CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Orange juice price forecast: Extreme weather hinders production

By  Yoke Wong

Edited by Vanessa Kintu

13:05, 13 December 2022

a glass of fresh orange juice with fresh fruit on a wooden table
Orange juice is the liquid extract of the citrus fruit. Photo: Nitr / Shutterstock

The price of orange juice increased over the past month as the agricultural bull run continued in December amid the La Niña drought across South America.

According to Statista data, Brazil is the largest orange juice producer in the world, followed by the US and Mexico. The La Niña weather pattern has caused droughts in Mexico and southern Brazil this year, while hurricanes have slashed crop output in the US.

Leading orange juice producers 2021/2022 (in 1,000 metric tons)

The effect of La Niña is expected to fade in 2023, which could provide more stable planting conditions for orange tree crops in Brazil and Mexico.

The front-month frozen concentrate orange juice (FCOJ) futures contract traded on the Intercontinental Exchange (ICE) hit a fresh six-year high at $2.24 a pound on 8 December, the highest since October 2016.

Although orange juice prices eased at the end of last week and the January 2023 contract settled at $21.51/lb on 9 December, it remained at around the six-year highs level.

Prices have been rising since the beginning of this year, driven by the post-Covid demand boom amid falling orange crops in key producing countries. The FCOJ price started the year at $14.27/lb and rose throughout the year and surged past the $20/lb level by mid-October.

Frozen concentrate orange juice historical performance  

Are you interested to learn more about the orange juice market and analysts’ orange juice price predictions? Read this article for the recent market development and analysts’ outlook and orange juice price forecast.

What is orange juice?

Orange juice is produced by squeezing or reaming oranges. There are several varieties of oranges, including navel, Valencia, blood, clementine and tangerine.

Orange juice is high in vitamin C and has a sweet taste. It was introduced during World War II as the US government searched for an alternative vitamin C replacement for lemon crystals, which were rejected by the soldiers due to their unappetising sour taste.

Frozen concentrated orange juice was developed by scientists at the National Research Corporation in 1946, with support from the federal government and the Florida Department of Citrus. The product was commercialised to become a common breakfast beverage in the US. 

Capitalising on the popularity of frozen orange juice concentrate, Minute Maid became the first consumer juice supplier and remains a household brand.  

The FCOJ futures contract traded on ICE is the world benchmark contract for the agricultural commodity. The orange juice contracts are settled by physical delivery of US Grade A juice in the exchange’s licensed warehouse in several US delivery points. The permitted orange juice origins in the contracts are the US, Brazil, Costa Rica and Mexico.

The minimum contract size is 15,000 pounds of orange juice solids (3% or less). The price is quoted in cents a pound. The minimum price fluctuation is $7.50 a contract.

What is your sentiment on Orange Juice?

4.29751
Bullish
or
Bearish
Vote to see Traders sentiment!

Hurricane Irma slashes US orange crop in 2022/2023

According to the US Department of Agriculture (USDA) data released on 9 December, all orange production in Florida was expected to fall to 20 million boxes in 2022/2023, a drop of 8 million (29%) from its October forecast.

“If realised, this will be 51% less than last season’s final production,” said the USDA.

The orange industry commonly measured crop output in fruit boxes, each box of oranges is defined as containing 40.8kg of fruit.

The decrease in orange output in Florida, a key production region in the US, was due to crop destruction caused by Hurricane Irma in late September.

In July, the USDA warned that US orange production was expected to be at “the lowest level in over 55 years […] due to poor fruit set in California due to unfavourably dry weather and the continued decline in area and yields in Florida as a result of citrus greening.”

US orange production has been falling over the past 25 years, leading to reduced exports.

Oil - Crude

78.74 Price
-2.840% 1D Chg, %
Long position overnight fee 0.0511%
Short position overnight fee -0.0731%
Overnight fee time 21:00 (UTC)
Spread 0.040

Silver

29.25 Price
-2.070% 1D Chg, %
Long position overnight fee -0.0202%
Short position overnight fee 0.0120%
Overnight fee time 21:00 (UTC)
Spread 0.050

Natural Gas

2.16 Price
+1.220% 1D Chg, %
Long position overnight fee -0.0630%
Short position overnight fee 0.0410%
Overnight fee time 21:00 (UTC)
Spread 0.0050

Gold

2,401.36 Price
-1.830% 1D Chg, %
Long position overnight fee -0.0198%
Short position overnight fee 0.0116%
Overnight fee time 21:00 (UTC)
Spread 1.20

US orange production 1997-2021

As a result of the poor harvest, US orange juice output fell to a record low of 190,000 tonnes in 2020/22, down 17% from the previous season.

