Orange-juice futures surged to the highest in more than nine months on speculation that Florida’s crop, ravaged by Asian bugs, will continue to shrink.
On ICE Futures US in New York, orange juice for January delivery rose 1.5 per cent to close at $1.394 a pound after reaching $1.45, the highest for a most-active contract since 26 January. Aggregate trading was 88 per cent above the 100-day average, according to data compiled by Bloomberg.
On Tuesday, the US Department of Agriculture will cut its estimate for Florida’s output of the fruit by 0.4 per cent to 79.7 million boxes, extending a plunge to the lowest since 1964, a Bloomberg survey of analysts showed. Citrus greening, spread by the Asian citrus psyllid bug, has caused fruit to shrivel and drop from trees in the state for the past decade.
“The market is scrambling to find a new equilibrium price to reflect what’s happening on the ground,” Joe Nikruto, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “You may see speculators entering this market in anticipation that prices are going to go much higher.”
Futures have soared 35 per cent from a three-year low of $1.0345 a pound on 29 September as investors weighed slowed demand against declining output. Brazil is the world’s top orange-juice producer, followed by Florida.
There’s no solution the citrus disease, which has caused billions of dollars in losses across Florida since 2005. By some estimates, “the industry needs to put more than 20 million trees in the ground over the next 10 years to support existing infrastructure and get production back to where it was” before greening, Michael W. Sparks, chief executive officer of Florida Citrus Mutual, the state’s biggest producer group, said in an e- mail on Friday.
The most “pessimistic” scenario in a recent study by the Florida Department of Citrus has the crop falling to 27 million boxes by 2026. A box weighs 90 pounds or 41 kilograms.
The futures rally may boost costs for companies including Coca Cola, the maker of Minute Maid and Simply Orange brands, and PepsiCo, which sells Tropicana.
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