Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Orange Juice Still Sparkling After Drop From 5-Year Highs

By Investing.com (Barani Krishnan/Investing.com)CommoditiesApr 22, 2022 09:44
uk.investing.com/analysis/orange-juice-still-sparkling-after-drop-from-5year-highs-200516694
Orange Juice Still Sparkling After Drop From 5-Year Highs
By Investing.com (Barani Krishnan/Investing.com)   |  Apr 22, 2022 09:44
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The first weekly loss after a 30% rally over five straight weeks might not do much damage to US orange juice (FCOJ) futures, with the market’s psyche and charts pumped up by a decimated global crop and solidly supported technicals. 

Futures of frozen concentrated orange juice hovered at $1.73 a pound as the week neared to a close, after coasting to a five-year high of $1.94 on Wednesday.  

But the peak also proved to be a trigger for profit-taking as longs holding positions accumulated since the week of Mar. 4— when FCOJ traded as low as $1.36—exited for a breather, handing the market a weekly loss of nearly 5%. 

Orange Juice Daily
Orange Juice Daily

Charts courtesy of skcharting.com

“FCOJ is sharply lower on what appears to be speculative long liquidation,” Jack Scoville, chief crop analyst at Chicago’s Price Futures Group, said in a commentary on Friday, after the market plunged 11.5% over two prior sessions.

But Scoville said FCOJ’s upside appeared intact despite the cataclysmic drop. 

“Demand is being priced out of the market as the market now knows it is short oranges and short juice production,” he wrote.  

The “greening” of Florida’s oranges—a disease that affects citrus cultivars, causing tree decline—has left the crop in America’s so-called Sunshine State with its lowest production since World War II, Scoville noted. 

Brazil—the world’s biggest citrus grower—was, meanwhile, just emerging from a drought that had decimated its output as well. 

Topping those were strong technical factors in FCOJ’s favor, with “trends still up on the daily charts,” Scoville said.

Orange Juice Weekly
Orange Juice Weekly

Sunil Kumar Dixit, chief technical strategist at skcharting.com, concurred with Scoville’s outlook.  

“Orange juice faced technical resistance as is commonly witnessed once prices make a breakout,” said Dixit.

“That pushed down prices from $1.9445 to $1.6650.” 

But if FCOJ’s weekly middle Bollinger reading went to 150—at the time of writing it was at 148—it should help the market retrace this week’s five-year highs, said Dixit. 

“Real worry for the bulls would be if the weekly settlement goes below $1.70, and progressively declines to $1.63 and $1.50 over the next few weeks,” he added.

Orange Juice Monthly
Orange Juice Monthly

The rally in FCOJ futures has squeezed US beverage makers—including Minute Maid brand owner Coca-Cola (NYSE:KO) and Paris-based PAI Partners, which owns Tropicana—forcing them to pass on costs to consumers.

As one of America’s breakfast staples—along with eggs, cereal, milk and sausages—orange juice has contributed to this year’s food inflation, with supermarket prices for the beverage rising by just over 7% in the year to March to reach $7.88 a gallon, according to Nielsen research.

Prolonged US supply woes and poor Brazilian crops have reduced the global supply of FCOJ to around 1.5 million metric tons for the past two years, the lowest levels in a decade, according to estimates by Rabobank analyst Andres Padilla.

Brazil’s frozen orange juice stockpiles are the lowest since 2017, though they are equal to “almost zero” because the juice doesn’t meet industry requirements for acidity and sweetness, Ibiapaba Netto, executive director at CitrusBR, said in comments carried by Bloomberg earlier this month. 

The upcoming Brazilian crop is expected to recover since weather has been favorable, though it won’t be “gigantic” because drought effects will linger for a few years, Netto said.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold positions in the commodities and securities he writes about.

Orange Juice Still Sparkling After Drop From 5-Year Highs
 

Related Articles

Andey Goilov
The Crude Oil Market is Optimistic By Andey Goilov - May 23, 2022

By Andrey Goilov, analyst at RoboForex Early in another week of May, the commodity market is steadily rising. Brent is looking good and trading towards $113.30. Positive factors...

Ipek Ozkardeskaya
Gold Rallies, As US Dollar Falls By Ipek Ozkardeskaya - May 23, 2022 1

The week starts with an improved sentiment. The S&P 500 just avoided to close in the bear market last Friday, but the index sank its teeth into the bear zone for the first time...

Orange Juice Still Sparkling After Drop From 5-Year Highs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email