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Orange juice hits 3-month high as USDA slashes crop forecast
December 11, 2012 / 10:01 PM / 5 years ago

Orange juice hits 3-month high as USDA slashes crop forecast

* Fruit droppage highest in more than 50 years-USDA
    * Crops hurt by lack of rainfall

    NEW YORK, Dec 11 (Reuters) - New York orange juice futures
rallied to three-month highs on Tuesday amid concerns about
falling supplies after the U.S. government slashed its orange
crop forecast for Florida, the country's top growing state, for
the 2012/13 marketing season.
    In its first crop report since October, the U.S. Department
of Agriculture cut its crop forecast for Florida by 8 million
boxes, or 5 percent, to 146 million boxes. That was much more
than the 2 million to 4 million boxes many in the market had
expected.
    "That was a little bit of a surprise," said Kevin Sharpe, a
commodity broker at Basic Commodities in Winter Park, Florida.
    The half-a-billion-dollar orange juice futures market rose
as much as 7 percent to $1.34 per lb soon on the news. That was
its highest level since mid-September when prices were buoyed by
a hurricane premium. Prices had eased off those highs as the
threats of storms faded and hurricane season ended.
    Rather than driving winds and flooding from tropical storms
damaging the Sunshine state's orange groves, a lack of rainfall
since then has hurt growths. The region hasn't had substantial
precipitation since late September.
    "Unless (the crops) get substantial soaking good rain and
some better growing weather, (farmers) will get small fruit and
there may be a drop in yield overall. We need rain," said
Sharpe.
    On Tuesday, the USDA kept its yield estimate for Florida
frozen concentrated orange juice at 1.61 gallons per box
unchanged. That is down 1 percent from last season.
    Early, midseason and Navel varieties in Florida are forecast
at 67 million boxes, down 9 percent from the October forecast
and 10 percent from last season, the USDA said.
    The Florida Valencia forecast of 79 million boxes is down 1
percent from October, but up 9 percent from the 2011/12 crop.
    In a particularly alarming statistic, the USDA said the
fruit droppage rate is projected to be the highest since the
1969-1970 season, while the fruit sizes will be below average,
the USDA said.
    It kept its forecasts for California and Texas unchanged.
    As the buying ebbed later in the day, the most-active
January frozen concentrated orange juice on ICE Futures
U.S. settled up 3.6 percent at $1.299 per lb. 
    Prices are still well below the record $2.20 per lb set in
January when U.S. authorities restricted imports of Brazilian
juice due to the use of a banned fungicide.
    As the Northern Hemisphere winter approaches, experts will
watch for damage to fruits from freezing weather.

 (Reporting by Josephine Mason; Editing by Leslie Gevirtz)

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