FRUIT AND TREE NUTS
September 23, 1996
Approved by the World Agricultural Outlook Board
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the Economic Research Service, U.S. Department of Agriculture, Washington, DC
20005-4788. FTS-277. Please note that this release contains only the text of
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Contents

Summary
Fruit Price Outlook
Noncitrus Prices Strong in 1996
Noncitrus Fruit Outlook
Large California Grape Crop in 1996
Pear Production Down in 1996
U.S. Stonefruit Output Down Slightly in 1996
Berry Outlook
More Strawberries Expected in 1996
Blueberry Production Plummets in 1996
Tropical Fruit Outlook
California's Kiwifruit Production To Expand
Banana Imports and Domestic Production Down
Imports Continue To Boost Tropical Fruit Supplies
Citrus Fruit Outlook
Record Large Florida Early and Midseason Orange Crop in 1995/96
Strong Prices for Florida Oranges and California Valencias
Strong Demand Buoys Orange Juice Prices
Record Exports Raise Fresh Grapefruit Prices
Tree Nut Outlook
Almond, Walnut Harvests Increase, Other Nut Crops Average

Situation Coordinator
Agnes Perez
Voice (202) 501-6779 Fax (202) 501-6782

Principal Contributors
Agnes Perez (202) 501-6779
Linda Calvin (202) 501-8449
Doyle Johnson (202) 501-7159

Editor
Diane Decker

Graphics and Table Design & Layout
Wynnice P. Napper and Ann E. Pearl

Summary

Grower prices for fruits were higher than a year ago during the first 7 months
of 1996, due largely to smaller crops of apples and pears during the fall of
1995, and strong domestic and export demand. Reduced production of grapefruit,
Florida Valencia oranges, Florida temples, and tangelos in 1995/96 also helped
bolster prices for the season. Almond prices were also up sharply, reflecting
reduced 1995 production. Expected smaller crops of peaches, cherries, and
blueberries this summer and another small harvest of pears this fall will
continue to support grower prices during the second half of 1996. Grape prices
this fall and through early 1997 are expected to remain strong, reflecting
nearly the same production as last year, a generally good quality crop in
California, and continued strong demand. All-apple grower prices during
1996/97 will likely average the same as last year's strong level, reflecting a
relatively unchanged 1996 U.S. apple crop and continued tight supplies of
processing apples. Strawberry prices this summer and almond prices in 1996/97
may slip given the forecast of a larger new crop.

Higher retail prices for apples, grapefruit, peaches, pears, bananas, and
grapes raised the consumer price index for fresh fruits during January-June
1996 to 229, up 7 percent from a year earlier. Light supplies of summer
noncitrus fruits will likely keep the index strong this summer while increased
production of western crop apples and California table grapes could weaken the
index this fall. A potentially smaller pear crop, however, may offset some of
the downward pressure on fresh fruit prices this fall.

U.S. apple production in 1996 is forecast at 10.7 billion pounds, about the
same as last year. Cold weather and excessive moisture delayed blooms and
reduced crop potential in many apple-growing States. Smaller crops in many
central and eastern States will be offset by expected larger crops in
Washington and California. Apple production is expected to be up 15 percent in
the western States, but down 29 percent in the central States, and down 15
percent in the eastern States. The larger western crop and the expected
smaller fruit size of the Washington crop are likely to put downward pressure
on fresh-market apple prices. However, continued tight supplies of processing
apples and apple juice stocks will likely help to maintain a relatively strong
average all-apple price.

California grape production is expected to increase 3 percent above a year ago
in 1996, with wine varieties up 1 percent, table varieties virtually unchanged,
and raisin varieties up 6 percent. Low chilling hours this winter,
particularly in the Coachella Valley, diminished fruit bud formation and
reduced yields. Barring any adverse weather, however, other California grape-production areas are expecting typical yields and a good quality crop. USDA
forecasts this year's total U.S. grape output to be only fractionally above
last year, likely keeping prices strong as last year.

USDA's August forecast puts the 1996 U.S. pear crop 17 percent smaller than a
year ago, with production of Bartlett pears on the Pacific Coast down 18
percent and total U.S. production of other varieties down 17 percent. Sharply
smaller crops in Washington and Oregon will likely offset the expected 9-percent gain in California's Bartlett output.

