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South Africa rejoices but stronger Rand affects grape export income

South Africa rejoices but stronger Rand affects grape export income

CAPE TOWN: The South African Rand is trading at its strongest levels in two and a half years in reaction to the news that Jacob Zuma has finally relinquished his position as state president.
 To the export industry this is collateral damage to the long-awaited positive political developments, particularly with regards to the Rand-US Dollar exchange rate, around R11.70 to the Dollar this morning.
The income on grape exports will be dramatically affected, particularly in dollar markets like the Far East, Middle East and Canada,” says a grape trader who asked not to be named. “We’ve seen a 15 to 20% strengthening since the election of Cyril Ramaphosa as ANC president. The challenges for us this year are the exchange rate and the shipping delays.”
White grapes from the Hex River are still on their way to Europe, where volumes are starting to be supplemented by Indian grapes. From next week traders expect to start feeling the competition from India which was quick out of the starting blocks this season. “South Africa will have a less dominant position on the European market, but clients saw it coming,” the trader continues. “The next four weeks will be critical, particularly for Western Cape grape growers who started in January. The coming month will show whether the market remains stable. There was some increase in prices over the past three weeks, but we’ll have to see how the market reacts to the increased volumes and at which levels prices stabilise.”
Prices for white grapes are currently higher than for red and black, which isn’t always the case, at around €1 or €1.50 per carton more, according to market reports. It reflects the limited supply of white grapes; red and black are more readily available. However, sales in Europe aren’t particularly brisk, which is of concern to South African traders who worry that supermarkets might start running promotions which will push down price points.
Those in the grape industry emphasise that, even with a decrease in volumes, there’s no question of not being able to fulfil programme commitments. Tonnage per hectare has been affected by smaller bunch weights, but the newest SATI estimate is between 56.2 million and 59.3 million 4.5kg cartons which still compares favourably with the industry’s five year average, despite the drought.
The South African grape season will probably end earlier, about ten or fourteen days sooner. The South African Table Grape Industry reported ten days ago: “Close to normal export volumes will continue for at least the next four weeks. However, a shorter tail-end of the harvest is expected due to the cut in water allocations and possible further effect of the ongoing drought.”