DJ ICE FCOJ Review: Down As Traders Take Profits

Orange juice futures for May delivery fell Monday as traders booked profits after an early jump to a two-month top of $1.5300 a pound. Most active May orange juice lost 40 points, or 0.27%, to settle at $1.4930 a pound. Nearby March, which has little open interest, fell 180 points, or 1.2%, to end at $1.5090 a pound.

« You’ve got the March contract preparing to go off the board later this week, and traders are jockeying for position ahead of the crop report, » a broker said. Nearby March juice incurred steeper losses after hitting an eight-month high of $1.5365 shortly after the open. Traders also liquidated positions in March ahead of Thursday’s contract expiration.

Orange juice futures have been trading steadily higher anticipating the Florida orange crop to shrink due to a prolonged freeze in January, brokers said. The U.S. Agriculture Department’s March production estimate is expected to show Florida’s orange crop either holding steady at 129 million boxes or being revised lower by 3 million boxes due to the January freeze.

The USDA in February lowered its estimate by 6 million boxes to total 129 million 90-pound boxes, from 135 million a month earlier owing to the freeze, small fruit and higher-than-normal drop rates. This latest report will include the oranges that were lost after the initial survey was conducted Jan. 26-27. The USDA said it would continue to assess the crop through mid-March.

Commodity funds added 2,298 long bets to FCOJ futures and options in the week ended March 2, increasing their net long position to 17,073, from 14,766 contracts the previous week, the Commodity Futures Trading Commission’s Commitments of traders report showed. Funds are 38.7% net long, up from 36.1% last week.

Traders added length to the market on ideas the USDA will likely further reduce its orange crop estimate in the upcoming production report. Temperatures continue to run below normal in the citrus belt of central and southern Florida, though readings will rebound to near to above normal Wednesday through Friday, private forecaster DTN Meteorlogix said. Moderate to heavy rainfall is forecast for the citrus belt on Thursday and Friday.

Source : FutureSource