Bitterly Low Temperatures Drive Sharp Price Increase for Lemons

Spend Matters welcomes another guest post from Nick Smith of Mintec.

Lemon prices have nearly doubled since the start of May and are now at a five-year high. The normal price rise seen as demand rises into summer has been strengthened by recent frosts in the major citrus producing countries of Chile and Argentina, which have damaged the quality of the lemons and reduced global supply.

lemons

Argentina is the fourth largest producer in the World (1.3m tons) and a major exporter with 265,000 tons per year. While Argentina does not export significant quantities directly to the US, any problems with supply here will have a strong impact on the global availability of lemons. The recent frosts in Tucuman, the largest lemon producing region in the country, have had a significant effect on production. Lemon output is expected to be cut by up to 20% due to the worst frost to hit the area in over two decades. The trees were exposed to icy temperatures for several days, with temperatures dipping as low as -9 °C and as a result up to 1 million trees are thought to have been damaged. The impact of the frosts was compounded by the dry conditions experienced before the winter, which also caused damage and led to a reduced number of lemons of a high enough quality for export. There are also fears that next year’s harvest may be affected by the drought and frost damage.

The US is a significant producer of lemons itself, and production is expected to rise this year to 0.79m tons, up slightly from 0.77m tons in 2012. California and Arizona are the primary producers of lemons in US, with California being by far the largest lemon producing state. This year’s harvest is coming to an end after starting in August. Prices tend to increase over the summer as demand reaches a peak and imports rise. Imports are expected to reach 0.48m tons in 2013.

Lemon prices tend to reach a seasonal peak in October or November,so prices are likely to drop back in the coming months as demand falls back. However, the longer term influences of the frost damage to lemon trees in Argentina and Chile may have an impact on the future global supply.

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