Orange-juice futures entered a bull market after the U.S. Department of Agriculture said that Florida’s crop will shrink to a 52-year low as a bug from Asia continues to spreads citrus disease.
On ICE Futures U.S. in New York, orange juice for November delivery rose 5.2 per cent to close at $1.2745 a pound on Wednesday. In eight sessions, the price jumped 21 per cent from $1.0535, the recent low settlement on 1 October. The common definition for a bull market cites a gain of 20 per cent. The commodity topped the 200-day moving average.
Florida’s orange crop in the season that ends 30 September next year will slump 17 per cent to 80 million boxes from a year earlier, the USDA said last week. That would be the lowest since 1964. Before the latest USDA data, the average of eight analysts’ predictions in a Bloomberg survey was 93.46 million boxes. Citrus greening, spread by the Asian citrus psyllids bug and first discovered in the state in 2005, has triggered the loss of an estimated 100,000 acres (40,000 hectares), the University of Florida has said. The disease causes fruit to shrivel and drop from trees.
“Part of the rally is related to the report last week,” Jack Scoville, a vice president at Price Futures Group in Chicago, said in a telephone interview. “The technical chart also looks good, and people are also taking positions ahead of the frost season,” which can threaten Florida’s crop during the winter months, he said.
Shrinking supplies may boost costs to make Coca-Cola Co.’s Minute Maid and Pepsico Inc.’s Tropicana.
Florida’s crop declined by more than half since 2008 as efforts to eradicate the bug floundered, while maintenance costs for farmers increased.
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