The biggest test for the 2008-09 South African grape season will be achieving strong producer earnings, leading exporter Capespan has claimed.
The company said that while it is confident of a “first-rate” South African table-grape production season, tough times lie ahead in the markets.
Capespan product manager Erik Stroebel confirmed that the market globally appears to be well supplied as South Africa gears up to start its campaign. He said: “The real challenge this season will be favourable producer returns in the face of production costs that are almost 35 per cent more than in 2008. On the demand side, there is uncertainty. With the global financial crisis hanging over everyone’s head, will the market absorb the strong table-grape supply at higher sales prices to make up for increased production costs?
“There is uncertainty whether brisk sales at top prices will materialise and if so, whether the momentum will continue when substantial South African volumes arrive in the market post-Christmas.”
South Africa could look to continental Europe as its “saving grace”, Stroebel added, given that the UK and US appear to be hardest hit financially. But he also warned: “Demand might be lower than we want it to be, putting downward pressure on market prices.”
The weakness of the rand against the US dollar and other major currencies will make trade to Russia, the Far and Middle East more attractive as these are dollar markets, but senders must be careful not to oversupply and put prices under pressure.
Stroebel said: “The market is certainly going to be demand-driven, where realistic prices will keep sales rates up. Programmed business, rather than trading business, could be the deciding factor in ensuring strong grape sales at good prices.”
