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Orange Juice Futures Take a Hit as US Sales Plunge

May 3, 2017 at 16:50 by Andrew Moran

Orange juice futures are tumbling on Wednesday as a new report suggests that US sales of the classic breakfast staple have plummeted. With supplies growing and consumption declining, orange juice prices are poised to record their third consecutive session of losses.

July frozen concentrated orange juice futures fell $0.10, or 2.9%, to $1.496 per pound at 16:33 GMT on Wednesday. Orange juice futures are trading at their lowest levels in nearly a year. Year-to-date, orange juice prices are down nearly 17%, continuing to be affected by swelling supplies.

This comes as new data suggest that US sales of the beverage are plummeting.

According to a Nielsen report, total US sales of orange juice dipped 7.6% to 33.36 million gallons in the four weeks ending April 15 compared to the same time last year. During the 2016–2017 season, orange juice sales have decreased 7.4%, and frozen orange juice sales have dropped 9.3%.

A decline in orange juice consumption has been the trend in the last couple of years, particularly in North America. With health-conscious consumers concerned about high sugar volumes in orange juice, Americans are turning to healthier alternatives, like sparkling water.

Last year, orange juice prices were surging to as high as $2.25 per pound because of dwindling supplies. Thanks to a rebound in Brazilian production and the Florida orange market gradually recovering from citrus greening, global supplies are climbing. Global orange output increased by close to three million tonnes to 49.6 million tonnes in the current 2016–2017 season.

Orange juice futures have benefited over the last week on seasonal long bets ahead of the hurricane season. Speculative investors are betting that weather events could impact orange supplies in The Sunshine State, which would drive up orange juice prices. Florida is the second-largest producer of oranges, behind Brazil.

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

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