Orange juice futures prices exploded higher this week, rising 13.48%. The move is in line with FLOJ being the best performing commodity in the first quarter of the year, they were up 30.8%. They are up 71% in the past year. The reason is supply, the U.S. Department of Agriculture estimates Florida production will fall to only 15.65 million boxes of oranges this season. In the 2021-2022 season Florida growers produced fill 41.2 million boxes. For perspective twenty years ago, the average output for the state was around 200 million boxes. The region was hit back-to-back hurricanes Ian and Nicole last fall and a citrus greening disease. A hard freeze in January only exacerbated the issue.

Furthermore, a severe drought last season in California and number one Brazil, drove prices higher earlier this year. The U.S. is expected to import more oranges from Mexico to meet demand.

Global Oranges Production

Florida at one point helped the United States be the world’s, top orange producer. Brazil is now the global number one producer and China number two. Brazil produces twice as many oranges as China. The United States has fallen to be the sixth largest grower.

The United States is still a top five orange exporter and is expected to account for 6% of global shipments this season versus a peak share of 23% two decades ago. The United States was the leading orange exporter back in 1983, since then it is a tussle between Morocco and South Africa.

Florida Production

Citrus is a massive $6.7 billion industry in Florida and up until recently the state was the nation’s number one producer of oranges. California has recently overtaken it at the nation’s biggest orange grower.

The U.S. Department of Agriculture estimates Florida production will fall to only 15.65 million boxes of oranges this season. In the 2021-2022 season Florida growers produced fill 41.2 million boxes. The slide has been rapid, that is less than 20% of U.S. output in the record 1997-1998 season. For perspective twenty years ago, the average output for the state was around. 200 million boxes. The state was hit by back-to-back hurricanes and a citrus greening disease.

Citrus greening disease

Florida has been battling a widespread disease known as citrus greening for more than a decade, shrinking the state’s output. Florida state legislators have passed a bill which will provide $49.5 million in relief to the disease, a $12.5 million increase from this year. That bill is currently awaiting the signature of Gov. Ron DeSantis. With that a citrus greening treatment is showing some promise.

U.S. Imports of Oranges

With the collapse in production the U.S. imports of fresh oranges have increased, though at the same time demand has fallen. However, United States is the world’s top consumer. The United States imported a record 230,619 tonnes of fresh oranges in 2022 with Chile, Mexico and South Africa supplying 86%. The world’s biggest producer, Brazil does not export fresh oranges.

U.S. consumption is down more than 50% from its peak 25 years ago, a combination of the decline in production and therefore availability and pricing but also to shifting habits. Breakfast habits have changed. Juices are most often consumed at sit-down breakfasts and the changing lifestyles have gone to more breakfast on the run scenario. There is also an increased focus on health-conscious, lower sugar drinks.

Meanwhile OJ prices have been soaring with the production impacts from natural disaster and disease. From there perhaps changing habits will dictate the next big move. The stability of climate impacts is the other major factor.

Orange Juice was the best performing commodity Quarter ending March 31, 2023

Commodities

Quarterly Commodity Highlights

Agriculture

Agriculture commodities were at both ends, much to do with supply conditions such as with orange juice and cocoa at the top. Many of the grains had pulled back from over speculation from Russia’s invasion of Ukraine. Prices came back dramatically in grains in particular.

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Five Factors in a Constructive Strategy for Investing in Commodities

Investing in commodities is something that needs to be done within a constructive strategy to understands risks and opportunity. There are many factors to consider individually depending on one’s access, location and financial position. Five factors to consider are monitoring the market, monitoring supply and demand dynamics, diversification, long-term focus and dollar cost averaging.

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2023.

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