US: Orange-juice prices soar after cold blast in Florida

Orange-juice futures surged Wednesday as bitter cold weather blasted through Florida's citrus groves. Frozen, concentrated orange juice for January delivery jumped 6.5% to $1.8475 a pound, the front-month contract's highest settlement in more than two months on ICE Futures U.S. The more-actively traded March-delivery contract rose 2.9% to settle at $1.7805 a pound. "Today's rally was due to the cold weather in the Florida citrus-growing regions," said Boyd Cruel, a senior commodities analyst at Chicago-based Vision Financial Markets. "It's the possibility of lower production." Overnight temperatures in some areas of central-west Florida dropped to 22 degrees Fahrenheit, low enough to freeze fruit. The cold weather is expected to continue into early Thursday, although the temperatures aren't expected to be as low.

Florida oranges produce about three-quarters of U.S. concentrate supplies, and imports cover the rest. About 75% of those imports come from Brazil, the world's largest producer of frozen, concentrated orange juice. Futures prices moved higher on speculation that the freeze could damage Florida's fruit at a time when U.S. stockpiles are down. Frozen orange-juice concentrate in U.S. warehouses totaled less than 500 million pounds in November, compared with about 800 million pounds in the same month of 2010, according to the U.S. Department of Agriculture. While the USDA is forecasting a 7% increase in orange production this season, which ends in September, a bitter winter could mean far less fruit. Florida Citrus Mutual, the state's main growers group, received some reports of frozen fruit and damage to leaves. However, the damage was "not widespread" because the low temperatures didn't last long enough, spokesman Andrew Meadows said.

"We were fine. We just watered the trees," said Ann Cronin, of Bartow, Fla.-based Bohde Grove Service, which provides crop services for several groves in the area. Watering citrus trees creates a protective frost over the fruit. The cold snap is expected to be over by Friday. "A warming trend will be going on for the next several days and overnight temperatures will be back into the 40s and 50s," said Logan Johnson, a forecaster at the National Weather Service's Tampa office. Orange-juice futures are up 4% from a year ago, which is pushing up the price at grocery stores and cutting into demand for the juice. According to Nielsen data published by the Florida Department of Citrus, a state agency, retail prices of orange juice rose 8.4% in the four weeks that ended Nov. 26 to $6.16 a gallon from the same period of 2010, while retail sales of the juice fell 8.7%.

Source: online.wsj.com