The Chinese yuan/US dollar exchange rate is worrying China-based produce importers as they gear up for their biggest sales period of the year.
Last month the yuan plunged to an eight-year low overnight, falling to 6.8729 against the greenback, and causing some banks to slash their exchange rate forecasts.
The weaker yuan makes foreign goods more expensive on the Chinese market – and exporters and importers are currently footing the bill.
But, going forward, some analysts anticipate the yuan will continue to weaken as the US dollar strengthens on the back of rising interest rates, leaving Chinese importers little option but to pass higher produce costs onto the end consumer, which in turn could stifle demand.
Not an ideal scenario as Chinese New Year 2017 falls on 28 January - earlier than usual, compressing produce sales into a much narrower window.
“The most critical element [affecting demand] going forward is the exchange rate, and secondly a more cautious and concerned consumer,” Ignacio Smith, T&G Global’s general manager, China, told Fruitnet.
General manager of importer Berda Fruit, Xufei Jiang, agreed: “The exchange rate may affect demand and sales of imported fruit ahead of Chinese New Year as the cost will increase.'
Chinese consumers tend to contemplate Chinese New Year preparations only after 1 January, Kurt Huang of importer Fruitease explained, and often return home to families ten days before the festival date. This leaves a much shorter time-frame in which to sell fruits for consumption and gifts for the festive period.This could put some supply countries, whose main crops won’t arrive in time, at a disadvantage.
“An earlier Chinese New Year means a shorter pre-Chinese New Year market,” Huang told Fruitnet. “It doesn’t mean the sales will be less, but the sales will be more concentrated. If the fruit can’t be sold before Chinese New Year, or arrives after it, it will face a very difficult market.”
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