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Orange Juice Futures Fall to Three-Month Low

December 13, 2016 at 18:07 by Andrew Moran

Orange juice futures are continuing their losing ways. For eight straight trading sessions, orange juice prices have been falling and are now trading at their lowest levels since mid-October. Is it time for traders to sell their positions in orange juice and take the profits?

January frozen concentrated orange juice futures tumbled 1.64% to $2.01 per pound at 16:42 GMT on Tuesday on the ICE Futures exchange. Orange juice futures have settled with losses for eight consecutive trading sessions as they trade at three-month lows.

Year-to-date, orange juice prices have surged 40% because of limited supplies, changing consumer tastes, and crop conditions in Brazil and Florida. All of that may change over the next 12 months.

It seems that the orange market is starting to improve. The weather conditions are getting better in Brazil, while scientists may have found a solution to citrus greening, which has devastated Florida crops for the past decade. This means that the outlook for global orange supplies remains positive heading in to the new year.

The US Department of Agriculture (USDA) projected last week that this year’s orange crop in Florida will produce just 72 million boxes of oranges. This represents a 12% drop from last year and is the state’s its lowest total since the 1963–1964 season. Despite this, traders may begin to sell their positions in orange futures and take the profits before prices dip even further.

Even though consumer demand for orange juice is diminishing, the supply is starting to increase. This is something that industry experts have suggested: it is not the demand that is weakening the orange market but rather the paucity of supply. When you factor in a surging Brazilian real and a US Dollar, the orange market’s near-term performance seems bleak.

In 2017, prices could decrease to levels unseen since March 2015, unless something devastating occurs.

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