- Futures enter bear market, defying Florida crop-disease woes
- American consumers shift to broader array of beverages
The U.S. predicted Wednesday that domestic orange-juice demand will slump to the lowest in at least 30 years, as consumers shift to a wider array of beverages. Meanwhile, futures prices in New York entered a bear market, shrugging off prospects for the smallest Florida crop since 1964.
Domestic demand for the breakfast staple will drop 11 percent to 600,000 tons in the 12 months that started Oct. 1, the lowest since at least 1986, the U.S. Department of Agriculture said in a report after the futures market closed. Orange production will drop 18 percent to 4.8 million tons from a year earlier as citrus-greening disease continues to hurt groves in Florida, the nation’s top grower. The USDA had forecast the state’s harvest will be the smallest in 52 years.
Beverage choices have increased, from sports drinks to diet sodas, and high sugar content in orange juice has put off some consumers, according to Rabobank International and Euromonitor International. On Wednesday, futures settled down more than 20 percent from a high in November, meeting the common definition of a bear market.
“The problem has been the demand,” Jack Scoville, a vice president at Price Futures Group in Chicago, said in a telephone interview. “We know we have a short supply, but when nobody’s drinking OJ anymore, it becomes that much harder.”
On ICE Futures U.S., orange juice for March delivery tumbled 4 percent to settle at $1.2005 a pound on Wednesday. The price plunged 23 percent from $1.5625 on Nov. 12. The commodity fell for the ninth straight session, the longest slump since Oct. 1.
Brazil is the world’s largest citrus producer and orange-juice exporter. The USDA said Wednesday that orange output will rise 2.5 percent to 16.7 million tons.
Global orange-juice consumption will drop 4.9 percent to 1.87 million tons, and output will rise 0.6 percent to 1.78 million, the USDA said.