The US is the second largest orange juice producer after Brazil. The falling crop yield has cut global supply and pushed prices higher.

Brazil orange juice production and exports 2016-2022

Orange juice output, export rise in Brazil in 2022/23

According to data from the Brazilian Association of Citrus Exporters (CitrusBR), despite the dry weather condition in Brazil, the country’s orange juice output for marketing year 2022/2023 is expected at 1.028 million tonnes.

Brazil produced 821,600 tonnes of orange juice in marketing year 2021/2022. This is lower than Statista and USDA reported production of 1.138 million tonnes for the same year.

Brazil’s export of orange juice is expected to rise in 2022/23 as US’ output falls.

In November, the UK suspended the import tariff on concentrated and ready-to-drink juices between 1 January 2023 and 31 December 2024. 

CitrusBR welcomed the British government’s decision and said this could benefit juice shipments from Brazil to the UK. biapaba Netto, executive director of CitrusBR, said:

“We knew that there would be a window for reviewing a series of tariffs due to the UK leaving the EU and that there was a real chance that we could get this exemption, because there is no local orange juice production and it made no sense to penalise the consumer. with a surcharge that only makes the product more expensive.”

The UK is the third largest consumer market for orange juice in Europe, after Germany and France. Brazil shipped an average of 15,000 tonnes of orange juice to the UK in 2019/20, 2020/21 and 2021/22. There is potential to increase shipments following the suspension of import tariffs in the UK.

The EU is a major importer of Brazilian orange juice, accounting for 65.5% of the country’s 276,000 tonnes export in July to September (first quarter of 2022/23 harvest), said CitrusBR.

According to the USDA, Brazil is projected to account for nearly three-quarter of global orange juice exports.

Orange juice price forecast: Predictions for 2023 and beyond

Orange juice spot live chart

Despite the expected market surplus next year, some analysts remained bullish with their orange juice price forecast and projected prices to rise in the next one to five years.

Algorithm-based price prediction website Wallet Investor published its orange juice price forecast 2023 at $2.27/lb, rising to $3.06/lb in 2027. 

Gov Capital’s orange juice price forecast was more bullish. It projected the price to rise to $3.35/lb in the next 12 months. Gov Capital’s orange juice price forecast 2025 saw the price surging past $8/lb by the end of 2025, reaching $10 by 2027.

Trading Economics expected the average orange juice prices to rise to $2.23/lb by the end of 2022 and $2.49 in 12 months’ time. 

Due to the market volatility caused by the war in Ukraine and the uncertainty in crop yield caused by the La Niña weather pattern, analysts have refrained from issuing any long-term orange juice price projection and no analyst has issued any orange juice price forecast 2030.

Note that analysts’ predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading. And never invest or trade money you cannot afford to lose.

FAQs

Is orange juice a good investment?

Orange juice is a popular beverage globally and a good source of vitamin C. All agricultural commodity prices can be volatile. Whether it’s the right investment for you depends on your investing goals and portfolio composition. You should conduct your own research. And never invest what you cannot afford to lose.

Will orange juice go up or down?

No one can say for sure whether the price of orange juice will go up or down. The price movement will depend on the commodity’s supply and demand. It’s also worth noting that as the US dollar is the main denomination in contracts. Its value can affect on prices.

Should I invest in orange juice?

Only you can decide if you should invest in orange juice and this will depend on your investment goals, risk profile and portfolio composition. Please do your research before making any investment decision and remember that orange juice price forecasts by analysts could be wrong. You should conduct your own research. And never invest what you cannot afford to lose.

Markets in this article

Orange Juice
Orange Juice
4.29751 USD
-0.00984 -0.230%

Related topics

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading