Following the aftermath of Hurricane Milton, orange juice futures have seen an upward trajectory for two consecutive days, influenced by the anticipated reduction in Florida's orange production. The hurricane's passage through key citrus-producing areas in Florida resulted in significant fruit loss and damage to citrus trees. Industry consultant Judy Ganes estimates the loss at over three million boxes of oranges, forecasting that the upcoming Florida harvest could be the lowest since the late 1920s.
In response to these developments, the most active orange juice contract experienced a 3.3% increase in New York. This surge comes after prices reached a record high last month, driven by global supply constraints and a severe drought in Brazil, the leading orange exporter. Florida, recognized as the foremost producer of oranges for juice in the United States and ranking second in overall orange production behind California, was already facing challenges from citrus greening disease and the impacts of Hurricane Ian two years prior.
The recent hurricane and a disappointing forecast for Florida's orange crop have compounded these challenges. The U.S. Department of Agriculture's initial forecast for the 2024/25 crop year, released before assessing Milton's damages, projected the state's orange production at 15 million boxes, marking the lowest output since 1933. Furthermore, the USDA report highlighted a lack of improvement in fruit size, a critical indicator of crop health, with greening disease often leading to smaller oranges. Ganes noted the industry's hopes for better fruit sizing and reduced drop rates were not met, as evidenced by the increased number of pieces needed to fill a box.
Source: BNN Bloomberg