Price of orange juice on the rise amid forecasts of smallest crop since 1945
This year, Florida is expected to produce 44.5 million 90-pound boxes of oranges
Government agricultural forecasters said they expect the smallest Florida orange crop since World War II, touching off a rally in juice futures that were already at their highest level in years because of the pandemic.
The U.S. Agriculture Department said last week that it expects Florida to produce 44.5 million 90-pound boxes of oranges this year, trimming its already low expectations and predicting that the crop will wind up smaller than the one that was ruined by 2017’s Hurricane Irma. If the forecast is accurate, it will be the smallest harvest since 1945.
The big culprit this time around, the Florida Department of Citrus said, is citrus greening, an incurable disease that thins the crowns of trees and saps their vitality. Spread by invasive tree lice, greening has plagued Florida’s groves since it was first detected there in 2005. In a report on Wednesday, the Agriculture Department said a lot more oranges than usual are on the ground, and the fruit that is being harvested is unusually small.
FLORIDA HOMES AT CENTER OF BALTIMORE PROSECUTOR MOSBY’S ALLEGED CRIMES
The Oviedo Florida Chuluota orange groves in the sunshine (Education Images/Universal Images Group via Getty Images / Getty Images)
Frozen concentrated orange-juice futures ended Friday at about $1.50 a pound, up roughly 50% since the pandemic began. Futures jumped 5.1% on Thursday, after the Agriculture Department cut its expectations for the current crop. It was the best day for orange-juice futures since early in the pandemic, when Americans were stocking up for lockdown.
Pandemic demand paused a long decline in orange-juice consumption among Americans, who have shifted to less sugary drinks. Supply of juice oranges, which in the U.S. are primarily grown in Florida, has declined with demand. Citrus-bearing acreage in Florida is down by about half since 2001, as groves have made way for suburban sprawl or fallen victim to disease.
CLICK HERE TO READ MORE ON FOX BUSINESS
Orange-juice futures were trading around 10-year lows when the pandemic hit markets in February 2020. By the middle of that March orange-juice sales had jumped 10%, according to data from NielsenIQ. The pandemic boost was short-lived, though. Consumption resumed its slide in recent months.
Still, a lot of traders are bullish on juice given the supply problems. Hedge funds and other speculators in recent weeks have boosted their bets that prices will continue to rise, according to Commodity Futures Trading Commission data.
Morning frost sits on the leaves of an orange tree at a commercial grove near Winter Garden, Florida, on Thursday, Jan. 7, 2009. (Matt Stroshane/Bloomberg via Getty Images / Getty Images)
"We’re seeing it’s a commodity of interest at a time like this," said Peter Mooses, senior market strategist with RJO Futures. "There’s a big demand for oranges."
Others aren’t so sure. Orange supplies globally are expected to be robust. Though drought and frost have hurt Brazilian crops, the U.S. Agriculture Department expects the harvest there to be 12% larger than the last one.
CLICK HERE TO GET FOX BUSINESS ON THE GO
Oranges coming from other places, such as Mexico, will also help offset declining U.S. output, said Brandon Saltmarsh, president of HomeMaker Juice, which has headquarters in Winter Park, Fla.
"The fundamentals do not support prices at these levels," Mr. Saltmarsh said. "There’s still too much juice in the world."