Orange-juice futures surged into a bull market after posting the biggest three-day rally in 16 years, amid mounting concerns over crops in Florida, the world’s second-biggest producer.
The state’s citrus regions will have drier-than-normal weather in the coming weeks, worsening soil conditions after a lack of rain in the past month, according to MDA Weather Services.
In the season that ends in September, Florida’s orange-growers will collect the smallest crop in more than four decades after the citrus-greening disease damaged groves, the US Department of Agriculture estimates.
Prices jumped 21 per cent in three sessions recently, the biggest such gain since October 1998. Futures are climbing on speculation that the dry weather will further hamper yield prospects for next season, spurring concerns over a supply shortage, even amid sluggish demand for the beverage.
“We knew production was pretty bad, and Valencia oranges in Florida are late in reaching maturity,” Jack Scoville, a vice-president for Price Futures Group in Chicago, said in a telephone interview. “The dry weather may cut production a little next year, and prices had gotten really cheap. Speculators are closing some of their shorts.”
Florida’s crop will drop to 102 million boxes in the 12 months that end 30 September, the USDA said. That’s down from 104.6 million a year earlier, and would be the smallest since 1968. A box weighs 90 pounds, or 41 kilograms. Brazil is the biggest orange-juice producer.
Bloomberg News, edited by ESM