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Anticipations of a good crop causes US orange juice prices to drop

December 6, 2019

1 mins read

In November, Mintec prices for orange juice in the US nosedived 26% y-o-y, driven by an anticipated increase in orange and orange juice production in the country.

Orange production in Florida for the season of 2019/20 is estimated to reach 74m boxes, 3% higher than the 2018/19 season. Along with increased volumes, the quality of oranges is expected to be superior on the back of favourable weather conditions throughout the growing season. Also, the USDA estimates the current US orange juice inventory to be very high, keeping the average prices subdued (-2%) for the last quarter (Sep-Nov) compared to the previous quarter. Furthermore, the hurricane season officially finished at the end of October, which reduces the chances of further fruit drop. Nevertheless, there have been hurricanes as late as December in previous years, so there could still be further fruit drop if that occurs. Therefore, considering the current estimates prices are expected to remain low in short term until the inventory is cleared.

Apart from the supplies in the US, Brazil and Mexico are the key forces driving the orange juice prices in the US.  Brazil is the largest global supplier of orange juice. Dry weather in Brazil has raised concerns about the flowering of the orange crop for 2019/20. Thus, the US orange juice prices are forecast to drift up in long term if the orange crop in Brazil is severely affected by dry weather. Also, the expectation of lower orange production in Mexico, which was affected by drought, may support the price increase in the longer-term.

Rutika Ghodekar
Rutika Ghodekar

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