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| 12-12-2011
At about $1.75 a pound, orange juice prices are threatening to break through to levels not seen since the great commodity surge that peaked in mid-2007.
What’s driving OJ? Well, the move is primarily a function of struggling supply. A hard frost has stunted the harvest in the crucial orange growing regions of Florida over the past two seasons. High nitrogen fertiliser prices have discouraged, on the margin, some output-boosting applications. The spread of “greening” disease has also forced farmers to uproot some trees and is expected to crimp production further.
The world’s biggest citrus grower is Brazil but the strong real has discouraged farmers from selling into a market priced in dollars. Orange juice inventories monitored by ICE Futures have fallen 46 per cent during the past year. Consumption has remained steady, and buyers have been fretting about the possibility of more cold weather this winter. Furthermore, OJ is not immune to broader risk appetite swings, and the recent better-than-expected US economic data have been encouraging some speculators to take a sip.
Read the original article from the Argentine Citrus Federation.