Orange farmers in the U.S. and Brazil are recovering from the citrus-greening disease that decimated fruit farms across the Americas over the past decade. But with production on the rise, prices are falling.
Growers are reinvesting in more-resistant tree varieties, strengthening existing trees with nutrients and making sure young trees are disease-free for at least two years. Resulting in bigger fruit and a rebound in the number of oranges produced.
But according to https://www.wctrib.com the larger crop has undercut the price of orange juice. Futures have lost 38% in the past year, the worst performance among 34 major commodities tracked by Bloomberg. Meanwhile, the battle with citrus-greening disease is costly, and demand for juice has been sliding.
At current prices for futures, "nobody in the world is making money," said Thomas Spreen, a retired agricultural economist at the University of Florida in Gainesville, who has worked for the Florida Department of Citrus.
The amount of orange juice produced worldwide in the 2018-2019 season, ending Sept. 30, is forecast to rise 36% year-on-year to 2.17 million metric tons, the highest level in eight years, according to the U.S. Department of Agriculture.
From October through July 22, U.S. retail sales fell 5.8% from a year earlier to 307.3 million gallons, the Florida Department of Citrus said in a report last month. That follows an 18-year period in which demand fell by almost half as calorie-counting baby boomers and millennials turned to a growing number of beverage options.
There's "a challenging scenario for orange-juice futures in this year's second half," said Andres Padilla, analyst for Banco Rabobank International in Sao Paulo. "Brazil's harvest has already started with the outlook of being a big and good quality crop, but demand figures continue to be disappointing."
Even with greening disease still at issue in Brazil groves, the nation's farmers are improving yields amid investments in technology. The 2019-20 crop is set to reap 36% more fruit than a year earlier while it will be 21% above the 10-year average output, according to industry foundation Fundecitrus.
In Florida, the second-largest regional juice producer after Brazil, farmers harvested 59% more oranges than in the previous season, when they faced damages from Hurricane Irma. The increase, though, is coming at a high cost, said Ray Royce, executive director of the Highlands County Citrus Growers Association.
The grower's association, which produces as much as 14% of the state's crop, collected between 9 million to 9.5 million 90-pound boxes this season, and should replicate the output in the season starting Oct. 1, if not "a little better," Royce said. Last year, the group collected about 6 million boxes.
The USDA will release its initial Florida crop forecast of the 2019-20 season on Oct. 10.