Global orange juice prices declined by 2% to USD 1.11/lbs in the six weeks to 25th March 2021. The price decline can be attributed to speculators selling out of their positions due to oversupply concerns.
The bearish sentiment evident in the current market is due to high forecasts of Brazilian orange juice inventories for June 2021 (272,979 tonnes) and favourable weather conditions in the US. According to the United States Department of Agriculture (USDA), Florida’s current orange forecast for the 2020/21 marketing year is up by 2 million boxes from the previous forecast of 22 million boxes. Furthermore, growing conditions are reportedly favourable according to market participants, following a mild winter.
There has been some bullish sentiment in the market, following the widespread and sustained freeze events in Q1 2021 in Northern Mexico. However, the impact on the market has been limited with prices hitting a ceiling of USD 1.19/lbs, as the northern regions only account for 20% of Mexico’s production, with the majority of Mexican orange output produced in the south. The freeze impacted the growing regions of Tamaulipas and Nuevo Leon, with continuous sub-zero temperatures for a period of 6-12 hours daily. Market participants report that production for the 2020/21 MY in these regions is expected to be cut-back by 40 to 50% year-on-year (2-3 million boxes).
Global orange juice prices are expected to remain range bound between USD 1.1-1.30/lbs over the next few months, with speculative selling by traders testing the lower range and low supply concerns due to future weather events challenging the upper range.