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Orange Juice Posts Biggest January Gain Since 1981; Cotton Drops

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Jan. 31 (Bloomberg) -- Orange-juice futures rose, capping the biggest January gain in 31 years, on speculation that a U.S. probe into a banned fungicide will reduce imports as inventories ebb. Cotton declined.

Last week, the Food and Drug Administration detained imported juice shipments after 11 samples from Canada and Brazil tested positive for carbendazim. Testing will run through July. Next week, the Department of Agriculture will update its forecast for Florida’s orange crop, the world’s second-biggest grower. On Jan. 12, the agency cut its projection by 2 percent. The figure did not include damage from frost on Jan. 4.

“The USDA will cut another 1 million to 1.5 million” boxes, or as much as 1 percent from 147 million boxes forecast this month, Michael Smith, the president of T&K Futures and Options in Port St. Lucie, Florida, said in an e-mail.

Orange juice for March delivery advanced 0.1 percent to settle at $2.10 a pound at 2 p.m. on ICE Futures U.S. in New York. This month, the price surged 24 percent, the biggest January increase since 1981. On Jan. 23, the price reached a record $2.2695.

A box weighs about 90 pounds, or 41 kilograms. Brazil is the top producer.

“The $2.40 to $2.60 area would be about the top, unless the Florida crop really gets shrunk,” Sterling Smith, an analyst at Country Hedging in St Paul, Minnesota, said in an e-mail

As prices climb and Europe’s sovereign-debt crisis clouds the worldwide economic outlook, “demand destruction will begin,” Smith said.

Global inventories will decline 5.5 percent in the 12 months ending Sept. 30, the USDA said on Jan. 26.

Cotton futures for March delivery fell 1 percent to 93.25 cents a pound in New York. The fiber rose 1.6 percent in January.

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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