World Banana Markets Firmer

NEW YORK - Sep 12/07 - SNS -- World banana markets have firmed in recent months, says Chiquita Brands International, Inc. in an intraquarter update.

North American banana pricing was up 5% year-over-year, reflecting increases in base contract prices, higher year-on-year surcharges linked to a third-party fuel price index, and higher market pricing on non-contract volumes. Banana volume sold in the region rose 2%, as a result of distribution gains.

Banana prices in the company's core European markets were up 10% year-on-year on a local currency basis (up 17% on a U.S. dollar basis), reflecting favorable comparisons to the year-ago quarter when excessive heat in Europe depressed demand for bananas and the market had excess supply. Volume sold in the core European markets was steady year-over-year.

In Asia Pacific and the Middle East, pricing rose 12% year-on-year on a U.S. dollar basis, primarily as a result of significant improvement in local pricing in Japan, partially offset by unfavorable dollar-yen exchange rates. Volume in this region fell by 4% year-over-year, primarily related to continuing supply constraints in the Philippines, which resulted in lower yields of premium-quality fruit.

In the company's trading markets, which consist primarily of European and Mediterranean countries that do not belong to the European Union, pricing rose 43% year-over-year, while the company's volume in this region declined 72%, reflecting favorable comparisons to the year-ago quarter when the market was significantly oversupplied.

In late August, Hurricane Dean damaged important European sources of bananas in the Caribbean, including Martinique, Guadeloupe, St. Lucia, Dominica and Jamaica. The company does not source from these areas; however, the banana industry overall has lost an estimated 300,000 to 400,000 boxes per week of normal supply, or approximately 6 to 8% of the five million boxes of bananas shipped weekly to meet consumer demand in the European Union. This shortfall, and the corresponding favorable pricing environment, is likely to affect the European market for six to nine months, or longer, depending on the extent of the damage.

In early September, Hurricane Felix made landfall in Central America. The company believes that damage to Chiquita's sources of supply has been minimal.