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Orange juice on the ICE Futures U.S. exchange gained 2.3% Tuesday, after trading as much as 7.9% higher in the session, as tropical storm Beryl dumped rain across top orange-producing state Florida.
It is unknown whether the rains will help or hurt the state’s citrus groves, traders said. But even the hint of fresh fundamental news after a months-long dearth of new supply-and-demand information was enough to send investors who bet that prices would fall scrambling to lock in profits.
“Folks look real hard to find any reason to cover profitable positions,” said Joe Nikruto, a senior broker at R.J. O’Brien Futures. “They’re not concerned about how real the fundamental [change] is, just how it’s going to affect sentiment.”
Front-month ICE orange juice for July delivery was 3.9% higher at $1.1355 a pound at midday Tuesday, after hitting a two-week intraday high of $1.1735 a pound.
Orange-juice futures have languished for months as a lack of market-related news and weak demand sent prices tumbling to levels not seen since October 2009.
“This is the first real—quote unquote—fundamental news” in months, Mr. Nikruto said. “But I don’t even know that this is a legitimate fundamental at the end of the day.”
Boyd Cruel, a senior analyst at Vision Financial Markets in Chicago said the heavy rains should support the market as investors worry about the possibility of flooding, but “it’s still too early to tell” whether those concerns are warranted.
The National Oceanic and Atmospheric Administration predicted a “near-normal” Atlantic hurricane season last week, but traders will likely look at each storm specifically.
The early arrivals of tropical storm Beryl and last week’s Bud are creating concerns that hurricane season could be bigger, longer or more intense than usual, leading traders to cash in profitable bets that prices would continue lower, or cover their short positions.
“Heaven forbid somebody who’s short and a winner give any of that profit back,” Mr. Nikruto said.
- By ALEXANDRA WEXLER