Crop Updates - Tomato - Q2 2022

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Highlights:

  • The increased yield from global crops in 2021 has not met the rising demands.
  • Stocks of diced and paste depleted globally.
  • Strong demand from industrial and retailers.
  • High possibility of deficits before the new crop, possibilities of negatives stocks.
  • Decreased water availability for crop in California, Chile and Spain.
  • Alternative profitable crops such as wheat and cotton
    compete for farming land.
  • Large cost increases for processors and farmers, almost all claiming skyrocketing costs.
  • Price increments expected for paste, diced, and powders in crop 2022. Price changes indexed to natural gas prices.

According to the World Processing Tomato Congress (WPTC) information released in May 2022, the outlook for global processing for 2022 season stands at 39.7 million MT of fruit. The overall consumption of tomato paste in 2021 increased by 1.75%, and is expected to increase further in 2022. These figures however represent the intention of processors than an actual forecast, due to uncertainties about the actual volumes which will be produced, particularly in China, California and Europe.

A carry-forward deficit in tomato paste existed in 2019, and has increased year-on-year. The deficit in 2022 is expected to account for 5.5 million MT globally.

SPAIN

The current crop estimate for Spain is 2.2 million MT of fruit vs 3.2 million MT from crop 2021, indicating a decrease of 31%. In the Extremadura region, if sufficient water was to be available for an additional 3,500 HA, the output could potentially increase to a maximum of 2.55 million MT. The lack of water in Extremadura and Andalucia regions remains a challenge for this year, paving the path for better market prices for alternative crops such as corn, or cotton.

Farming costs have risen significantly due to the increase in costs of fertilizers, diesel, and phytosanitary & irrigation tape. The Initial contracting surface in the Extremadura region decreased 23% vs crop 2021 and for Andalusia is a decrease of 63% vs crop 2021.

PORTUGAL

The contracted surface in Portugal decreased by 8% vs crop 2021. Though rainfall is expected in week 10, the challenging water requirements will not be met, hence the forecast remains at ~1.45 million MT.

CHINA

Currently, the forecast is for 5.8 million MT of tomatoes to be produced through 51,333 HA of surface area. The government-backed incentives for oil seed and cereal producing crops compete for surface areas. Strong competition from other commercial crops such as cotton, corn, sunflower and soja bean from Xinjiang, and Inner Mongolia, prevails. Towards the end of the planting season in May, more accurate information on the utilization of the surface area by farmers will be available. Labor shortages remain in Inner Mongolia across all farms, while the yield is expected to rise.

CHILE

The Chilean crops planted for the season account for 10,500 HA, showing a decline of 40%, thus affecting the pricing of tomato paste from the rest of the world. Harvesting of the tomato crops began in January and continued till the end of April 2022. Severe droughts in Chile also appear to be a considerable challenge.

USA

Similar to some previously indicated countries, the Californian crops from the USA face many challenges, pushing farmers to opt for alternative and less risky crops. An approximate 11 million MT of produce is expected. Factors such as, increasing diesel costs, and decreasing water availability appear to carry a large impact and the planning season is currently ongoing.