Orange Juice Future prices Rebound

Infocommodity.com - Prices of orange juice futures rebounded from the biggest two-day slump since 2008 on renewed concern that a U.S. government probe of imports from Brazil will tighten supplies.

The Food and Drug Administration said it will detain all imports that contain carbendazim, a fungicide that isn’t approved for oranges in the U.S. Yesterday, the U.S. Department of Agriculture trimmed its crop forecast for Florida, the world’s largest grower after Brazil, by 2 percent. The estimate didn’t include damage from frigid temperatures last week.

“The realization that FDA will test all imports is probably driving” prices up, Jack Scoville, a vice president at Price Futures Group in Chicago, said today in an e-mail. “The damage to Florida, if any, is unknown.”

Futures prices jumped 9.2 percent in the past two weeks, and on Jan. 10 reached the highest in almost five years. The rally may boost costs for companies including PepsiCo Inc. (PEP), the Purchase, New York-based producer of Tropicana juices, and Coca- Cola Co. (KO), which makes Minute Maid.

Orange juice for March delivery rallied 3.6 percent to settle at $1.846 a pound at 2 p.m. on ICE Futures U.S. in New York, after jumping as much as the exchange’s 20-cent limit, or 11 percent. The gain of 3.9 percent for the week was the fourth straight advance.

“This testing could turn out to take a while, not just a quick bump in the road,” Scoville said. “That is what has people buying again.”

The U.S. is testing “imports as they come in,” Siobhan DeLancey, an FDA spokeswoman, said yesterday in an e-mail. “We have three preliminary test results that are negative for carbendazim. Once those results are final, we’ll be allowing the shipments to enter the country.”

Concern that the FDA probe and frigid weather in Florida will limit supplies sent futures on Jan. 10 to $2.0775, the highest since March 2007. Prices plunged 14 percent during the previous two days, after the exchange raised the minimum cash margin needed for speculators to post to take a futures position, and as forecasters called for temperatures in Florida to remain above freezing.

There are “no changes” to Florida’s weather in the next few days, Kyle Tapley, a meteorologist at Gaithersburg, Maryland-based MDA Information Systems, said today in an e-mail. Temperatures are still expected “to remain above frost levels in the citrus belt,” he said.

Coca Cola said Jan. 11 that it had brought the use of the fungicide by some Brazilian orange growers to the FDA’s attention. The Atlanta-based company said in a statement that Brazilian orange juice is safe and it will take guidance from the FDA in resolving the situation.

Traders “are waiting for more definite news from the FDA to get some direction,” Jim Garasz, a principal at Transworld Futures in Tampa, Florida, said today in a telephone interview.

“If we can hold this rally, we will be looking at the resistance around $2, first,” Garasz said. “If we break above that, we could then have a push into the next resistance around $2.10.”

Category: futures orange juice, Info Commodity, orange juice prices, tropicana juice, us orange juice