Orange juice price surge explained and what happens next

Orange juice price has gone parabolic this year as it reached a record high. Data compiled by Barchart shows that it jumped to a high of $438.50 on Thursday, crossing the previous all-time high of $415. 

Orange Juice’s performance has been increasingly strong considering that it was trading below $90 in 2019. It has also jumped from December’s low of $318. This surge makes it one of the best-performing commodities in the financial market. 

The main reason why orange juice is soaring is that the industry is going through a substantial supply squeeze because of weather and other natural factors. 

Most of these gains started in 2017 after Hurricane Irma caused a lot of damage to many orange growers in Florida. As a result, while other states have increased production, it has not been enough to offset Florida’s plunge. 

Orange juice price chart

The most recent report by the USDA found that the US produced 42.8 million of non-Valencia boxes in 2022-2023, down from 49.9 million a year earlier. Florida’s production in this period tumbled from 18.2 million boxes to 6,150. 

The US produced 18.8 million boxes of Valencia oranges in the last season compared to 30.5 million a year earlier. Worse, the USDA expects that this trend will continue this year. In its report, it expects that Florida will produce 18.8 million boxes this year, lower than the previous estimate of 19.8 million.

There are two main challenges facing citrus farmers. First, like cocoa, citrus trees take a few years to grow and produce fruits. As a result, trees planted after Hurricane Irma will start producing fruits in the next few years. 

Second, there are signs that farmers are hesitant about growing new plants since analysts predict that future hurricanes will be severe because of climate change. 

Meanwhile, Brazil, another major orange producer is not doing well this year. The country is now emerging from major floods that have affected some planting areas. 

Worse, the country is going through an orange disease. Data shows that orange production will plunge to its lowest level in over 30 years as Sao Paolo and Minas Gerais will harvest 232.38 million boxes. 

Therefore, the outlook for orange juice is extremely bullish, with the next level to watch being at $500.

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