FCOJ Review: Sharp Gains On Crop Concern, Fund Buys

Orange juice futures rallied Monday on worries that Florida’s orange crop may be revised lower next week, and on technical buying that pushed prices up to four-week highs. Nearby March orange juice rose 6.95 cents, or 4.8%, to settle at $1.5060 on ICE Futures U.S. Most active May added 4.35 cents, or 3%, to end at $1.4795 a pound.

Most of the chart-related buying kicked in when May futures scaled $1.44 a pound, taking the contract to its highs at $1.4960, said Sterling Smith, analyst at Country Hedging in St. Paul. That was the strongest price the May contract has reached since notching a $1.51 high on Jan. 28.

Profit-taking near the highs took prices off their strongest levels by the closing bell, brokers said. ICE orange juice also gained as nervous traders fretted about colder-than-normal temperatures in Florida. They increased long bets that the orange crop would shrink further this year, said Smith.

Florida growers are already producing one of their smallest crops in 20 years owing to a January freeze, smaller fruit and higher-than-normal drop rates. The USDA pegged the 2009-10 Florida orange crop at 129 million boxes in February, down from 135 million in January.

The USDA will issue its March crop production and supply/demand report on  March 11. Commodity funds added 218 long bets to ICE FCOJ futures and options in the week ended Feb. 23, slightly increasing their net long position to 14,766, from 14,475 contracts the previous week, the Commitments of Traders report showed. Funds also liquidated 73 shorts during the week.

Source : FutureSource