California peach production in 1996 is forecast up 19 percent from a year ago,
but sharply reduced crops in many States, especially Georgia and South
Carolina, will lower the U.S. output an estimated 13 percent. Total freestone
peach production, mainly for fresh use, is forecast down 31 percent, while
California clingstones, mostly for canning, are expected up 16 percent.

The 1996 U.S. sweet cherry crop was down 19 percent from a year earlier,
reflecting reduced production in Washington, Oregon, Michigan, Pennsylvania,
and New York. Low chilling hours during the winter limited California's
production potential. California's production was up 26 percent from 1995's
weather-reduced output, but 52 percent below 1994's bumper crop. California
and Washington grow mostly Bing cherries and other sweet varieties for the
fresh market. Fresh sweet cherry prices averaged higher than a year ago, due
partly to a 33-percent drop in Washington, the largest domestic source. This
year's U.S. tart cherry production dropped 35 percent from 1995, with smaller
crops in all producing States except Utah. Production declined 42 percent in
Michigan where nearly three-fourths of U.S. tart cherries are grown. Low
stocks of frozen tart cherries and a small crop helped to boost prices.

Large gains in California and New Jersey strawberry production are compensating
for smaller outputs in Florida, Washington, Oregon, and Michigan. USDA
forecasts 1996 commercial strawberry production in the six major producing
States to be up 16 percent from a year ago. Increased supplies, including
imports, are forcing fresh prices down. More fresh supplies and lower prices
will likely encourage fresh strawberry consumption to increase from 3.76 pounds
per person in 1995.

Industry sources expect blueberry supplies to be lighter this summer, pushing
grower prices up. Cultivated blueberry production will likely decrease in
Michigan and other producing States except New Jersey, Washington, and Oregon.
Fresh use and processing use of the new blueberry crop will be down this
summer.

Preliminary indications from the California Kiwifruit Commission suggest a
slightly larger kiwifruit crop in 1996 that could weaken prices in 1997.
California's kiwifruit production decreased for the third straight year in
1995. Increased imports made up for the decline, maintaining U.S. supplies and
holding prices down. Consumption rose from 0.503 pounds per person in 1994 to
0.514 pounds in 1995.

Hawaii's banana crop in 1996 decreased for the second straight year due to
adverse weather. New acreage is being planted in stages and production is
anticipated to increase next year. U.S. fresh banana imports in 1995 were down
1 percent from year-earlier levels, lowering domestic supplies and consumption.
Imports during January-May 1996 were virtually unchanged from last year, and if
they remain unchanged for the rest of 1996, higher prices could be expected.
Limited supplies of stone fruit and pears will also help support banana prices
during the remainder of 1996.

Imports will likely boost U.S. mango and papaya supplies in 1996. Mango and
papaya imports, mainly from Mexico, increased in 1995, pushing U.S. supplies
above a year earlier and raising consumption to a new record. Imports and
consumption were lower for fresh and canned pineapple, but higher for pineapple
juice.

The 1995/96 U.S. orange crop was up about 2 percent from 1994/95, and the
second largest on record. A large California orange crop led to an abundant
supply of fresh-market oranges. Although the California Valencia crop was up 8
percent, good fruit quality and strong demand raised f.o.b prices. Meanwhile,
higher juice yields boosted orange juice supplies despite a slightly smaller
Florida orange crop. Orange juice prices were also above last year's because of
reduced carryin stocks and strong domestic demand.

The 1995/96 U.S. grapefruit crop was down 5 percent from a year earlier.
Florida's crop was 6 percent smaller, accounting for 80 percent of U.S.
grapefruit production. California's crop was up 2 percent. Florida grapefruit
destined for the processing sector declined about 12 percent. Total Florida
fresh shipments increased 3 percent in 1995/96, but the growth was in the
export market. Florida domestic f.o.b. prices increased for both fresh white
and red grapefruit.

Total tree nut production in the United States will likely be up in 1996,
reflecting expected larger almond and walnut crops in California. Almond
production is forecast up 43 percent from 1995's sharply reduced output, likely
forcing prices down in 1996/97 and boosting domestic and export demand.
Despite increased production, walnut supplies are expected to remain unchanged
due to slightly lower beginning stocks. Therefore, walnut prices in 1996/97
are expected to remain good. Pistachio and pecan crops are expected to be
about average size, although smaller than in 1995. Hazelnut production is
expected to be much lower this year due to alternate-bearing characteristics of
this nut. Hawaii's macadamia production will likely continue to trend upward
due to the increasing number of bearing trees.

