Orange juice prices soar as US harvests anything but sweet

NEW YORK – Wholesale orange juice prices soared to a record high on Tuesday, propelled by low inventories and a calamitous recent US harvest.

Chicago-listed futures contracts for frozen orange juice concentrate climbed to US$4.32 for about 450g.

A key factor behind the surging price is a cratering inventory, which has almost halved since the same time in 2022, and is barely a quarter of 2019 levels.

It follows a calamitous 2022-23 harvest, the lowest in 56 years according to US Department of Agriculture (USDA) data, primarily due to the spread of citrus greening.

Also known as Huanglongbing or yellow dragon disease, the incurable infection causes citrus to become green and bitter, with most of the impacted trees dying off in a few years, the USDA says.

It is transmitted by the psyllid, a tiny insect that carries a bacterium that feeds on the sap.

Another major blow to inventory were back-to-back hurricanes in late 2022 which hit Florida, the biggest orange juice producing US state.

However, Tuesday’s high could mark the beginning of a market turnaround, according to Mr Shawn Hackett of Hackett Financial Advisors.

He pointed out that, after setting a new record high since the launch of orange juice futures in 1966, prices dropped by almost 5 per cent in the second half of the session.

“I believe over the next 12 months, prices are likely to fall back, probably 50 per cent from where they currently are, if not more,” Mr Hackett predicted.

The first factor is that production of Valencia oranges, the variety most commonly used for juice, is forecast to rise by 23 percent for the 2023-24 season, according to the USDA.

With the hurricane season winding down – but not yet over – Florida’s groves have been largely spared in 2023, Mr Hackett said.

A final factor likely to influence prices is the slowdown in demand.

The USDA says that United States orange juice consumption has more than halved over the past 20 years. AFP