US citrus: First quarter’s surprise outperformer was farm commodity

As the coronavirus pandemic - and perhaps a misguided desire for vitamin C- helped to drive a surge in demand for the drink, orange juice futures were a surprise outperformer in the first quarter this year.

During the first three months of the year, orange juice futures for May delivery gained 20.5% to be priced at $1.20 a pound. In March alone, the futures were up more than 25%.

This upward spike in prices came as global stock markets and other assets tumbled amid panic around the coronavirus crisis.

The Dow Jones Industrial Average and S&P 500 were both down by around 20% over the quarter, while European stocks posted their worst quarter since 2002. Crude oil also plummeted over the period, losing more than 65% of its value, as the pandemic weighed and oil exporters Saudi Arabia and Russia engaged in a price war.

Before the coronavirus crisis, orange juice futures had fallen to “really low levels,” Sonneville noted, as demand slipped. Prior to the ongoing pandemic, Rabobank had predicted that demand would continue to decline into 2021.

“Whether we would fall back very quickly to below a dollar after the crisis, I don’t think so, given the problems there are with the 2020/2021 harvest,” he told CNBC. “But whether we would go up to $1.50, I wouldn’t dare to say.”


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