By
Svetlana Soroka
April 16th, 2024
Crop commodities, including orange juice, are bullish following several underperforming weeks and could hit record highs May-ending.
Orange Juice futures climbed 29% this year and is fully recovering following the volatility that succeeded its record highs. The world benchmark FCOJ (Frozen Concentrated Orange Juice Futures) contract remains firmly rooted among raw materials with double-digit gains for 2023. Amid this development, agriculture-focused financial services provider Rabobank noted that FCOJ bulls could shoot for a new $3 record high. However, Rabobank also cautioned that this potential bull rush could trigger another price fall in the global frozen concentrated orange juice market.
Rabobank ascribed this year’s record-high orange juice prices to a tight market with less-than-anticipated production and low inventories. However, the agriculture-based financial platform believes the decline in the commodity’s demand will accelerate in 2023 amid soaring prices and waning consumer demand.
Crop commodities are pressing ahead with momentum, unaffected by the ongoing US banking and debt crisis. This upswing could be due to the relatively low exposure of these commodities compared to the more popular oil and gold. The price of robusta beans is up 40% this year, while cocoa and arabica coffee are up 16% and 13% year-to-date, respectively. Furthermore, besides FCOJ, the price of raw sugar and feeder cattle are also up 29% in 2023.
Orange Juice to Revisit Record High at The End of May
An interesting point can be made in the case of frozen concentrated orange juice. The commodity is en route to ending May in positive territory following serial losses since February. When its losses began, FCOJ was trading at a record high of approximately $2.88 a pound.
The FCOJ monthly chart indicates that bulls would drive the price up to revisit its previous all-time high at the end of the month. However, the commodity’s price could tumble once more after cresting at $3, creating a rinse-&-repeat price cycle.
In Tuesday’s New York pre-trade, FCOJ for July delivery traded at around $2.68. This is higher than last week’s two-month low of $2.41.
Price Futures Group chief crop analyst Jack Scoville commented on the orange juice record high trajectory development. Explaining that FCOJ bulls seek to hike price action amid a tight production estimate in Florida, Scoville said:
“Demand is thought to be backing away from FCOJ with prices as high as they are currently, but the market has not taken any note and continues to work higher. Historically low estimates of production due in part to the hurricanes and in part to the greening disease that have hurt production, but conditions are significantly better now with scattered showers and moderate temperatures.”
The Chicago-based chief crop analyst also added that global weather favored citrus production now, including in Florida. The US southeastern state has been experiencing torrential rainfall and stormy periods. Nonetheless, Scoville remains convinced that the citrus production outlook is favorable. He pointed out that the world’s prime citrus grower Brazil also experienced rain, yet its conditions remain rated good.
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