Breaking News
Investing Pro 0
Free Webinar - Master Indicators: Maximized Trading Potential! | Thursday, June 8 | 12:30PM EDT Enroll Now

Orange Juice: New $3 Record High on Charts Before Swing Lower 

By Investing.com (Barani Krishnan/Investing.com)CommoditiesMay 23, 2023 04:48AM ET
www.investing.com/analysis/orange-juice-new-3-record-high-on-charts-before-swing-lower-200638337
Orange Juice: New $3 Record High on Charts Before Swing Lower 
By Investing.com (Barani Krishnan/Investing.com)   |  May 23, 2023 04:48AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
OJ
-8.65%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • FCOJ entrenches position in club of double-digit commodity annual gainers
  • Orange juice up 29% on the year, could finish May in the black after 2 months of losses
  • Rabobank says sans overproduction in Brazil, citrus prices look set to stay firm
  • Charts show bulls could attempt new $3 all-time high that could trigger another price tumble

Away from the rough and tumble of oil, gold and other commodities that may be exposed to the U.S. debt crisis, the exclusive club of raw materials with double-digit gains for the year are pressing ahead with momentum — particularly orange juice which seems to have regained its footing from volatility that followed record highs.

The club of double-digit gainers is all made of up crop commodities: Robusta beans, up 40% on the year; cocoa (+16%); arabica coffee (+13%) and raw sugar, feeder cattle, and frozen concentrated orange juice futures, or FCOJ — which are all up 29% or more each.

FCOJ Monthly Chart
FCOJ Monthly Chart

Charts by SKCharting.com, with data powered by Investing.com

FCOJ makes an interesting argument, with its front-month appearing to have shaken off bouts of profit-taking that occurred at record highs of almost $2.88 a pound a month back. Case in point: A market that could end May in the positive after losses since February.

And charts indicate that bulls in the space could attempt taking juice to a new all-time high towards $3 before another tumble that could set in.

In Tuesday’s pre-open to its regular New York trading session, FCOJ for July delivery hovered at around $2.68, pulling away from a two-month low of $2.41 hit last week.

The Fundamentals

Jack Scoville, chief crop analyst at Price Futures Group in Chicago, said the bulls in orange juice are trying to turn up the price action on the back of a tight production estimate in Florida, the top U.S. orange growing state. Adds Scoville:

“Demand is thought to be backing away from FCOJ with prices as high as they are currently, but the market has not taken any note and continues to work higher. Historically low estimates of production due in part to the hurricanes and in part to the greening disease that have hurt production, but conditions are significantly better now with scattered showers and moderate temperatures.”

Scoville added that global weather was generally good for citrus production now, including in Florida which has been impacted in a big way by the two storms. Even top citrus grower Brazil has some rain and conditions are rated good, he added.

Scoville’s outlook comes on the back of a recent Rabobank report that’s also positive for FCOJ. According to the Utrecht, Netherlands-based bank the orange juice market is staying tight for at least another season, unless there is a significant supply-side surprise for the 2023/24 harvest in Brazil or a much sharper contraction in global demand in 2H 2023.

Rabobank said record-high orange juice prices in 2023 were a consequence of a very tight market, with smaller-than-expected production and low inventories. However, the decline of OJ demand is set to accelerate this year, in the face of high prices and weaker consumer demand, which will, in part, allow the market to find an equilibrium at high levels. Prices will probably remain high, at least until forecasts for the 2023/24 Brazil harvest provide more clarity on supply relief.

Says Andres Padilla, senior analyst at Rabobank:

“We see very low inventories from two consecutive small harvests in 2020/21 and 2021/22, plus worsening news for the current 2022/23 season. This created the perfect environment for OJ prices to see a significant rally this year, surpassing levels last seen back in 2017 and climbing toward all-time highs. The global OJ market is under supply stress, and the lack of clarity regarding when inventories will be replenished is increasing the upward pressure on prices. In addition, the ongoing decline of production in Florida has meant that US imports have been rising over the past four years, adding demand for exports from Brazil”.

Rabobank said its base assumption was that the United States will remain primarily dependent on imports in the coming years, as there is no clear path for a sustained recovery in Florida under current conditions. Significant additional investments would be required to increase production, but rising production costs are making new investments in orange groves less attractive.

Despite weakening demand, the global supply/demand balance is on course for another deficit this season, albeit smaller than the past two years, Rabobank said.

“All eyes are on the first forecasts for Brazil’s 2023/24 harvest as a measure of global supply. Some early indications suggest that a crop similar in size to 2022/23 could be in the cards, given rain patterns, flowerings, and tree conditions at this stage of the cycle. However, it is unclear whether such a crop would be sufficient to alleviate inventory issues, even if fruit quality and harvest size were both satisfactory.”

The increasing dependence of the United States on imports, ongoing challenges in Mexico with lower productivity, and the absence of other suppliers mean that Brazilian supply will probably remain tight into 2023/24, Rabobank said, adding:

“A couple of sizable harvests will be needed to rebalance the market to a more neutral position, unless of course global demand falls much faster than expected due to high prices, which is a real risk for the OJ category.”

Technicals

So, what are the technical resistances and support for FCOJ?

FCOJ Weekly Chart
FCOJ Weekly Chart

A new all-time high towards $3 beckons but that could also lead to serious selling, says Sunil Kumar Dixit, chief technical strategist at SKCharting.com. He adds:

“A weekly close above $2.80 can extend the upward move towards the psychological barrier of $3.00, which urges caution as selling pressure from this zone is a high probability that can trigger a sharp drop to $2.60 and $2.40. Weakness below $2.40 will indicate a selling pressure towards $2.20.”

FCOJ Daily Chart
FCOJ Daily Chart

For now and towards the end of May, Dixit said the 100-day SMA, or Simple Moving Average, of $2.47 has formed a so-called horizontal support base after FCOJ’s strong consolidation above the zone.

“A sustained break above 50 Day EMA dynamically positioned at $261 adds further strength to current momentum and opens way for the next leg higher that matches swing high of $2.80.”

***

Disclaimer: The content of this article is purely to educate and inform and does not in any way represent an inducement or recommendation to buy or sell any commodity or its related securities. The author Barani Krishnan does not hold a position in the commodities and securities he writes about. He typically uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables.

Orange Juice: New $3 Record High on Charts Before Swing Lower 
 

Related Articles

Orange Juice: New $3 Record High on Charts Before Swing Lower 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
NK Dole
NK Dole May 23, 2023 9:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great article and nice to see something on a different commodity that isn't always discussed. I always think about the movie "Trading Places" when reading about orange juice futures... Where is Billy Ray Valentine and Louis Winthorpe III when you need them?  Have a great day.
Barani Krishnan
Barani Krishnan May 23, 2023 9:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks much NK for the endearing support. Yes, I'm trying to give some love to the oft-ignored ags and softs space. I love that movie too: What a combination: Ackroyd, Murphy, Bellamy and Elliot!
Roy Nisani
Roy Nisani May 23, 2023 8:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
pumping orange juice... u can't make this stuff up 🤣🤣
Mary Wangare
Mary Wangare May 23, 2023 8:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
i can
Barani Krishnan
Barani Krishnan May 23, 2023 8:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No, you can't Roy ... and yes, YOU can, Mary! LOL :)
Remzi AbdlA
Remzi AbdlA May 23, 2023 4:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Remzi abdla
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email