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Orange Juice Futures Surge on Dwindling US Reserves

July 27, 2017 at 16:54 by Andrew Moran

Orange juice prices are climbing higher on Thursday as the US government reported a decline in reserves. Many traders are expecting this to give a boost to orange juice futures in the short-term.

September orange juice futures surged $0.335, or 2.50%, to $1.374 per pound at 16:47 GMT on Thursday on the ICE Futures exchange. This is one of the biggest single-session gains for orange juice prices in 2017. Year-to-date, orange juice has cratered more than 27%, and lackluster weather in the Atlantic Ocean is not doing the commodity any favors.

Orange juice prices are being supported by a new US Department of Agriculture (USDA) report that found a decrease in orange juice reserves. According to the USDA, frozen orange juice reserves tumbled to 544.4 million pounds on June 30, 2017. This is down 5.4% from the previous month and down 29% from July 2016.

The same state report also found a 17% decrease in orange juice exports from Brazil from July 2016 to July 2017. It totaled 890,000 tonnes, which is the smallest volume in more than 25 years.

Investors have been reducing their long-term bets on orange juice because of the limited weather threat. Without any hurricane threats forming in the Atlantic, there will not be any impact on the Florida orange crops. Last week, orange juice futures plunged to their lowest levels in 18 months.

Although Florida’s orange output is the worst it has been in 50 years, total global orange production increased by three million tonnes to 49.6 million tonnes in the 2016–2017 season.

One of the biggest stories occurring in the orange juice industry right now is the potential trade war between the US and the European Union (EU). Due to concerns of US President Donald Trump launching a steel trade war, the EU has promised to prohibit US orange juice imports.

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