Orange Juice Fresh-Squeezed Gains

On June 25, 2014, in orange juice futures news report, by Infinity Trading
orange juice futures

orange juice futures

June 24th, 2014

Even the most obscure commodities can be profitable if an investor strikes at the right time.

And, as Wall Street Daily Founder, Robert Williams, recently pointed out, there’s a juicy opportunity in oranges [1] right now.

That’s because orange juice exports to overseas markets are exploding, even as supplies shrink to a 29-year low.
Putting the Squeeze on Crop Yields

Florida is the world’s second-largest orange producer, and right now its orange crop is dwindling. In fact, the Department of Agriculture announced not long ago that the Florida orange crop will be the smallest since 1985!

So it’s not surprising that the price of orange juice has jumped 18% in 2014.

The poor crop collection is being partly attributed to an infestation of Asian citrus psyllids, gnat-sized insects that carry a bacterial disease that causes oranges to shrink and drop off the tree early.

On top of that, hurricane season is underway, and the odds favor a hurricane making landfall this year. Amazingly, the United States hasn’t been hit by a major hurricane – one with winds of at least 111 mph – since Wilma hit Florida in 2005. That’s the longest such period in modern times.

Yet in spite of all the bad news, there’s one factor that’s keeping orange juice prices afloat: demand.

You see, even though U.S. demand for orange juice is down 34% over the past decade, overseas demand is on the rise. South Korea, for example, is now the No. 2 importer of U.S. orange juice.

In 2012, the country removed a 54% tax on U.S orange juice and, since then, imports have been ripe. Through April of this year, South Korea had already imported 13.2 million gallons of orange juice, mainly in the form of frozen concentrate. That nearly matches their total imports from all of 2013.
Orange You Thirsty… for Profit?

Going forward, one thing is certain: These changes in the juice market will mean higher prices at the grocery store when buying Minute Maid, Simply Orange, or Tropicana. Orange juice prices have spiked 42% in the last decade, and there’s still room to run.

And on the investment side, orange juice futures should continue to trade higher this year as the fallout from the Asian citrus psyllids spreads.

Industry observers expect futures to move north of $2 per pound, which would be the highest price in more than two years. That means savvy investors have a sweet opportunity…

But bear in mind, orange juice futures are a very thinly traded market. They’re notoriously volatile, so be careful. You don’t want your portfolio to go to pulp.

And “the chase” continues,

Tim Maverick