Orange juice price forecast as Hurricane Idalia gains momentum

Orange juice price rally gained steam as investors focused on the happenings in Florida, the biggest producing state in the United States. Data by TradingView shows that prices jumped to $3.20 on Tuesday, a few points below the year-to-date high of $3.31. It has soared by more than 60% from the lowest level this year.

Hurricane Idalia concerns

The biggest catalyst for orange juice prices is the unfolding Hurricane Idalia. According to media reports, the hurricane will hit Florida as a stronger-than-expected category 4 event. At the same time, it is expected to lead to a stronger storm than anticipated. 

Most importantly, some reports say that the hurricane will bring a once-in-a-lifetime level of damaging winds and storm surge. 

Orange juice prices tend to be highly sensitive to hurricane events in Florida, which is the biggest producer in the country. In fact, prices have remained in a strong bullish trend after Irma in 2017 and Michael in 2018.

Orange farms are affected by hurricanes because of the flooding, winds, and damage to crops. Unlike other crops like corn and soybeans, citrus plants take a longer period to grow and produce fruit.

The most recent data by the USDA showed that the state will produce 15.65 million boxes of oranges. If this happens, it will be the lowest production since the 1934-1935 season. It will also be lower than the 41.2 million boxes it produced in the 2021-2022 season.

Orange juice price is also being affected by weather events that are leading to lower output in South America. The ongoing drought has even led to a major crisis in the Panama Canal, which is an important route for food products.

Therefore, as I have written before, the outlook for orange juice prices is bullish as the world contends with these challenges. Orange demand remains significantly high as US inflation eases and the unemployment rate drops.

Orange juice price forecast

The 4H chart shows that orange juice prices have been in a strong bullish trend in the past few months. It has risen above the important resistance level at $3.10, the highest point on July 27th. Orange juice has jumped above the 25-day and 50-day moving average and the support at $2.86.

Therefore, the outlook of orange juice is bullish, with the initial target to watch being at $3.32, the YTD high. A move above this level will open the possibility of it soaring to $4.

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