Investing.com - Orange juice came under heavy selling pressure on Wednesday, dropping to the lowest level since October 2010 on the view that global supplies are more than ample to meet demand.
On the ICE Futures Exchange, orange juice for May delivery traded at USD1.4465 a pound during early U.S. morning trade, tumbling 1.1%.
It earlier fell by as much as 1.3% to trade at USD1.4430 a pound, the lowest since October 21. 2010.
Orange Juice prices have lost nearly 25% since March 5, including a 4% plunge on Tuesday, as favorable weather conditions in Florida, the largest citrus-growing state in the U.S., dampened sentiment on the commodity.
The downward trend in prices continued on Wednesday after U.S. Department of Agriculture chief economist Joe Glauber said that orange juice consumption in the U.S. has declined as part of “a longer-term trend” amid competition from other fruit juices and drinks.
The Florida Department of Citrus said last week that U.S. retail sales of orange juice from October through mid-March was nearly 11% lower compared with a similar period a year ago.
In its Supply & Demand Estimate Report published Tuesday, the USDA lowered its estimate on orange production in Florida by 1.4% to 145 million 90-pound boxes for the year, down from March’s forecast of 147 million boxes.
The downward revision reflected a drop in orange juice consumption and an increase in plant disease.
Market analysts expected prices to continue their downward trend and eventually test the USD1.00-level as the likelihood of a freeze this season has becomes nearly non-existent, while the start of the annual Atlantic hurricane season is still more than six weeks away.
The U.S. hurricane season begins on June 1 and ends on November 30.
Florida is the largest citrus-growing state in the U.S., accounting for nearly three-quarters of U.S. concentrate supplies. The state is also responsible for 15% of global oranges.
According to Florida Citrus Mutual, the state’s leading industry group, the industry generates nearly USD9 billion a year in economic activity and employs almost 76,000 people across the state.
Continued market talk of hedge funds and large institutional investors liquidating long positions amid bearish chart signals further added to the selling pressure.
Trading volumes on the orange juice futures market are thin compared to other commodities. It is the smallest agricultural market on the ICE Futures exchange and a large sell or buy order from funds can result in exaggerated price action.
Back in January, prices rallied sharply to a record high USD2.27 a pound after the U.S. said it found a prohibited fungicide in imports of Brazilian juice, which accounts for half of all imports and around 10% of U.S. juice supplies.
The FDA conducted tests and excluded some shipments, but fears over a disruption to supplies receded amid optimism over the Florida crop.
Elsewhere, on the ICE Futures Exchange, cotton futures for May delivery eased up 0.5% to trade at USD 0.9018 a pound, while sugar futures for May delivery added 0.35% to trade at USD0.2391 a pound.
On the ICE Futures Exchange, orange juice for May delivery traded at USD1.4465 a pound during early U.S. morning trade, tumbling 1.1%.
It earlier fell by as much as 1.3% to trade at USD1.4430 a pound, the lowest since October 21. 2010.
Orange Juice prices have lost nearly 25% since March 5, including a 4% plunge on Tuesday, as favorable weather conditions in Florida, the largest citrus-growing state in the U.S., dampened sentiment on the commodity.
The downward trend in prices continued on Wednesday after U.S. Department of Agriculture chief economist Joe Glauber said that orange juice consumption in the U.S. has declined as part of “a longer-term trend” amid competition from other fruit juices and drinks.
The Florida Department of Citrus said last week that U.S. retail sales of orange juice from October through mid-March was nearly 11% lower compared with a similar period a year ago.
In its Supply & Demand Estimate Report published Tuesday, the USDA lowered its estimate on orange production in Florida by 1.4% to 145 million 90-pound boxes for the year, down from March’s forecast of 147 million boxes.
The downward revision reflected a drop in orange juice consumption and an increase in plant disease.
Market analysts expected prices to continue their downward trend and eventually test the USD1.00-level as the likelihood of a freeze this season has becomes nearly non-existent, while the start of the annual Atlantic hurricane season is still more than six weeks away.
The U.S. hurricane season begins on June 1 and ends on November 30.
Florida is the largest citrus-growing state in the U.S., accounting for nearly three-quarters of U.S. concentrate supplies. The state is also responsible for 15% of global oranges.
According to Florida Citrus Mutual, the state’s leading industry group, the industry generates nearly USD9 billion a year in economic activity and employs almost 76,000 people across the state.
Continued market talk of hedge funds and large institutional investors liquidating long positions amid bearish chart signals further added to the selling pressure.
Trading volumes on the orange juice futures market are thin compared to other commodities. It is the smallest agricultural market on the ICE Futures exchange and a large sell or buy order from funds can result in exaggerated price action.
Back in January, prices rallied sharply to a record high USD2.27 a pound after the U.S. said it found a prohibited fungicide in imports of Brazilian juice, which accounts for half of all imports and around 10% of U.S. juice supplies.
The FDA conducted tests and excluded some shipments, but fears over a disruption to supplies receded amid optimism over the Florida crop.
Elsewhere, on the ICE Futures Exchange, cotton futures for May delivery eased up 0.5% to trade at USD 0.9018 a pound, while sugar futures for May delivery added 0.35% to trade at USD0.2391 a pound.