US Orange Juice Prices Rise to Two Year High as Orange Production Plummets

US FCOJ futures have risen due to an expected decrease in orange production. Prices surged to USD 1.62/lb on 27 Jan-22, the highest in almost two years. The latest US orange crop estimate published by the USDA places the 2022 crop at 44.5 million boxes, 16% lower YoY. Citrus greening has also led to the average size of oranges shrinking to near the minimum size, resulting in more fruit filling each 90lb box. Citrus greening has affected eight US territories and states, including Florida, the leading citrus-growing state in the US. This downward trend in orange supply is pushing prices up.

Floridian orange production has depleted the most, which directly affects FCOJ production as orange processing is heavily reliant on the Florida crop. The citrus greening disease affected many Florida orchards a few years ago and continues to significantly impact orange crop harvest. As it is permanent and incurable, infected trees need to be removed, allowing for replanting. It could thus take a few years for orange production to recover in the US. US producers have initiated strategies to remedy the situation, such as importing orange trees from Brazil as part of the replanting process. On the back of this, FCOJ supplies may stay tight going forward.

Another factor slowing down FCOJ production in the US is the shift in consumer trends. Many consumers in the country are opting to take vitamin pills and leave off fresh and frozen fruit as a cheaper way of obtaining vitamin C. Consumers are also shifting towards bottled juice rather than frozen concentrate. Grocery stores in the US are placing machines that produce fresh-squeezed juice as consumers prefer the taste to other forms of orange juice.

Inflation continues to impact fruit juice markets, and for the next two cropping seasons, until the orange crop recovers from citrus greening and the high production costs subside, the upside risk in the FCOJ market will persist.