Last year at this time, frozen OJ futures were at the beginning of a 7-month rally.  Global production had continued to declined since citrus greening and citrus canker have been ravaging crops in Brazil and Florida.  The only way to treat infected trees is to remove them and others within a 1 mile radius. Therefore, global acreage has dropped. Hurricane Matthew and Hermine also provided a speculative boost in prices last year, due to worries of storm damage.

OJ Price Reversal

Now it appears that the nonexistent demand is the dominating feature in the market. Orange juice consumption has decreased in 14 of the last 15 years.  Other beverages have taken orange juice’s place in American homes. This is similar to the decline in soda consumption, as people stray from sugary drinks.

Moving Forward

Rainfall in Florida over the next couple months is very important. Drought conditions are currently present.  See the drought monitor below:drought, florida, orange, FCOJ If an El Nino develops, this typically leads to above normal rainfall. Most models forecast continued Nino 3.4 warming.  Crop damage by hurricanes are always a concern for the summer and fall.  But El Nino conditions cause increased shear, that shred tropical systems and hinder hurricane formation.  A significant drought or damage from hurricanes would be necessary to really shake the market from its current low demand/low supply see saw. Nino3.4, El Nino, SST, forecast