China will produce less apple juice concentrate in 2018/19 due to a steep decline in apple supply caused by freezes during spring. As a result, the U.S. may be looking at a swing in AJC origins like we saw between 2013/14 and 2014/15, when China went from supplying nearly 80 percent of U.S. AJC imports to less than half. As with this season, China’s apples in 2013 and 2014 were hit with challenging growing conditions that reduced production. In the 2013/14 marketing year, when processors produced just 503,000 MT of AJC, down by a third from the previous season, AJC stocks could cover the deficit and allow China still to be the dominant supplier to the U.S. In 2014/15, AJC production fell to 400,000 MT, and this season coincided with strong production out of Poland. China accounted for 45 percent of U.S. AJC imports that season, while Poland and other EU origins supplied almost 15 percent, compared to their more usual 3 to 4 percent.
With this season’s rebound in supply, European AJC suppliers want to regain the stronger profile in the U.S. market they earned in 2014/15. For three seasons following that marketing year, the EU did manage to keep AJC exports to the U.S. higher than their historical average, but last year’s extensive crop loss minimized trade opportunities.
How will these dynamics play out in the U.S. market this year? Prices will remain elevated—European AJC can’t fully replace Chinese AJC—but a few factors may help keep Chinese AJC below $8.00 per gallon. In 2013, Chinese AJC averaged $7.95 per gallon, but average pricing fell a bit to $7.75 per gallon in 2014 despite even lower production, reflecting some discounting in the face of competition from Poland. This year, China will also face pressure from white grape juice out of Argentina—plus the wildcard of possible U.S. tariffs on Chinese AJC and pear juice. So far this season, Chinese AJC has averaged over $7.50 per gallon, a dollar higher than AJC out of Europe.
Chinese AJC production
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