With Tropical Storm Colin expected to cross Florida overnight, that morning glass of orange juice is getting costly.
Futures jumped to the highest in more than two years as the storm is expected to make supplies of oranges even tighter this year after heavy rain already damaged trees in Brazil. Parts of the citrus belt north of Tampa, Florida, may get 3 inches (7.6 centimeters) to 4 inches of rain in the next 24 hours, which will “absolutely cause some damage” to fruit, Donald Keeney, agricultural meteorologist with MDA Weather Services in Gaithersburg, Maryland, said in a telephone interview.
The Florida crop was already projected to be the smallest since 1964, and this storm could shrink supplies even further. The state is the world’s biggest orange-juice producer after Brazil. Prices for the beverage traded in New York have jumped 44 percent in the past 12 months as U.S. groves were withered by the citrus-greening disease, which causes fruit to shrivel and drop prematurely.
Orange juice for September delivery rose 5.9 percent to $1.6678 a pound at 11:26 a.m. on ICE Futures U.S., after reaching $1.68, the highest for a most-active contract since April 23, 2014. Trading volume was more than double the average for this time, according to data compiled by Bloomberg.
Prices could keep rising in the next several months as the Atlantic hurricane season, which runs from June 1 to Nov. 30, continues to pose risks to Florida’s groves. Indications are for an “active” season, Keeney said. U.S. orange-juice inventories in April were down 12 percent from a year earlier, the latest government data show.
Tropical Storm Colin comes after trees in Brazil’s Sao Paulo were pummeled by rain and hail last week, according to Somar Meteorologia, which is based in the state. More heavy showers are expected this week across the region, MDA’s Keeney said.
“The market has turned into a weather market, with reports of unsettled weather in Brazil and forecasts for big rains in Florida,” Jack Scoville, vice president of Price Futures Group in Chicago, said in an e-mailed report.
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