Factors Affecting 2023/24 US Apple Exports: High Stocks and Low Prices

The US fresh apple industry stands at a crossroads, with multiple events converging that will dramatically alter the condition of exports for the 2023/24 season. The combination of overly high stocks and soft prices will drastically shift from past seasons, and industry participants need to be informed and prepared immediately.

The United States Department of Agriculture (USDA) announced that apple exports from the US surpassed 1 billion pounds (lbs) during the 2023/24 marketing season (August to January), a 47% year-on-year (YoY) increase over the same period last year. However, exports remain below the level established a decade ago. Mexico and India were the most significant destinations in this period, and shipments to India increased 16 times after tariffs were removed.

Figure 1: US Fresh Apple Export Volume 2019-2023

Source: Tridge

In the first half of 2023/24, the US exported 39 million lbs of fresh apples to India, representing 4% of the total export volume. This is the most significant volume exported to India since 2017/18, when it was the second-largest market for fresh apples from the US. India has removed retaliatory duties on US apples, increasing shipments in season 2023/24. The leading destination for US apples, Mexico, showed 2.14% YoY growth in calendar year (CY) 2023, reaching 266,955 metric tons (mt). In the same period, exports to Taiwan soared 45.33% YoY, up to 65,444 mt. Positive results in these markets softened the decline in the Canadian market of 24.89% YoY to 133,618 mt.

Impact of High Inventory Levels on US Apple Industry

As of December 1, 2023, there were 173 million bushels of fresh apples in US storage, indicating a slower movement than the five-year average prior to December, totaling 2,138,376 mt, a 33.6% YoY rise.

A direct result of a bumper crop, the high inventory levels were initially seen as a boon for the industry. However, this abundance has led to an oversupply in the market, exerting significant downward pressure on prices. The situation is further exacerbated by the substantial storage costs of maintaining large stocks, which are eating into the profit margins of growers and exporters, posing a serious threat to their financial sustainability.

Figure 2: Tridge Price Indices and Forecasts

Source: Tridge

While beneficial for consumers, low prices present a challenge for US apple exporters. The domestic market saturation has necessitated a push for increased exports. According to Tridge Price Indices and Forecasts for US fresh apples, prices are also expected to continue the downward trend in Apr-24. However, the global market has its challenges. Competitive pricing from other apple-producing nations, such as Poland and China, means that US exporters must balance price competitiveness and profitability.

Another factor to consider is the currency exchange rate. A strong US dollar makes American exports more expensive for foreign buyers, which could dampen demand. This is particularly relevant in price-sensitive markets where buyers may opt for cheaper alternatives.

The industry is proactive in counteracting these challenges. Marketing efforts are being intensified to showcase the superior quality and diverse variety of US apples. Moreover, there is a concerted push towards exploring new markets, like South Korea, and diversifying export destinations, a move that not only reduces reliance on any single market but also opens up new avenues for growth and profitability.

Since 2018, the US government has been lobbying for South Korea to allow the import of American apples and pears to open up the Korean fruit market to US products such as grapefruits, stone fruits, and blueberries. However, this effort, which aims to capitalize on South Korea's favorable market conditions, is met with intense criticism from the Korean agricultural community. They are concerned about introducing foreign pests, reducing native production, and affecting the broader fruit business.

In conclusion, the US apple export market for the 2023/24 season is influenced by high stocks and low prices, along with a complex interplay of trade policies and market dynamics. Tridge expects an increase in US fresh apple exports, driven by increased supply and favorable prices.