Orange juice prices skyrocket due to the weather and accentuate the production crisis

Orange juice prices skyrocket due to the weather and accentuate the production crisis

The production of oranges, one of the most consumed citrus fruits in the world, is in suspense after a drop in supply, as a result of climate change and diseases that have affected the production rate of this fruit. With that, The price of orange juice on the International Exchange has accelerated in line with the market price.

The greatest impact has been received by the leader in orange production in the world, Brazil. However, the state of the Florida, Historically known for its large fruit plantations, it has also suffered a blow.

According to Matthew Joyner, director of Florida Citrus Mutual in an interview with the Financial Times, overall orange juice production in the United States is the lowest in more than 100 years. “A little more than 20 years ago we produced 240 million boxes of oranges but now we are ending this season with just under 18 million.” More than 90% of the American Union's supply comes from that state, which was hit by a hurricane in September of last year and a cold wave that lasted three months.

The main cause of the decline in citrus production is due to the greening of the fruit, a disease spread by insects that causes the orange from the infected tree to taste bitter, deform and take on a green color. The disease has also impacted crops in Brazil.

Now, the greening of the fruit is not the only cause of the low level of citrus production. For Vinicius Trombin, coordinator of the Fundecitrus Harvest Estimation Study, the weather conditions have not been the most favorable. “The dry and hot weather impacted orange production, in addition to an aggravated scenario with a high incidence of greening in the plantations,” said Trombin.

This sharp drop in production has been strongly reflected in the market, with the reference contract (Fcoj) for concentrated orange juice futures on the Intercontinental Exchange trading at practically US$3 per pound, The only value that resembles this occurred in May of last year when it reached lows of US$1.76 per pound.

“It is not the most fluid and liquid market in the world, but it moves when it wants,” Jack Scoville, a broker at Price Futures Group in Chicago, told the British newspaper. He also forecasts that the price of concentrated orange juice could continue to grow to US$3.50.

With the introduction of the contract in 1966, industry players have been allowed to protect themselves against market volatility by buying and selling individual orders of up to 15,000 pounds of juice stored in drums or tanks at a predetermined date and price.

Brazil is also affected

The largest orange producer has also been in trouble due to low citrus production. Fundecitrus estimates reveal that this year could represent the second lowest harvest of the fruit in more than 40 years. While in 2023, total box production closed at 307 million boxes, estimates for the end of this year place it at 233 million, thus 24.3% less than the previous record.

In view of this problem, one of the alternatives that emerged was to rely on mandarins so that marketing is not affected. Kees Cools, president of the International Fruit and Vegetable Juice Association, commented, “Juice manufacturers could lean on other citrus fruits to meet consumer demand and reduce costs.”

Likewise, he expressed that the possibility of starting talks with the UN regulatory bodies is being considered to propose a legislative change in the code of food standards for the preparation of this drink with another citrus fruit. The option of selling less concentrated juices is also contemplated.