* Market drops most for the year, testing $1.20/lb support
* Traders await USDA crop report due on March 8
By Barani Krishnan and Carole Vaporean
NEW YORK, March 1 (Reuters) - U.S. juice futures tumbled 5 percent, their biggest drop for the year, in a rash of speculative and technical selling on Friday, as traders awaited a government crop report that would reveal the damage to citrus groves by disease and adverse weather.
After two weeks of uneven moves, frozen concentrated orange juice’s most-active March contract on New York’s ICE fell to a one-month low of $1.20, before recovering to trade above $1.21 by 1:30 E.T. (1830 GMT).
The 5 percent drop was the market’s sharpest for the year and the biggest decline for the day among 19 commodities tracked by the Thomson Reuters-Jefferies CRB index.
Technical chartists said FCOJ’s upward bias over the past six weeks may be near an end, with the impending release of the U.S. Department of Agriculture’s (USDA) monthly crop report on March 8.
“We’re probably going to see the market consolidate at lower levels like $1.10 and $1.15. I think the days of trading over $1.20 are almost over,” said James Cordier, head trader at Florida’s OptionSellers.com.
FCOJ had started the year weakly, after a loss of about 30 percent in 2012. The March contract tumbled 4 percent in the first session and hit a 2-month low of $1.1050 by Jan. 9.
From there, it progressed into what is technically called an “upward channel.” Despite steep losses in several recent sessions, price declines had held above the channel’s support line, adding to the bullish view of some traders.
But on Friday, March FCOJ ruptured the channel line by slipping under $1.2550, after automated sell orders were triggered below the previous key support level.
For the year, FCOJ still shows a gain of nearly 2 percent, due to worries over the harm wrought by the so-called citrus greening disease and winter freeze on groves in the key U.S. orange-growing state of Florida.
Greening is a bacterial disease that produces bitter, hard and misshapen fruit that tend to drop off trees prematurely. Infected trees also die within a few years.
Originally thought to have hailed from China in the early 1900s, it is considered one of the most serious plant diseases in the world, for which there is no current treatment. Discovered in Florida in 1998, it has become endemic in recent years.
“It’s getting worse here as more and more trees are being affected,” said Pete Spyke, whose Arapaho Citrus Management owns 140 acres planted with 50 acres of orange in Florida.
“Even with the best of care, you’re probably looking at about 20 percent reduction in average of your fruit production,” the 61-year-old farmer told Reuters by telephone from Fort Pierce, Florida.
The USDA has already said it expects less citrus production out of Florida this year.
The state’s orange crop for 2012-2013 is seen at around 141 million boxes, compared with 146.6 million for 2011-2012, the department said in a Feb. 8 estimate.
The USDA’s initial forecast for the current season was 154 million boxes.
While winter is bowing out, some analysts say March still has cold days that could impact trading in juice.
Dry weather, which heightens the chance for crop damage during cold, could also be a factor to watch.
“We have another month of cold weather window, with not much rain, and that could be a problem,” said Kevin Sharp, an analyst with Basic Commodities in Winter Park, Florida. (Reporting by Barani Krishnan; Editing by Dale Hudson and Bernadette Baum)