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Orange Juice Futures Plunge on USDA Report

October 12, 2017 at 16:53 by Andrew Moran

Orange juice futures are plummeting on Thursday following a new US government report that shows Florida is expected to produce the smallest crop since the 1940s. Orange juice prices have been climbing higher in the fallout of Hurricane Irma that destroyed roughly 70% of The Sunshine State’s citrus crop.

November orange juice futures tumbled $0.0395, or 2.43%, to $1.586 per pound at 16:33 GMT on Thursday on the ICE Futures exchange. Orange juice has been trading at its highest level since the beginning of May, but is still down about 15% year-to-date.

The US Department of Agriculture (USDA) released its forecast for Florida citrus production for the 2017–2018 season. According to the report, Florida will have the smallest crop since the 1940s, stemming from the damages inflicted by Hurricane Irma last month. Prior to the storm, the USDA anticipated 75 million boxes, but now it projects as little as 31 million boxes.

Because the Florida orange industry is projected to lose as much as $750 million, state lawmakers are considering adding agriculture relief in its $36.5 billion emergency disaster legislation. Florida legislators are proposing as much as $2.5 billion in aid for the citrus industry.

Florida Republican Representative Tom Rooney is urging his colleagues to pass the bill:

Go tell him how important it is that we not import orange juice from Brazil, that it’s important that Florida continue to lead in the production of orange juice. This storm was devastating to our industry. Just ask the people that are involved in orange juice every day what the lack of help will mean to their industry in your state. It’s catastrophic.

You may find fewer orange juice products in your grocery store. California is forecasting a reduction in citrus production and Florida may not be able to match demand. Analysts are warning that this could lead to higher orange juice prices at grocery stores across the US.

Experts are noting that Brazil may try to cover the shortfall, but they add that shortages are unlikely to happen.

If you have any questions and comments on the commodities today, use the form below to reply.

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