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Orange Juice Futures Limit Up On Global Supply Squeeze

Tyler Durden's Photo
by Tyler Durden
Wednesday, Dec 07, 2022 - 08:45 PM

Orange juice futures squeezed to a near-record high ahead of another US Department of Agriculture's crop report on Friday that will likely show tight global supplies will persist well into the new year. 

USDA's next report will provide an estimate for Florida's 2022-23 harvest. Figures will add to October's downbeat report, which showed that Florida would only produce 28 million boxes (each box is 90 pounds) for the current season, down 32% from the prior year. This season is expected to be the lowest harvest since 1943. 

A combination of Hurricane Ian's devastation across Florida's citrus groves, and years of citrus greening disease, has crushed the state's citrus industry, and the drop is expected to continue with no recovery in sight. 

"Even as Ian knocked more fruit off trees, it may be hard to differentiate how much more was caused by the weather event and how much by the disease, so a revision downward may be small," soft commodities consultant Judy Ganes told Bloomberg. 

Ahead of the report, orange juice futures on the ICE exchange are up 10 cents, or 4.8% (limit up), to $2.185 per pound, honing in on a record high of $2.20. 

The price is up 128% since the low of 94 cents per pound in early 2020. Another top producer, Brazil, has recorded very tight supplies, where greening is spreading across citrus-growing regions. 

"Brazil remains a question mark, too, and it may become a bigger issue if greening infection continues to expand," Ganes said. 

Tightening orange juice supplies will only increase prices at the supermarket and may cause affordability issues, forcing some consumers to scrap the nutritious drink for vitamin C pills. 

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