US FCOJ Prices Remain Bullish in March as Orange Production Drops to 70-year Low

US FCOJ futures have continued on an upward trajectory in Mar-22, owing to the dwindling orange crop following the effects of the citrus greening disease and recent freeze damage. By 25 Mar-22, FCOJ prices had risen to USD 1.51/kg, a MoM increase of 11% and over 20% more than last year's price.

According to the USDA's March Florida Citrus Forecast, the 2021-22 orange crop could fall to 41.2 million boxes, over 20% lower than last season's harvest. This figure could signify Florida's lowest orange crop in over 70 years. The effects of citrus greening have been devastating, resulting in over 60% of the US' orange growers leaving the industry in the past five years. Another factor hampering production is the cold freeze that swept through the US South Coast in January, which caused significant damage to this season's crop as certain regions witnessed the lowest temperatures in years. Bad crop and adverse weather sentiments caused FCOJ futures to rally in 2022.

Prices for US FCOJ and all forms of orange juice have been high throughout Q1 2022 and could remain elevated in the coming months as inflation continues to plague the country. The price trend has varied implications for different industry stakeholders. Consumers could be deterred from purchasing orange juice, opting for vitamin pills for nutritional benefit, a trend that has been growing in recent years. This dip in domestic sales could hurt local suppliers. However, producers can afford to remain patient in selling, as futures could rise in the short and long term, allowing for favorable selling chances for orange producers and FCOJ processors. Rising FCOJ prices could impede exports that had already been affected by low demand from the EU following the war in Ukraine.

Florida orange farmers are trying to figure out how to adapt to the greening disease and keep their trees healthy. Meanwhile, researchers from Penn State University and the USDA have recently developed technology that can detect the greening disease at an early stage. This innovation could allow farmers to uproot affected trees early, thus protecting their orchards from the spread of the disease. This technology could aid the recovery of the country's orange crop and lead to lower orange juice prices in future years. However, given the state of the current crop, FCOJ prices are expected to remain bullish for the rest of the year.