Fruit Price Outlook

Noncitrus Prices Strong in 1996

Smaller crops of many noncitrus fruits this summer point to strong grower and
retail prices during the second half of 1996. Production of apples and grapes
will be nearly unchanged from last year, and along with a smaller pear harvest,
1996/97 prices are likely to remain strong. Good quality and continued strong
domestic demand will buoy fresh Valencia orange prices.

Smaller Crops Bring Higher Prices

The grower price index for fruit and nuts (1990-92=100) averaged higher than a
year ago during the first 7 months of 1996 (table 1). Contributing to the
strong price index were higher grower prices of apples, grapes, peaches, pears,
grapefruit, oranges, and almonds. Smaller crops of apples and pears during the
fall of 1995 supported their respective prices. The 1995/96 season-average
grower price for apples, at 16.7 cents a pound, was up 29 percent from 1994/95,
and the season-average price for pears was 13.4 cents, up 20 percent.

Production of grapefruit, Florida Valencia oranges, Florida temples, tangelos,
and almonds also declined during the 1995/96 marketing season. While orange
juice production was up from a year earlier, lower frozen concentrated orange
juice (FCOJ) inventories and strong domestic demand kept processing orange
prices higher than a year ago. From January to June 1996, preliminary U.S. on-tree equivalent prices for processing oranges averaged $4.87 a box, compared to
$3.32 a year earlier. At the same time, the U.S. all-orange on-tree equivalent
price rose from $4.27 a box to $5.20.

The grower price index for fruit and nuts will likely continue strong through
the second half of 1996 and into early 1997. The expected smaller peach crop
this summer and the forecast of another small pear harvest this fall will
continue to support grower prices. Grape prices are likely to remain strong
through early 1997 as the 1996 output will be nearly the same as last year,
domestic and export demand should continue strong, and the grapes, particularly
in California, will be of good quality. All-apple grower prices during the
1996/97 marketing season will likely match last year's strong level,
reflecting a relatively unchanged 1996 U.S. apple crop and continued tight
supplies of processing apples brought by smaller crop forecasts for central and
eastern States. Although not included in the calculation of the grower price
index, expected smaller crops of sweet and tart cherries and blueberries will
continue to support grower prices.

From January to June 1996, U.S. fresh orange on-tree equivalent prices averaged
about 9 percent lower than in January-June 1995, but the average price in July
matched last year's level. The larger 1995/96 California navel crop, which
had quality problems, was partly the reason for lower fresh orange prices
during the first half of 1996. Navel oranges dominate the fresh orange market
from fall through early spring, while Valencia oranges are most available
during the spring and summer months. The good quality of the 1995/96
California Valencia crop will likely boost domestic demand. Hence, in spite
of the expected larger Valencia crop, strong demand and the expected high
prices of many noncitrus fruits will likely help support fresh orange prices
this summer. Increased supplies of summer strawberries and the forecast of a
larger 1996 almond crop will likely force their grower prices down, offsetting
some of the strength in the fruit price index during the second half of 1996.

Consumers Pay More For Fruits

The Consumer Price Index for fresh fruits (1982-84=100) remained above a year
ago from January to July 1996, with higher retail prices for apples,
grapefruit, peaches, pears, bananas, and grapes. Prices of Red Delicious
apples rose seasonally during the first 7 months of 1996 as the 1995/96
marketing season winded down and inventories remained tight. The CPI for fresh
fruits will likely remain strong this summer as fruit supplies become limited
by reduced production of many summer noncitrus fruits. The fresh fruit index
will likely weaken in the fall, reflecting increased apple supplies from the
western States, more smaller-sized apples, and the expected large California
table grape crop. However, a potentially smaller pear crop this fall will
likely offset some of the downward pressure on fresh fruit prices.

The Consumer Price Index for fresh fruit (1982-84=100) averaged 9 percent
higher in 1995 than in 1994 (table 2). Contributing to the increase were
higher retail prices for fresh oranges, Red Delicious apples, grapefruit,
lemons, bananas, peaches, grapes, and strawberries. Retail prices for navel
oranges averaged 62.5 cents a pound in 1995, up from 54.5 cents in 1994, and
Valencia oranges averaged 64.8 cents a pound, up from 58.7 cents. Retail
prices for Red Delicious apples were 3.2 cents a pound higher in 1995 than in
1994.

