The Mintec price of Chilean grapes increased by 40% to CPL 700/kg in the seven weeks to 30th June, in line with an uptick in seasonal demand.
Chilean grape prices historically surge in October, as demand peaks at the start of the season. This year, the rise is expected to be more profound, with Chilean grape production for the 2019/20 marketing year (MY) estimated to be 5% lower at 840,000 tonnes, compared to the four year average.
Chilean grape production has declined steadily over the last few years due to recurring droughts. To mitigate the impact of droughts, Chilean growers have invested in various techniques and strategies including installing drip irrigation systems, planting drought-resistant varieties and investing in private water reservoirs. However, the coronavirus has negatively impacted the Chilean agricultural financing sector, and as a result the investment in water infrastructure is expected to slow down.
In contrast, Chile is anticipated to export fewer grapes y-o-y to its top importer, the US amidst the coronavirus pandemic. This is expected to provide some bearish sentiment in the market. Additionally, US consumer retails sales for grapes have dropped, mainly due to consumer-perceived concerns over the risks of bagged grapes, which are easier to touch and so are seen as an infection risk.
Despite lower export demand, the Mintec price of Chilean grapes is expected to rise in line with a seasonal trend for the remainder of 2020, with increasing demand at the onset of the harvest.