DJ ICE FCOJ Review: Lower; Speculative Sales Cap Bearish Week

Frozen concentrated orange juice futures closed modestly lower Friday, pressured by continued speculative selling after prices touched new 3 1/2-week lows.Nearby September orange juice lost 55 points to end at 90.70 cents, and November fell 25 points to settle at 94.50 cents. The contracts touched respective intraday lows of 90.05 and 93.60 cents – their lowest prices since Aug. 4.

For the week through Friday, most-active November juice lost 415 points due to speculative selling and benign weather for the Florida orange crop. Selling will likely continue to pressure the market in the near term, unless a tropical system develops and sets its sights on Florida, a broker said.

Traders are watching a broad low-pressure area 850 miles west-southwest of the Cape Verde Islands for signs of development. Conditions are favorable for the system to develop and strengthen over the next 48 hours as it moves west at 15 miles per hour, National Hurricane Center forecasters said.

A tropical wave exists in the far-eastern Atlantic Ocean and shows a 30% to 50% chance of becoming a depression or tropical storm in the next few days, National Hurricane Center forecasters said. It is too far away, however, to pose any threat to the Florida orange crop, the broker said.

Tropical Storm Danny is east-northeast of Florida and moving to the north-northeast, posing no threat. In other news, Brazil’s 2009-10 orange crop may be down on low prices and disease threats, officials there said. Producers continue to harvest the 2008-09 crop, which is about 25% complete.

Falling global demand for orange juice and the global economic slump has pressured juice prices. In addition, growers continue to battle citrus greening disease, and millions of trees are being lost each year. Greening makes the fruit bitter and unmarketable and kills the trees within one to three years.

Sao Paulo state’s current 2008-09 orange crop is expected to total 358 million 40.8 kilogram boxes, up from 350 million in 2007-08. It is still too early to make predictions on the 2009-10 crop, officials there said. Sao Paulo state accounts for 90% of Brazil’s orange production.

November’s Relative Strength Index has fallen to 31%, near the 30% mark normally considered oversold. Open interest fell 696 to total 29,887 contracts, ICE data showed. Futures volume was estimated at 2,200 contracts, with 833 calls and 322 put options traded.

 ICE         Settle     Change     Range (At time of settlement)
 Sep         $0.9070    dn  55     $0.9005-$0.9130
 Nov         $0.9450    dn  25     $0.9360-$0.9460

Source : FutureSource