Orange-Juice Futures Suffer Double-Digit Drop

Orange-juice futures experienced a significant decline of nearly 11% for the week, marking the largest percentage drop since late March 2017. This sharp decrease comes just days after reaching their highest recorded price.

Favorable Weather and End of Hurricane Season Contribute to Decline

As we approach the end of the hurricane season, which runs from June 1 to November 30, improved weather conditions have had a positive impact on orange crops. Florida, one of the major orange growing states, particularly benefits from this development. The Atlantic hurricane season, which initially showed promising activity, remained relatively calm in October.

Profit-Taking and Lack of Buying Interest Drive the Market Down

Weekly Losses Reach Record Levels

The most-active January contract for frozen concentrated orange juice recorded a weekly loss of 10.6%, representing the worst performance since the week ending March 31, 2017. According to Dow Jones Market Data, the contract settled at $3.4925 per pound on the ICE Futures U.S. exchange, down 1.4% for the session. This decline follows a significant 5.2% drop observed on Thursday.

November Contract Dominates Market Movement

Among the various futures contracts, November witnessed significant movement. Darin Newsom, a senior market analyst at Barchart, highlights its impact on the market dynamics.

A Sharp Selloff in Frozen Orange Juice Prices

By Anonymous

Frozen orange juice prices experienced a significant decline recently, dropping by approximately 14% from their peak on Tuesday, according to industry expert John Newsom. This decrease was triggered by the first notice day on November 1, when futures contract holders were notified of sellers’ intention to deliver the commodity.

In order to avoid taking delivery, many investors holding long futures had to exit their positions, resulting in a notable sell-off. The January contract was particularly affected as it experienced some spill-over selling from the November contracts.

Just a few days earlier, frozen orange juice had hit a record high settlement of $4.008 per pound on October 30. On a year-to-date basis, prices have surged by an impressive 71%, setting the stage for the best year since 2009.

Newsom comments that it becomes challenging to enter the market when it reaches new record highs, making investors more cautious about increasing their positions. Furthermore, James Roemer, the publisher of WeatherWealth newsletter, attributes the recent rally to post-COVID demand for vitamin C and the devastating impact of citrus greening on Florida’s citrus crop, which is reportedly the worst since the 1920s.

However, Roemer also highlights potential long-term bearish factors, such as the absence of Florida hurricanes during this fall season and the possibility of a significant orange crop in Brazil in 2024. Brazil is currently the world’s largest producer of oranges.

Regardless of these speculations, the recent selloff in frozen orange juice prices serves as a reminder that market dynamics can change rapidly and unpredictably.