The Tribune

By CHRIS ILLING

CCO @ ActivTrades Corp

Global stocks of orange juice have shrunk significantly, and raw material costs are rising. Consumers must be prepared for price increases for their most popular drink.

According to experts, orange juice is currently scarcer than it has been for a long time. Consumers worldwide will therefore have to prepare for price increases in the coming months.

The industry is suffering from poor harvests in numerous regions plus falling stocks of orange juice concentrate in Brazil, the most important supplier country. Orange juice concentrate is currently several times more expensive than usual on the commodity futures exchange in the US.

Orange juice futures - contracts to buy and sell orange juice – have almost doubled to $2.60 per pound over the last year, up from $1.40 a year ago, leading to price surges in stores.

This season, the US agriculture department predicts the state will produce 16m 90-pound boxes of oranges, a 61 percent drop compared with last season when the state produced 41m boxes. It is a worrying decrease but nothing compared with the fall from its peak in the 1990s, when the state was producing 200m boxes a year.

Orange juice concentrate prices are at record levels. And there is currently nothing to buy, as the markets have been swept empty.

According to the latest market report from the US Department of Agriculture, global orange production in the 2022-2023 marketing year is likely to be 5 percent below the previous year’s level. The slumps in the US, where production is likely to fall to its lowest level in more than 56 years, are particularly severe. The main reasons for this are the spread of a plant disease - the so-called citrus greening - as well as the effects of hurricanes on harvest volumes. But also in Brazil, the largest producer of oranges, and in Europe, bad weather had a negative impact on harvest volumes.

According to estimates by the US Department of Agriculture, global orange juice production is likely to fall by 7 percent. The stocks of orange juice concentrates in Brazil, from where 90 percent of European Union (EU) imports originate, are lower than ever before.

With a per capita consumption of 7.4 gallons of fruit juice and fruit nectar annually, consumers in Germany are world champions when it comes to fruit juice consumption. Their favourite in recent years has always been orange juice. In 2021, Americans consumed roughly 4.8 gallons of juice per year, and 2.2 gallons of it was orange juice. The price increases have been capped by a drop in demand, especially after the pandemic, causing consumers to look at other options such as apple juice, non-fruit beverages and flavoured water. The savvy investor has to consider a broad spectrum of influences on the price of our beloved orange juice.