this time was only involved as a top-up source, with fairly moderate quantities mainly comprising Tommy Atkins, Keitt and Palmer. This transition occurred more rapidly for the air-freight fruits in view of the transport times. Yet West Africa was supplying only limited volumes, which in any event were lower than had been expected. In mid-April, the European market was under-supplied because of the disappearance of the Peruvian supply (at the end of the campaign), the slow start of the West African campaign and the moderate imports from Brazil. The Ivorian harvest was stepping up, yet the number of containers loaded was lower than forecast, insofar as the fruits were mainly small-sized and still barely mature. The quantitative shortfall helped prices hold up, with occasional variations mainly attributable to the predominance of small sizes and to qualitative variations.

Leaner production than forecast in West Africa

In May, the European market was better supplied, with continuous incoming volumes from Côte d’Ivoire on the up, reinforced by Malian and Burkinese volumes, which though smaller, helped expand the supply. However, the supply conditions for Côte d’Ivoire remained difficult. The apparent fall in production registered in 2016, and above all without any prior announcement by the operators, the strikes by the Customs services, the lack of container availability, and as a consequence, loading delays, contributed greatly to the malfunctions seen on European markets.

However, when the latest updates to the European statistics are released in September, they will reveal that the Ivorian boom continued, with approximately 30 000 t of exports in 2016, and that Mali also saw a rise, albeit to a more modest level (6 777 t). Finally, after a prolonged downturn, the West African sources seem nonetheless to have been consolidating their market shares in Europe since 2010, in spite of the late start to their export campaigns.

Disruptions in late May

There are two reasons for the slight downward trend of the European market. Firstly, the consumption switch to seasonal fruits is more distinct in May, in spite of frequent volume shortages and high prices. The market is gradually emerging from the counter-season period. The French market was then disrupted by strikes and blockading of fuel supply centres. International transport became increasingly scarce, gradually leading to a reduction in volumes distributed. Post-routing of merchandise become a more complicated proposition on the national market.

Second transition phase in June

The West African export campaign ended with waning volumes from Mali and Burkina Faso. Sea-freight imports were reliant on Keitt from Puerto Rico and the Dominican Republic. Brazil provided a minimum supply of around 20 containers per week, the source’s lowest level, and half that of 2015.

Downturn in the summer period

Initially, mango demand was down, in particular due to competition from seasonal products, though their volumes remained moderate. The supply was also decreasing, which restored some balance to the market. So prices remained fairly strong, or even increased occasionally. Good quality produce earned satisfactory value, though quality problems proliferated across all sources. In mid-July, the relative under-supply to the European market brought price readjustments, more or less marked depending on the market. In late July, numerous retail stores and outdoor markets closed for the holidays. In August, the supply exceeded demand. The proliferation of sources, the diversity of varieties and qualitative heterogeneity of the produce only intensified the lack of sales fluidity. In addition, the predominance of small sizes, shunned by purchasers, caused major price variations. The market was at this time supplied above all by Israel and Senegal, with their range of varieties arriving by air and sea-freight. The Spanish campaign was getting started.

Stabilisation in September

In mid-September, the European market picked up slightly with sales increasing and overall stable prices. The Israeli campaign was drawing to an end, and Brazil provided the majority of the supply. Spanish Osteen shipments were growing, which aided wider distribution but was accompanied by a significant fall in rates. The US market received an abundant Keitt supply from Mexico. Price ranges widened expanded considerably, depending on the point of sale. Brazil shipped twice as much to North America as to Europe. In late September, the European market enjoyed stability more or less across the board. After the end of the Israeli campaign, the accumulated stocks received were sold off.

A heavy autumn market

In October, the market supply grew and grew, leading to a more or less perceptible dip in prices. With exports of Brazilian Kent progressing, the Tommy Atkins rate declined. Brazilian shipments rose to dominate the supply to Europe. They continued to decrease to the North American markets, largely replaced the rapidly climbing Ecuadorian shipments.

In November, a point of equilibrium between supply and demand seemed to have been reached on the North European markets, resulting in declining prices, though they remained stronger in France and Belgium. In late November, the European market was supplied nearly exclusively by Brazil, with volumes still on the increase, up to more than 250 containers per week. These quantities seemed to have been absorbed fairly fluidly, no doubt highlighting the rise in demand given the lower availability of temperate fruits.

Difficult end to the year in the run-up to the third transition

From December, the very steep rise in Brazilian volumes and the very early start by Peru gradually weighed down on prices. While Brazilian shipments reached their maximum and then decreased, Peruvian shipments distinctly gathered pace, easily offsetting the shortfall. The sizing disparity on the market did not help sell off the quantities received. In mid-December, the European market genuinely collapsed under the combined effect of Brazilian and Peruvian shipments. The accelerated tempo of incoming shipments, at between 250 and 300 containers per week in late November-early December, swelled the market. The transition to 400-480 containers then caused a flood on all European markets, in a context of higher demand, but not in line with the quantities placed on the market. The dip in imports from Brazil was very readily offset by the progressing Peruvian exports. Consequently, sales prices fell apart, price ranges widened and a distinctly downward trend set in. Demand was focused mainly on medium sizes; while Brazil supplied mainly large sizes, and Peru mainly small sizes. This unsuitability of the supply only aggravated the poor sales conditions. At the end of the year, the European market remained stuck in a rut. Import flows from Brazil and Peru far exceeded the demand level, and favoured the formation of large stocks. Numerous batches were sold on commission on the various European markets, with operators attempting to get rid of volumes definitely in excess of the market’s absorption capacities. 2017 got off to a more than gloomy context. Moreover the Peruvian production peak was expected in the first three weeks!

Click "Continue" to continue shopping or "See your basket" to complete the order.