Orange juice futures rally 5% as Florida crop concerns linger

Forexpros - Orange juice futures rallied sharply on Tuesday, trading at the highest level in nearly three months as concerns grew that a recent bout of frigid weather in Florida permanently damaged crops in the largest citrus-growing state in the U.S.

On the ICE Futures Exchange, orange juice for March delivery traded at USD1.8747 a pound during European morning trade, surging 5.53%.

It earlier rose by as much as 5.83% to trade at USD1.8772 a pound, the highest since October 26.

Prices have rallied nearly 11% since the beginning of 2012 as temperatures in key growing areas of Florida’s citrus belt dropped below zero.

Agricultural meteorologists continued to point to below-average temperatures across most parts of Florida. Temperatures in some areas of central-west Florida dropped to 22 degrees Fahrenheit (minus 5 Celsius) overnight, enough to freeze fruit.

Oranges can sustain long-term damage if the temperature stays below 28 degrees Fahrenheit (minus 2 Celsius) for a period of four hours or more.

Industry weather group MDA Federal said that temperatures in almost 75% of Florida’s citrus-growing region were cold enough for frost, with a hard freeze in about 25% of the area.

The frigid weather conditions could potentially threaten yields and reduce the quality of the harvest.  
 
Agricultural traders pay close attention to the weather because farmers need favorable conditions to grow large crops to replenish low inventories.

Florida is the largest citrus-growing state in the U.S., accounting for nearly three-quarters of U.S. concentrate supplies. The state is also responsible for 15% of global oranges.

According to Florida Citrus Mutual, the state’s leading industry group, the industry generates nearly USD9 billion a year in economic activity and employs almost 76,000 people across the state.

The adverse weather conditions underlined concerns over declining U.S. supplies. According to last month’s U.S. Department of Agriculture Supply and Demand report, frozen orange juice concentrate in U.S. warehouses totaled less than 500 million pounds, compared with about 800 million pounds in the same period a year earlier.

Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery eased up 0.03% to trade at USD 0.9647 a pound, while sugar futures for March delivery rose 0.88% to trade at USD0.2339 a pound.