On Friday 7 October, orange juice futures declined as Hurricane Matthew battered Florida but did not appear set to damage the state's citrus growing areas.
Frozen concentrated orange juice for November delivery fell 0.8% to close at $1.9810 a pound on the ICE Futures U.S. exchange.
But as the storm moves closer to the U.S., it looks increasingly less of a threat to Florida oranges as the storm will be north of most of its citrus growing areas.
The lackluster price reaction in the face of a hurricane suggested that "this is a rally that's showing signs of fatigue," said Joe Nikruto, a senior broker at R.J. O'Brien Futures in Chicago. Orange juice was the best performing commodity in the third quarter, up 15.7%, as Florida's citrus industry was struggling with tumbling production, in part due to a crop disease. Prices popped up to as high as $2.1825 a pound on Sept. 28, the highest level since January 2012.
The U.S. Department of Agriculture reported that in the 2015-16 season, 32% of oranges fell from trees before the harvest, versus 7% on average five years ago, as the disease, called citrus greening, causes fruit to drop before it is ripe.
But orange-juice prices were not able to stay above the $2 level for any significant time, and Friday's price moves would prove to be another disappointment for many traders.
As of last Tuesday, open interest in frozen concentrated orange juice reached 17,057 contracts, the highest since Aug. 9. Money managers betting for higher prices outweighed bearish speculative bets by 6,833 contracts, the largest net bullish positions since April 14, 2004, according to data from the U.S. Commodity Futures Trading Commission.
Technically, "if the markets should travel another 60 points lower, that would give us yet another clue...whether or not this rally could pause or turn around," Mr. Nikruto said.
Orange harvest in Florida will be starting in a few weeks, and "prices could start to work lower at that time, but for now the market seems to need some orange," said Jack Scoville, an analyst with Price Futures Group in Chicago, in a note to clients.
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