Health regulators said they will stop imports of orange juice from top grower Brazil if they test positive for an illegal fungicide, sending orange juice futures soaring on Tuesday to an all-time high.
China has become the world’s largest producer of citrus fruit, yet Brazil still grows more oranges and will likely remain the most important exporter for some time, given that Chinese fruit is largely consumed domestically.
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According to the Food and Drug Administration, a U.S. juice producer had detected low levels of carbendazim in orange juice concentrate imported from Brazil, the top grower accounting for more than 10 percent of the U.S. supply.
The pesticide is banned in U.S. citrus but it is used on orange trees in Brazil to fight mold. The FDA said low levels of carbendazim were not dangerous and the agency had no plans for a recall, but it would stop any shipments of orange juice at the border that tested positive for the fungicide.
Orange juice futures jumped almost 11 percent to an all-time high on the news, which was announced by the FDA in a letter to the Juice Products Association on Monday.
Carbendazim is legal in Brazil, where it has been used for more than two decades to fight blossom blight and black spot, a type of mold that grows on orange trees.
Christian Lohbauer, spokesman for CitrusBR, the association that represents Brazil's four main orange juice producers, said Brazilian orange juice is routinely tested for this fungicide, but has never been stopped by U.S. customs over this issue.
"Any shipment (of orange juice) will test positive," he said. "I don't know what is the level that they will decide is the maximum level. Our interest now is that juice keeps entering the United States."
The FDA could not immediately comment on what level of carbendazim would be acceptable, but said any levels below 10 parts per billion were not detectable and thus would be allowed. The agency is testing orange juice shipments from all countries, not just Brazil.
"EPA's scientific analysis concludes that no adverse health effects will occur at the reported levels in orange juice, which are thousands of times below levels where adverse health effects may occur," an EPA spokesman said in an email.
The EPA considers 80 parts per billion to be a health risk. The levels of the fungicide reported two weeks ago by a juice company were below that level, the FDA said. It declined to identify the company.
Brazil’s frozen concentrated orange juice exports for 2011-12 are expected to show a 9% increase at 1.245 million MT, with production volumes increasing by 345,000 MT to 1.44 million MT, according to a U.S. government report.
Fresh orange exports for the season are expected to be similar to the previous one at 1 million boxes despite a lower crop volume forecast of 445 million boxes – a 12% year on year decrease.
Brazil’s orange crop remained largely unaffected by greening disease despite its presence in more than half of the sample blocks tested in a Citriculture Defense Fund survey. Researchers found that out of the trees tested only 3.8% of trees were affected.
Americans purchase a substantial amount of Brazilian juice — about 14 percent of the total exported in 2010, based on value — but Brazil had been pursuing a complaint filed in 2008 with the World Trade Organization over tariffs imposed by the United States, which had accused Brazilian exporters of dumping, or selling at unfairly low prices. In March of this year, the WTO issued its final report, stating that the U.S. method for calculating dumping prices was illegal, a victory for Brazil.
The industry’s best year was 2007, when the value of exports jumped to $2.3 billion, an increase of nearly 35 percent over the previous year, according to Brazil’s Secretariat of Foreign Trade. The value of exports then declined for two consecutive years before recovering some lost ground in 2010, when Brazil exported $1.8 billion in orange juice, up 9.6 percent versus 2009.
Brazilian juice has gained traction in Asia. About 12 percent of Brazil’s frozen concentrate was shipped to Japan in 2010; however, the Japanese drink only one-fourth of that. Like Belgium and Holland in Europe, Japan, along with Australia, has bulk terminals and is a key trans-shipment point to other Asian markets.
The pesticide is banned in U.S. citrus but it is used on orange trees in Brazil to fight mold. The FDA said low levels of carbendazim were not dangerous and the agency had no plans for a recall, but it would stop any shipments of orange juice at the border that tested positive for the fungicide.
Orange juice futures jumped almost 11 percent to an all-time high on the news, which was announced by the FDA in a letter to the Juice Products Association on Monday.
Carbendazim is legal in Brazil, where it has been used for more than two decades to fight blossom blight and black spot, a type of mold that grows on orange trees.
Christian Lohbauer, spokesman for CitrusBR, the association that represents Brazil's four main orange juice producers, said Brazilian orange juice is routinely tested for this fungicide, but has never been stopped by U.S. customs over this issue.
"Any shipment (of orange juice) will test positive," he said. "I don't know what is the level that they will decide is the maximum level. Our interest now is that juice keeps entering the United States."
The FDA could not immediately comment on what level of carbendazim would be acceptable, but said any levels below 10 parts per billion were not detectable and thus would be allowed. The agency is testing orange juice shipments from all countries, not just Brazil.
"EPA's scientific analysis concludes that no adverse health effects will occur at the reported levels in orange juice, which are thousands of times below levels where adverse health effects may occur," an EPA spokesman said in an email.
The EPA considers 80 parts per billion to be a health risk. The levels of the fungicide reported two weeks ago by a juice company were below that level, the FDA said. It declined to identify the company.
Brazil’s frozen concentrated orange juice exports for 2011-12 are expected to show a 9% increase at 1.245 million MT, with production volumes increasing by 345,000 MT to 1.44 million MT, according to a U.S. government report.
Fresh orange exports for the season are expected to be similar to the previous one at 1 million boxes despite a lower crop volume forecast of 445 million boxes – a 12% year on year decrease.
Brazil’s orange crop remained largely unaffected by greening disease despite its presence in more than half of the sample blocks tested in a Citriculture Defense Fund survey. Researchers found that out of the trees tested only 3.8% of trees were affected.
Americans purchase a substantial amount of Brazilian juice — about 14 percent of the total exported in 2010, based on value — but Brazil had been pursuing a complaint filed in 2008 with the World Trade Organization over tariffs imposed by the United States, which had accused Brazilian exporters of dumping, or selling at unfairly low prices. In March of this year, the WTO issued its final report, stating that the U.S. method for calculating dumping prices was illegal, a victory for Brazil.
The industry’s best year was 2007, when the value of exports jumped to $2.3 billion, an increase of nearly 35 percent over the previous year, according to Brazil’s Secretariat of Foreign Trade. The value of exports then declined for two consecutive years before recovering some lost ground in 2010, when Brazil exported $1.8 billion in orange juice, up 9.6 percent versus 2009.
Brazilian juice has gained traction in Asia. About 12 percent of Brazil’s frozen concentrate was shipped to Japan in 2010; however, the Japanese drink only one-fourth of that. Like Belgium and Holland in Europe, Japan, along with Australia, has bulk terminals and is a key trans-shipment point to other Asian markets.
China has become the world’s largest producer of citrus fruit, yet Brazil still grows more oranges and will likely remain the most important exporter for some time, given that Chinese fruit is largely consumed domestically.
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