Orange Juice Jumps to 23-Month High on Smaller Florida Crop

Orange-juice futures rose to a 23- month high on speculation that fruit output may shrink further in Florida, the world’s largest citrus grower behind Brazil. Florida’s orange crop is expected to be 17 percent smaller than last season after a cold spell this year and a drought reduced fruit size and number. Prices have more than doubled this year.

Orange juice “is a weather play,” said Jodi Timmons, a Global Commodity Futures LLC vice president in Fort Lauderdale, Florida. “We still have a long way to go in the winter,” she said. Orange-juice futures for March delivery rose 5.6 cents, or 4.2 percent, to $1.3995 a pound on ICE Futures U.S. in New York, the biggest gain for a most-active contract in a week. Earlier, the price reached $1.425, the highest level since January 2008.

The March contract may reach $1.54 should a freeze occur in Florida, Timmons said. Without any immediate weather threats, prices may “pull back” in the next two weeks after a 25 percent rally in the past month, she said.

Temperatures have to stay below 28 degrees Fahrenheit (minus 2.2 Celsius) for six hours to cause fruit damage, Timmons said. So far, they have stayed above 30 degrees throughout Florida, she said.

The state may produce 135 million boxes of oranges in the year ending June 30, the lowest total in three years, the U.S. Department of Agriculture said on Dec. 10. Last season’s crop totaled 162.4 million boxes. A box weighs 90 pounds, or 41 kilograms.

Source : Bloomberg