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Orange Juice Futures Hit Fresh Highs on Output Squeeze

November 8, 2016 at 18:07 by Andrew Moran

One week after hitting an all-time high, orange juice futures hit a fresh high on Tuesday. As the industry continues to experience a production squeeze, orange juice prices are soaring as the year winds down.

November frozen concentrated orange juice futures declined 2.429% to $2.24 per pound at 16:42 GMT on Tuesday on the ICE Futures US exchange. Earlier in the trading session, orange juice futures climbed to $2.29 a pound before paring some of its gains. Orange juice prices have risen 50% this year.

The orange juice market is still being battered by lower output. Brazilian and US orange farmers are contending with diseases that are devastating crops. In Brazil, farmers are battling Asian citrus psyllid, a disease-spreading bug that produces a toxin that causes plant tips to die or contort. In the US, farmers are trying to combat citrus greening, a bacterial disease that causes fruit to drop before they are ripe.

Weather events, like higher than normal temperatures in Brazil, and natural disasters, like Hurricane Matthew in Florida, are also hurting orange farmers.

For the last decade, production levels have been falling. In 2005, 242 million boxes of oranges were produced. A decade later, just 81 million boxes of oranges were churned out by farmers. The 2016–2017 harvest season is already being projected as one of the worst on record. Experts are warning that there will likely be a global orange shortage over the next 12 months.

Many are attributing the orange juice industry’s downfall on declining consumption and tumbling sales. Over the past few years, the classic breakfast staple has gradually been leaving homes’ tables because the medical industry and health experts have complained about the high levels of sugar found in a glass of orange juice. This has prompted consumers to turn to an array of alternatives, such as sparkling water and even energy drinks.

With that being said, it is the supply side that is having more of a negative impact on orange farmers and orange juice companies, the industry experts say.

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