(News Bulletin 247) – The futures contract on frozen orange juice concentrate has taken more than 30% since the start of the year and more than 50% over one year. This increase makes it the best-performing agricultural material since the beginning of the year.

The mechanics of orange production have seized up, which is felt in the course of its juice on the market. As noted The echoes this Monday, the price of frozen orange juice concentrate, an essential raw material for the drink, has been rising sharply since the start of the year.

The July contract on the raw material has thus won 32.5% since January 1, an increase that has risen to 55% over one year. According The echoes which are based on data from the Intercontinental Exchange (ICE), an American stock exchange specializing in derivatives, this increase exceeds that of other agricultural commodities such as sugar (+29%), cocoa (+18%) , and coffee (+15%). It should be noted that gold for its part is only up 8.3% while oil prices, taking Brent as a benchmark, fell 12% over the same period.

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Hurricanes and “yellow dragon disease”

The price of orange juice jumped due to tensions on the offer, that is to say on the production of oranges. In particular in Florida, which, as Angeline Ong, financial analyst at IG Markets explains in a recent video, accounted for up to 80% of the production of the United States, the third largest producer in the world behind Brazil, and very close to the second, Mexico.

The American State suffered two hurricanes in the fall of 2022, namely Nicole and especially Ian, with damage whose cost was quantified by the University of Florida at 247 million dollars on citrus production (for l Hurricane Ian only).

This has exacerbated structural production losses due to a disease called “citrus greening”, or “yellow dragon disease”, caused by a bacterium transmitted by aphid-like insects. As Angeline Ong explains, this bacterium causes fruit trees to produce smaller, bitter fruits that are often unsuitable for sale.

As a result, the US Department of Agriculture estimates that Florida’s total orange production should fall to 16 million boxes in the 2022-2023 season, compared to 41 million in the previous season, a drop of 61%. According to Reuters, the orange harvest in the United States is expected to fall to its lowest level since 1937.

Towards a shortage?

Quoted in mid-April by MarketWatch, James Roemer, author of the publication WeatherWealth, explains that the rise in orange juice prices – which he describes as an “extraordinary rally” – is due to these poor American harvests but also to a high demand for vitamin-C in the post-pandemic period. And to difficulties with the harvest in Brazil, which was postponed for a few weeks due to intense rains in the Sao Paulo region.

We can also add, as indicated in mid-May by Unijus, the interprofessional union of the French fruit juice sector, that “Mexican production intended mainly for the ordinary American market has also fallen by 30% this year due to drought. “This is also what has been observed in Spain due to lack of water,” added Unijus.

As a result, industry professionals recently warned in a statement that these market conditions pose the risk of a “global shortage” of orange juice concentrate. They indicated that ruptures could be seen in stores in the coming weeks.