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Orange Juice Falls Back in the Red Despite Consumer, Industry Trends

March 22, 2019 at 14:36 by Andrew Moran

Orange juice futures are sliding on Friday as prices are on track for a weekly decline. Despite the recent surge, orange juice has slipped back into the red on the year. What exactly is going on with the classic breakfast staple? For investors, it has become increasingly more difficult to trade OJ futures, though May and June contracts have garnered a couple of “buy” ratings.

May orange juice tumbled $0.0075, or 0.59%, to $1.2675 per pound at 13:37 GMT on Friday on the US ICE Futures exchange. Orange juice prices are on track for a small gain of just 0.1%, but they are down about 0.35% year-to-date. Orange juice has had an impressive March, advancing nearly 4%.

ResearchAndMarketing released its “Fruit Juice Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019–2024” report, and it concluded that global consumption of soda pop is falling. As consumers become more health conscious, they are shifting away from soda and into more natural fruit drinks, including orange juice.

Changing lifestyles and altering eating patterns of the consumers have resulted in an increased intake of affordable, healthy and quick sources of nutrition like packaged fruit juices, thereby catalyzing the growth of the market.

In order to expand the consumer-base, manufacturers are introducing a wide array of flavors, and producing preservative-free and sugar-free fruit juices. In addition to this, growth in the food and beverage industry is boosting the overall demand for fruit juices worldwide.

One of the biggest problems for the orange juice industry has been health-conscious consumers abandoning this beverage because of its high sugar content. But researchers think that households will return to OJ and introduce other natural fruit beverages, such as pineapple, watermelon, and avocado, into their diets.

Meanwhile, global supplies might take a hit after Brazil, the world’s top orange exporter, projected that production will total 874,000 tonnes in the 2018–2019 season that ends in June. This represents a 27.4% decline from the previous crop year. Other estimates suggest Brazil will only produce 284 million boxes, a 30% drop from last year.

Could Florida swoop in and reclaim its title of top orange exporter? Reports show that the weather fundamentals in The Sunshine State are not too good but not too bad either. Although the weather is considered too dry for growing oranges, growers are witnessing “small sized to good sized” oranges. The state has been decimated in recent years from natural disasters, crop damages, bad weather, and slumping demand.

In other agricultural commodities, May corn futures rose $0.0375, or 1.00%, to $3.80 per pound. May wheat futures tacked on $0.06, or 1.29%, to $4.725 a bushel. May soybean futures tumbled 0.035, or 0.38%, to $9.07 per bushel.

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