Orange Juice Rallies as Texas Finds Citrus Disease; Cotton Drops
Orange-juice futures rose the most in a week on mounting concern that production will decline in the U.S. while a government probe slows imports. Cotton prices dropped.
Texas, the third-biggest orange grower in the U.S., today confirmed a case of citrus greening, a disease that has caused damage to groves in Florida. Last week, the Food and Drug Administration began examining imports for carbendazim, a fungicide used on fruit in Brazil, which is banned in the U.S. On Jan. 12, the Department of Agriculture trimmed its forecast of the crop in Florida.
The finding in Texas “is bullish” for prices, Sterling Smith, an analyst with Country Hedging in St. Paul, Minnesota, said in an e-mail. “These things are nasty and can cause lot of trouble.”
Orange juice climbed 3.7 percent to settle at $1.912 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest increase since Jan. 10. The commodity posted the biggest gain among the 19 raw materials tracked by the Thomson Reuters/Jefferies CRB Index.
The price is up 27 percent since the end of September, increasing costs for companies including Purchase, New York- based PepsiCo Inc. (PEP), the maker of Tropicana, and Atlanta-based Coca-Cola Co. (KO), which sells Minute Maid.
The FDA said it will hold imports through July while more samples are tested.
‘Elevated Prices’
Citrus greening in Texas, lower output in Florida and the fungicide probe will “keep prices elevated throughout most of the next few months,” Michael Smith, the president of T&K Futures and Options, Inc. in Port St. Lucie, Florida, said in an e-mail.
The Texas Department of Agriculture said a case of citrus greening, transmitted by an insect called psyllid, was confirmed in a commercial orange grove in San Juan. A portion of Hidalgo County was under temporary emergency quarantine, it said.
Brazil is the world’s top orange grower, followed by Florida.
Cotton futures for March delivery declined 0.7 percent to close at 97.53 cents a pound on ICE. The fiber has climbed 6.2 percent this month.
Farmers in Argentina, Paraguay and Brazil will lose cotton output after a prolonged dry spell damaged some crops, according to Gaithersburg, Maryland-based MDA Information Systems.
To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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