Business News: Orange juice futures are hitting record highs.
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Due to bad weather and a nasty citrus disease, orange juice futures are hitting record highs. There may be an increase in grocery prices as a result.

Prices in the OJ futures market have topped $3 per pound in recent weeks. At this time last year, prices were hovering around $1.81 per pound.

Due to a shortage of citrus around the world, prices have increased.

According to Billy Roberts, senior analyst for food and beverage at CoBank, this is a sad and perfect storm.

In Florida, which produces most of the orange juice consumed in America, hurricanes Ian and Nicole and a late freeze in late 2022 ravaged crops already thinned by citrus greening, which robs trees of key nutrients. It eventually kills trees infected with the disease, which produces fewer, lower-quality oranges.

Florida’s total orange production in the 2022-2023 season was estimated by the US Department of Agriculture at 20 million boxes – down 51% from the prior year and the smallest amount produced since 1936-1937.

A further decline in the forecast was expected by July. Approximately 15.9 million boxes are expected to be produced in Florida in 2022-2023, according to the USDA.

Mathew Joyner, CEO of Florida Citrus Mutual, a trade group, said citrus greening is citrus growers’ greatest challenge, adding that “new treatment methods are proving successful in combating citrus greening.”

Bad weather is also causing problems for major international exporters Brazil and Mexico.

Roberts predicted a lower orange crop for Brazil. In the industry, I think those Brazilian crop numbers have caused a little concern.”

As the situation has continued to worsen this year, traders are coming to terms with the low supply, said Roberts. On top of other production costs, the surging prices are partly a reflection of the dire conditions, he said.

Andrés Padilla, a senior analyst with Rabobank, wrote in an April Rabobank report that the United States is increasingly importing from international markets like Brazil because of storms and disease.

“Record-high orange juice prices in 2023 result from a tight market, with smaller production than expected and low inventories,” he explained.

The combination of two consecutive small harvests in 2020/21 and 2021/22, as well as worsening news for the current 2022/23 season, created the perfect environment for rising OJ prices in 2018.

In recent years, drought has hurt Mexico’s agricultural production, said Jack Scoville, an agricultural products analyst at Price Futures Group.

Futures prices could spike, resulting in higher grocery prices, he said. The price of a 52-ounce bottle of Tropicana Original orange juice is currently $4 on Walmart’s website.

In addition to supply, pricing is also determined by consumer demand.