Orange juice futures settled slightly lower midweek, continuing their bearish sentiment in the calendar year’s first few weeks. Despite last year’s 20% rally amid the coronavirus pandemic, the classic breakfast staple has been unable to sustain the momentum. Are consumers ditching the cold beverage from breakfast tables again?
March orange juice futures slipped $0.10, or 0.09%, to $1.082 per pound at 19:23 GMT on Wednesday on the New York Mercantile Exchange. Orange juice prices have been plummeting so far this year, cratering more than 14%.
What does 2021 have in store for the orange juice market? Bloomberg summed up the situation with this sentence: “It’s not looking like a good year for America’s orange juice.”
According to new data from the US Department of Agriculture (USDA), Florida’s orange groves are anticipated to bear one of the smallest crops in decades, even worse than in recent years amid citrus greening.
USDA officials project that Florida’s orange production will be 54 million boxes in the 2020-2021 marketing season, down from the previous estimate of 56 million boxes. This would be down from 20% of the prior year. If the forecasts are accurate, it would be the worst output in four years and the smallest crop since 1947.
Researchers also note that plantings have collapsed, leading to an all-time low since the federal government first launched the series in 1966.
In addition to citrus greening, a disease that forces fruits to drop off trees before they are ripe, Florida has been impacted by a paucity of rain over the last year. And other regions of Florida are only now recovering from the root damage endured throughout storm floods in recent years.
The US is not the only market to record a drop in output. Brazil and Mexico are producing less.
But demand is remaining story, with retail sales soaring 100% to 95.2 million gallons.
That said, if demand is expected to be healthy throughout the COVID-19 pandemic as consumers try to remain healthy and supply is predicted to take a hit, why are prices slumping?
Consumers and suppliers are turning to citrus alternatives.
Shannon Shepp, Executive Director of the Florida Department of Citrus, told the business news network:
There is positivity to be found elsewhere in the industry. Grapefruit production is up, growers continue to make great strides against citrus greening and consumers are more focused on health and wellness than ever before.
In other agricultural commodities, March corn futures picked up $0.0875, or 1.61%, to $5.5175 a pound. March wheat futures edged up $0.03, or 0.47%, to $6.4775 a bushel. March soybean futures skyrocketed $0.1625, or 1.2%, to $13.71 per bushel.