Orange-juice futures plunged, heading for the biggest monthly slump in more than a year, on signs of slowing demand in the U.S.
Retail sales of the juice fell 1.3 percent to 39.89 million gallons (151 million liters) in the four weeks ended June 8, the Florida Department of Citrus reported yesterday. U.S. consumers paid $6.22 a gallon on average during the period, down 1.9 percent. Stockpiles in freezers last month rose 2 percent from April to 1.04 billion pounds (471,736 metric tons), U.S. Department of Agriculture data show.
“The cold-storage report and U.S. retail sales being down are definitely contributing to the selloff,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said in a telephone interview.
Orange juice for September delivery tumbled 4.4 percent to close at $1.342 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest decline for a most-active contract since March 1. Prices have dropped for seven straight sessions, the longest slump since July, and are down 11 percent this month, which would be the most since May 2012.
Earlier today, the commodity touched $1.3255, the lowest for a most-active contract since April 1. Trading was 156 percent above the average for this time in the past 100 days, according to data compiled by Bloomberg. Prices have tumbled as much as 15 percent since touching a 13-month high on May 30, after a drought and a citrus disease eroded prospects for the orange crop in Florida, the world’s second-largest producer.
While fruit output will drop this year, juice supplies will remain ample unless the state’s groves are hurt by severe storms, Shaffer said. The hurricane season starts this month.
Weather models indicate a hurricane is unlikely until at least late July, said Donald Keeney, a meteorologist at MDA Information Systems Inc. in Gaithersburg, Maryland. In the season that started Oct. 1, Florida may collect 134 million boxes of oranges, down from 146.7 million a year earlier, the U.S. Department of Agriculture said June 12.
“A lot of funds are likely taking their profits and won’t re-enter the market until we see a hurricane threat,” Shaffer said.
Hedge funds and other speculators cut their net-long position, or bets on price gains, by 9.3 percent in the week ended June 21, government data show. A week earlier, the holdings were the most-bullish since February 2012.