Orange Juice Prices Sour

Orange juice sank to the lowest price in over eighteen months on Wednesday, squeezed lower by a supply overhang and lack of investor interest in the commodity.

Prices spiked higher in January amidst concerns that a fungicide in Brazilian orange juice could halt imports from that nation. Since then, the USDA has assuaged fears, allowing the free flow of Brazilian OJ to the United States. Furthermore, this winter was relatively benign, with little damage to Florida's orange crop due to freezing, a threat that looms over the market each winter.

As a result of the healthy supply levels, prices have been sliding since January, dropping over 88 cents per pound or 38 percent. OJ prices have also been undercut by a continued decline in U.S. consumer preference for orange juice; U.S. consumption has fallen nearly 11 percent over the last year.

The orange juice futures contract is traded in New York and represents 15,000 pounds of frozen concentrated orange juice (FCOJ), equivalent to nearly 16,000 canisters that the average consumer might buy in the grocery aisle. As of midday Friday, FCOJ for delivery in May was trading near $1.46 per pound.

Looking forward, OJ traders expect few threats to the orange crop until hurricane season this summer.

Natural Gas

Natural gas prices fell to a new ten-year low on Friday, as investors continued to cool toward the fuel.

On Thursday, the natural gas market was lifted briefly by a weekly report from the Energy Information Administration that showed smaller supplies than had been anticipated, but the report was unable to generate much optimism.

With the winter heating season passing, industry experts predict that supplies will continue to build until next fall. Supply levels are currently at a record level for this time of year, and analysts worry that the record-high U.S. production levels will continue to swamp the market. Even more negative for prices are reports that gas storage facilities are almost full, resulting in even further discounting.

As of midday Friday, natural gas for May delivery was worth only $1.98 per MMBtu, down more than 30 percent this year.

Like OJ, natural gas prices can be sensitive to hurricane threats, as over 10 percent of U.S. production is located in the hurricane-prone Gulf of Mexico.