Orange juice futures have hit record highs because of hurricanes and a citrus disease that destroyed crops in Florida, leading to higher prices in the grocery store.
In recent weeks, prices in the orange juice futures market hit $3 per pound, a jump from $1.81 per pound around the same time in 2022.
Skyrocketing citrus prices have also been fueled primarily by worldwide supply shortages.
A Series of Catastrophes Hits Florida’s Citrus Crop
Damage from hurricanes Ian and Nicole in the fall of 2022, plus a late freeze later that year, devastated crops already thinned by citrus greening that inhibits key nutrients to orange trees.
Trees that were hit with the disease produced fewer, lower-quality oranges that were unfit for consumption.
The Asian citrus psyllid, the insect which has been spreading the disease, which was first detected in Florida in 2005 and spread rapidly across the peninsula.Citrus greening “has proven to be citrus growers’ greatest challenge,” said Mathew Joyner, CEO of Florida Citrus Mutual, a trade association, in a note.
The U.S. Department of Agriculture (USDA) predicted last December that Florida would only produce 20 million boxes of oranges during the 2022–23 season.
That would have been a 51 percent decline from the previous year and the smallest level produced since the 1936–37 season.
The orange forecast had fallen even further by last month, when the USDA published a report saying that it expected Florida to produce 15.9 million boxes in 2022–23, well below the December estimate.
“It’s really a sad and perfect storm of what’s hitting the industry,” said Billy Roberts, senior analyst for food and beverage at CoBank.
Mr. Roberts said that since domestic shortages failed to improve—and even worsened this year—traders began to take into account the low supply.
Rising orange prices are “partially a realization of just how impacted the conditions have been,” on top of other production costs, he said.
Latin American Exports Affected by Bad Weather
Meanwhile, Brazil and Mexico, the two other major exporters of oranges, are having problems with their respective crops due to bad weather.
“The Brazilian orange crop itself is expected to come in a little bit lower,” said Mr. Roberts, adding, “those Brazilian crop numbers coming in, I think, have caused a bit of concern around the industry.”
After the Florida crop failures, the U.S. market is increasingly dependent on international exporters like Brazil, wrote Andrés Padilla, a senior analyst with Rabobank, in an April note.“Record-high orange juice prices in 2023 are a consequence of a very tight market, with smaller-than-expected production and low inventories,” he said.
At the same time, Mexico’s crop has suffered in recent years because of drought, Jack Scoville, vice president at the Price Futures Group and an agricultural products analyst, told CNN.
Orange Juice Price Gains Dampened by Lower Demand
Mr. Scoville said that rising orange futures prices could mean inflated prices for citrus products at the grocery store.
“There could be some more price increases coming [in] retail,” he said, as there is always a lag between prices in wholesale and retail.Still, prices also depend on consumer demand, not just supply, as orange juice consumption has dropped since a brief surge in consumption during the pandemic because it was a natural source of vitamin C.
Also, consumer preferences have steered many away from orange juice for years due to its high calorie count and sugar content.
Orange juice is facing competition from beverages that offer other health benefits or an energy boost.