The Consumer Price Index for processed fruit (1982-84=100) remained above a
year ago from February 1995 through June 1996, mainly reflecting higher prices
of orange juice and apple juice. The Consumer Price Index for frozen fruit and
juice averaged 136.7 in 1995, up from 132.2 in 1994. From January through June
1996, the CPI for frozen fruit and juice advanced to 142.6. Although U.S.
orange juice production is forecast up in 1995/96, decreased supplies due to
low carryin stocks of frozen concentrated orange juice (FCOJ) and higher apple
juice prices are contributing to stronger orange juice prices compared to a
year ago. Retail prices for FCOJ averaged 2 percent higher than a year ago
during the first half of 1996.

Noncitrus Fruit Outlook

U.S. 1996 Apple Crop the Same as Last Year

Production gains in Washington and California will offset apple output declines
in central and eastern States this fall. Apple prices will likely continue
strong.

USDA's August forecast of the 1996 U.S. apple crop was 10.7 billion pounds,
virtually unchanged from last year (table 3). Expected larger crops in
Washington, California, and other western States will make up for reduced
production in many central and eastern States this fall. In general, cold
spring weather and excessive moisture may be blamed for delaying blooms and
affecting post-bloom development in many apple-producing States. In the
central region, winter freezes, heavy rains, hail, and lack of bees contributed
to poor pollination and spotty fruit set. In the eastern States, growers also
faced problems with poor pollination and some disease problems resulting from
excessive moisture. Production in the western States is forecast up 15 percent
from a year ago, while production in the central and eastern States likely will
be down 29 and 15 percent, respectively.

Although Washington's 1996 apple crop is forecast to recover from last year's
weather-reduced output, outlook for a bumper crop this year will likely be
tempered by generally smaller-sized fruits. Production in Washington this
year--forecast as the second highest on record--is 5.6 billion pounds, up 12
percent from 1995, but 4 percent below the 1994 record. Apple orchards in
California were subject to excessive heat in July which may affect the size of
early maturing varieties, but quality, otherwise, is reported excellent. The
California apple crop is forecast at 950 million pounds, 12 percent larger than
last year. Poor pollination caused by a cool, wet spring in Michigan will
likely result in a 32-percent smaller crop, at 825 million pounds. Production
in New York is forecast 5 percent smaller, and output is likely to decline 20
percent in both Pennsylvania and Virginia.

Tight Apple Supplies To Support Prices

Apple stocks remain below a year earlier, following a 7-percent smaller fall
harvest in 1995. According to the International Apple Institute, U.S. apple
stocks on July 1, 1996, were 8 percent below a year earlier, but 13 percent
higher than the 5-year (1991-1995) average for that month. Total stocks
intended for the fresh market and for processing were 5 percent and 20 percent
less than the year earlier, respectively. Season-to-date apple shipments as of
June 1996 were 26 percent less than the same period in 1995, and were 13
percent below the 5-year average. Produce movement to the fresh market and to
processors was down 24 percent and 32 percent from a year ago, respectively.
This slower movement helped support apple prices, particularly during the first
half of 1996.

Washington accounted for 90 percent of all apple stocks on July 1, 1996.
Stocks were down 8 percent in Washington and 56 percent in California,
reflecting smaller crops in these two States last year. Stocks in the
Southeast on July 1, mainly from Virginia and West Virginia, were down 54
percent from a year ago. Stocks in the Northeast, mainly from New York and
Maine, were up 24 percent. On a varietal basis, U.S. apple stocks on July 1,
1996, consisted mostly of Red Delicious (67 percent), Golden Delicious (16
percent), and Granny Smith (9 percent) varieties.

Tight supplies and strong demand contributed to higher grower prices during the
1995/96 marketing season, raising the crop's value to $1.76 billion, up 20
percent from the prior season. The 1995/96 season-average all-apple grower
price rose from 12.9 cents a pound in 1994/95 to 16.7 cents, the highest since
1990/91's 17.9 cents. Grower prices for fresh-market apples averaged 23.8
cents a pound, compared to 18.6 cents in 1994/95, as some fresh-market apples
were diverted to the processing sector. Tight supplies of processing apples
drove processing apple prices up 39 percent from 1994/95 to 8 cents a pound in
1995/96. The larger 1996 Washington crop and smaller fruit size will likely
put some downward pressure on fresh-market apple grower prices during the
1996/97 marketing season. Meanwhile, smaller apple crop forecasts in the
central and eastern States along with the recent drawdown of domestic and
international apple juice stocks will likely keep processing apple prices

Fruit and Nut Outlook 2/5, 9/23/96