March 8th, 2013

Orange Juice Futures – Florida’s orange crop, the world’s second biggest, will be 1.4 percent smaller than forecast in February, the government said, on signs of worsening damage from citrus greening, a plant disease.

The state will produce 139 million boxes of the fruit in the harvest that runs from October through June, down from 141 million forecast a month ago, the U.S. Department of Agriculture said today in a report. The average estimate of seven analysts and traders in a Bloomberg News survey was 139.6 million boxes. Florida produced 146.6 million boxes in the previous season.

“Citrus greening has become more of a problem than anyone imagined,” Shawn Hackett, the president of Boynton Beach, Florida-based Hackett Financial Advisors Inc., said in a telephone interview before the report. “Something’s happening here that’s unexplainable by weather. It’s been a pretty normal winter, but the crop’s falling apart.”

Citrus greening, a bacterial disease first found in the state in 2005, starves a tree of nutrients, causing the fruit to drop prematurely. Oranges are often smaller, especially in younger trees.

The rate of fruit spoiling in the Valencia variety, which is forecast to account for 52 percent of the Florida crop, “has increased sharply in the past two months,” the USDA said.

According to a study by economists at the University of Florida in Gainesville, greening has reached 32 citrus- growing counties in the state, causing $4.5 billion in economic damage.

Temperatures were normal to 3 degrees Fahrenheit above average across the state’s citrus belt in February, according to MDA Information Systems Inc. in Gaithersburg, Maryland. Precipitation fell to 28 percent of the February average in some areas, while staying close to normal in others, Donald Keeney, a senior meteorologist at MDA, said in an e-mail.

“Rainfall was sparse, worsening the drought conditions in nearly all of the citrus-producing regions,” the USDA said in the report.

Orange juice futures for May delivery rose 6.4 percent to $1.3255 a pound at 10:29 a.m. on ICE Futures U.S. in New York. A close at that level would leave the commodity up 13 percent this year on the smaller Florida crop amid signs of rebounding U.S. demand for the beverage.

Yields in Florida will average 1.61 gallons per box, down from 1.63 gallons a year earlier, the USDA said.

A box weighs 90 pounds, or 41 kilograms. Brazil is the biggest orange producer.

- Oliver Renick in Chicago at Bloomberg.