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Orange Juice Futures Pare Losses as Weather Threat Dissipates

July 20, 2017 at 17:40 by Andrew Moran

Orange juice futures are paring Wednesday’s losses after industry experts say that weather threats that could impact Florida’s crop are dissipating. Orange juice prices are trading at their lowest levels in 18 months, but they were trading in positive territory towards the end of the trading week.

September orange juice futures rose $0.15, or 0.12%, to $1.256 per pound at 17:25 GMT on Thursday on the ICE Futures exchange. The commodity had declined as much as 1.1% during Wednesday’s trading session, but orange juice futures have since been in the green. Year-to-date, orange juice prices have cratered 33%.

Investors are disappointed that there have not been any hurricane threats forming in the Atlantic Ocean. Should a hurricane happen, it would pose a risk to Florida’s orange crops and inevitably disrupt supplies, something that The Sunshine State knows all too well.

This is the time of the year when speculators place their long bets in the orange juice market on the hope that hurricanes would hit Florida. But Florida’s orange industry has been on the decline for the last few years because citrus greening, a bacterial disease that causes fruit to drop before they are ripe enough to be picked, has impacted crops.

Due to the disease, Florida has produced its worst harvest in 50 years with a tepid 67 million boxes. Brazil, the largest orange producer, has offset the declines as global orange output climbed by roughly three million tonnes to 49.6 million tonnes in the 2016–2017 season.

Another factor that orange farmers are having to contend with is the waning demand for the once classic breakfast staple. In April, total US sales of orange juice plummeted 7.6% and an overall 7.4% in the 2016–2017 season. Experts note that consumers are seeking out healthier alternatives to the sugary drink.

Moreover, a trade war is brewing between the US and the European Union (EU). If the Trump administration initiates a steel trade war then the EU vowed to prohibit US orange juice imports.

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