Orange Juice Sep '24 (OJU24)

Description

The orange tree is a semi-tropical, non-deciduous tree, and the fruit is technically a hesperidium, a kind of berry. The three major varieties of oranges include the sweet orange, the sour orange, and the mandarin orange (or tangerine). In the U.S., only sweet oranges are grown commercially. Those include Hamlin, Jaffa, navel, Pineapple, blood orange, and Valencia. Sour oranges are mainly used in marmalade and in liqueurs such as triple sec and curacao.

Frozen Concentrated Orange Juice (FCOJ) was developed in 1945, which led to oranges becoming the main fruit crop in the U.S. The world's largest producer of orange juice is Brazil, followed by Mexico. Two to four medium-sized oranges will produce about 1 cup of juice, and modern mechanical extractors can remove the juice from 400 to 700 oranges per minute. Before juice extraction, orange oil is recovered from the peel. Approximately 50% of the orange weight is juice, with the remainder being peel, pulp, and seeds, which are dried to produce nutritious cattle feed.

The US marketing year for oranges begins December 1 of the first year shown (e.g., the 2020-21 marketing year extends from December 1, 2020, to November 30, 2021). Orange juice futures prices are subject to upward spikes during the US hurricane season (officially June 1 to November 30), and the Florida freeze season (late-November through March).

Frozen concentrate orange juice futures and options are traded at the ICE Futures US Exchange. The ICE orange juice futures contract calls for the delivery of 15,000 pounds of orange solids and is priced in terms of cents per pound.

Prices - ICE frozen concentrate orange juice (FCOJ) futures prices (Barchart.com symbol OJ) posted their low for 2023 of 202.20 cents in January. FCOJ prices rallied sharply throughout 2023 as hurricane damage, frost, and citrus greening disease decimated Florida's 2022/23 orange crop. In April, the USDA estimated the 2022/23 Florida orange crop at 16.1 million boxes, down -61% yr/yr and the smallest since 1936. The total 2023 US orange crop of 62.25 million boxes was the lowest output in 86 years. With limited US supplies, demand for FCOJ from Brazil, the world's largest orange juice exporter, soared and Brazil's 2023 orange juice inventory fell -41% yr/yr to a record low of 84,745 MT. FCOJ prices surged to a record high of 431.95 cents in October as orange juice supplies continued to tighten. US stockpiles of orange juice in cold storage sank to a 54-year low in December of 181.13 billion pounds. Record high orange juice prices began to curb demand as the USDA reported US orange juice consumption in 2023 fell to a 5-year low. FCOJ prices fell moderately toward the year-end on the weaker demand but still finished 2023 up sharply by +55% yr/yr at 320.20 cents.

Supply - World production of oranges in the 2023/24 marketing year is expected to rise by +1.8% yr/yr to 48.819 million metric tons. The world's largest producers of oranges in the 2023/24 marketing year are expected to be Brazil with 33.8% of world production, followed by China with 15.6%, the European Union with 11.2%, Mexico with 10.0%, and Egypt with 7.6%.

US production of oranges in 2022/23 fell by -25.3% yr/yr to 60.130 million boxes (1 box equals 90 lbs). Florida's production in 2022/23 fell by -61.7% yr/yr to 15.800 million boxes, and California's production rose by +10.5% yr/yr to 43.200 million boxes.

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