What’s behind the soaring price of orange juice?

Orange juice is bucking the dismal performance of most other markets with prices up more than 40% since the start of October.

andriuXphoto / Foter.com / CC BY-SA

  Orange juice futures prices began to rocket in early October when the US Dept. of Agriculture forecast output of oranges from Florida of just 80 million boxes, a 17% drop in production from last year and the smallest crop for the state since 1963. The cause is a disease called “citrus greening” has been destroying Florida’s orange groves, blocking nutrients from reaching ripening fruit, which eventually drops before it is fully mature. Although the disease has been around for many years the sharp drop in output has been seen by many that orange growers are abandoning the industry as demand for orange juice declines.

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Bacon futures: Less sizzle

This week the World Health Organisation (WHO) labelled bacon, salami and sausages as “Group 1” carcinogens, in the same category as cigarettes and asbestos. The WHO’s new labels appears to cast hamburgers as even more dangerous than was previously thought.

Despite the scary looking chart below the impact on hog futures has been quite muted. The WHO announcement could only have been responsible for that very last leg down, on the far right hand side of the chart, and this only brings hog future prices back to February 2015 levels.

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More on the potential impact of El Niño

In its latest outlook, published Oct. 1, The National Institute of Water & Atmospheric Research of New Zealand (NIWA) said the current El Niño weather pattern was tracking close to the 1997/98 El Niño, when farmers suffered through severe drought, in the strongest such weather pattern since 1950. The weather forecasters estimating that there is a 99% probability of El Niño conditions continuing over the next three months, intensifying along the way (their next update on El Niño will be published next week).

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