With harvesting of the 2014/15 Peruvian table grape crop getting underway in Piura this week, demand from China is shaping up well, according to Juan Carlos Rios, director of Shanghai-based Intercorp Peru.
Rios runs the Chinese subsidiary of the financial and retail conglomerate Intercorp Peru, which provides both banking services for Peruvian grower-marketers as well as commercial solutions for them in the marketplace. Last season, the company handled around 300 container loads of China’s Peruvian grape imports, which equated to roughly 10 per cent of the total volume imported. This year, it plans to ramp up volumes to 500 container loads.
“The [table grape] season is just starting with harvesting in Piura this week, and shipping will commence next week, ” Rios told Asiafruit. “At this stage, things are looking quite good for Peru in the market here in China. The Chinese importers are willing to take Peruvian grapes because they can make money on them, which is not the case for US grapes right now.”
Rios said current market prices of US Red Globes in China are marginal. “Basically, the cost price of US Red Globes in China amounts to around RMB220 per 21lb (9.52kg) carton – anyone selling below that price might be losing money,” he said. “But the US grapes we see in the market are selling in the RMB180-240 per carton range. Of course, there are premium brands are that are fetching over RMB250 per carton, but the majority would be selling at a loss to the grower and to the buyer.”
One of the key factors impacting the profitability of US grapes in China, particularly during the earlier part of the season for the Red Globe variety, is competition from low-priced domestically grown grapes, according to Rios. Chinese grapes have been selling within a range of just RMB40-70 per 6kg carton.
The outlook for Peruvian grapes is comparatively positive, he added. “There are good expectations from the Chinese buyers, and we’re expecting prices in the range of RMB190-220 per carton,” said Rios. “Many suppliers are making deals on fixed price arrangements or minimum guaranteed price.”
Fruit from Piura, the early growing region in Peru’s north, is expected to hit the market around week 46/47, while large volumes from the Ica region further south will arrive in time for Chinese New Year. Initial forecasts point to a 20 per cent increase in production across both regions, with China again expected to absorb around 20-30 per cent of total export volumes.
The majority of the Red Globe from Piura is darker in colour, yet while the Chinese market has a strong preference for lighter coloured (pink) fruit, Rios said it was still possible to secure good returns if the quality is up to the required standard.
“The quality and sizing are looking strong out of Piura, and there will be plenty of XL and Jumbo sized fruit,” he said. “Even if the colour is not perfect it can still sell well, but there is absolutely no room for Cat 2 or poor quality fruit.”
Indeed, Rios warned Peruvian suppliers against over-optimism. “Yes, the importers have good expectations for Peruvian grapes, but the market will punish anyone who has poor quality.”
Another factor that is likely to influence the Peruvian grape deal in China this year is Russia’s ban on imports from the US and Europe, Rios noted. The situation has created more demand in Russia for Peruvian grapes, and Chinese buyers with sourcing arrangements in Peru are keen to capitalise, he said. “We see Chinese importers ordering Peruvian grapes to sell to customers in Russia, so this is likely to bring a new dynamic to the market this year.”