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Orange Juice Squeaks out Weekly Gain

July 5, 2019 at 18:22 by Andrew Moran

Orange juice futures are trading higher on Friday, squeaking out a weekly gain. The agricultural commodity edged up as foreign markets appear to be offsetting the decline in demand in Europe and the US for the classic breakfast staple. As a result, major producers might need to reduce their output levels to match market trends, though it may not be enough to cut supply levels in the near-term.

September orange juice futures rose 0.45 cents, or 0.44%, to $1.0155 per pound at 18:03 GMT on Friday on the US ICE Futures exchange. Orange juice prices recorded a tepid weekly jump of 0.25%, but they are still down a whopping 20% so far this year. Orange juice has cratered 40% over the last 12 months.

Global supplies have dominated the industry in recent weeks.

In the US, the Department of Agriculture warned that Florida’s orange crop for the 2018–2019 season would plunge by 1%. What used to be one of the world’s biggest orange growers has been decimated in the last few years, mainly from falling demand, natural disasters, and a crop-damaging disease.

Brazil, which has become a major player in the orange market, is seeing massive output this year, despite sliding demand from Europe and the US. Ostensibly, Brazil is attempting to tap into other markets that are beginning to see a rise in orange consumption, including China, South Korea, Hong Kong, Japan, and Spain.

But while other countries are importing more oranges, the levels are nowhere near as large as European and US imports in years past. As a result, since inventories are anticipated to remain high in the near-term, prices are expected to crash even further. But some investors are betting on weather conditions to impact production and supply, hence why contracts are trading above $1 between September and January.

In other industry news, the makers of Tropicana orange juice – Pepsico and Tropicana Manufacturing – are being taken to court over allegations that they did not disclose their products contained an artificial flavoring. The complainant accused the companies that they used d-1 malic acid in orange juice products, which is a synthetic chemical used to process foods for a tart taste, despite claims of all natural ingredients.

In other agricultural markets, August corn futures added $1.00, or 0.23%, to $4.4225 per pound. July wheat futures were flat at $5.14 a bushel. September soybean futures tumbled $0.145, or 1.6%, to $8.9425 per bushel.

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