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Cutrale sees bigger Brazil orange crop in 3 yrs

By Roberto Samora ARARAQUARA, Brazil, Oct 19 (Reuters) - Brazil`s orange crop will only start rising again in three years when old trees have been replaced and new groves start producing, said a senior executive at the world`s biggest juice producer and exporter. Future supplies of oranges are a major concern in Brazil, which produces more than half of the world`s frozen concentrated orange juice (FCOJ) and accounts for over 80 percent of exports. "Due to higher prices, people will invest in new groves and replant old orchards...but we don`t think production will rise next year. Perhaps in three years," Jose Cervato, Cutrale`s finance director told Reuters in an interview on Wednesday. Cutrale accounts for about one-third of Brazil`s annual FCOJ exports of 1.3 to 1.4 million tonnes. New York FCOJ futures last week soared to a 16-year high, partly spurred by hurricane damage to orange groves in Florida, United States. Speaking at Cutrale`s headquarters in Araraquara, Cervato said that orange production would rise as a result of higher prices paid to producers. Under new contracts producers will receive more than $5 per 40.8 kg box of oranges, compared with $3 to $3.5 last year, he said, adding that there was also agreement to raise old contract prices. Orange juice processors are also planting groves in new areas, mainly in the south of Sao Paulo state. Sao Paulo produces about 80 percent of Brazilian oranges destined for processing. Its 2006/07 (July/June) crop is officially estimated at 352 million boxes, almost the same as last year. Despite a good flowering, it`s still early to forecast orange output in 2007/08, but it could be the same as this year, Cervato said. "When the harvest is very big, output falls the following year (due to the biennial production cycle). But because this year`s crop wasn`t very large, next year`s could be similar," Cervato said. More than 90 percent of the oranges processed by Cutrale in its five factories come from Sao Paulo state. Cutrale owns 40 orange farms which provide about one-third of its needs. Dryness in the traditional central-northern orange growing area of Sao Paulo combined with increasing disease in old groves is encouraging producers to shift new planting to the southern part of the state. Some 55 percent of Sao Paulo`s orange groves are now in the south where rain is more abundant. "In northern Sao Paulo, you shouldn`t plant orange trees without irrigation," Cervato said, estimating that up to $300 million irrigation investment was needed. An irrigated tree yields about 3.5 boxes of oranges, compared with two boxes by a rain-fed tree. Cervato said that cooler weather in southern Sao Paulo resulting in more bitter oranges wasn`t a problem. China, a fast growing market, prefers juice that is less sweet. Incluir em NEWS Reuters 20/10/2006

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