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Orange Juice

The orange tree is a semi-tropical, non-deciduous tree, and the fruit is technically a hesperidium, a kind of berry. The three major varieties of oranges include the sweet orange, the sour orange, and the mandarin orange (or tangerine). In the U.S., only sweet oranges are grown commercially. Those include Hamlin, Jaffa, navel, Pineapple, blood orange, and Valencia. Sour oranges are mainly used in marmalade and in liqueurs such as triple sec and curacao.

Frozen Concentrated Orange Juice (FCOJ) was developed in 1945, which led to oranges becoming the main fruit crop in the U.S. The world’s largest producer of orange juice is Brazil, followed by Florida. Two to four medium-sized oranges will produce about 1 cup of juice, and modern mechanical extractors can remove the juice from 400 to 700 oranges per minute. Before juice extraction, orange oil is recovered from the peel. Approximately 50% of the orange weight is juice, the remainder is peel, pulp, and seeds, which are dried to produce nutritious cattle feed.

The U.S. marketing year for oranges begins December 1 of the first year shown (e.g., the 2005-06 marketing year extends from December 1, 2005 to November 30, 2006). Orange juice futures prices are subject to upward spikes during the U.S. hurricane season (officially June 1 to November 30), and the Florida freeze season (late-November through March).

Frozen concentrated orange juice future and options are traded on the ICE Futures U.S. (ICE) exchange. The ICE orange juice futures contract calls for the delivery of 15,000 pounds of orange solids and is priced in terms of cents per pound.

Prices – ICE orange juice futures prices in early 2010 extended the uptrend that started in February 2009 at a 6-1/2 year low of 64.60 cents. FCOJ prices climbed to a 3-year high of 153.65 cents in March 2010 and then moved sideways into Q4 of 2010. FCOJ prices rallied into the end of the year and posted a 3-1/2 year high of 175.85 cents in December 2010, finishing the year up +39% at 172.35 cents. The rally in 2010 was driven mainly by the drop in Florida orange acreage in 2009 to a 24-year low as farmers cut down orange trees to stop the spread of greening disease. In addition, the 2009/10 Florida orange crop plunged by -18% y/y to a 23-year low of 133.6 million boxes.

Supply – World production of oranges in the 2010-11 marketing year rose +4.1% y/y to 51.379 million metric tons, down from the 2008-09 record high of 51.751 million metric tons. The world’s largest producers of oranges in 2010-11 were Brazil with 33.4% of world production, followed by the U.S. (15.5%), and Mexico (8.0%).

U.S. production of oranges in 2010-11 (latest data) fell -7.8% y/y to 194.200 million boxes (1 box equals 90 lbs.) Florida’s production in 2010-11 fell -17.8% y/y to 133.600 million boxes and California’s production rose +26.9% to 59.000 million boxes.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here

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