Orange Juice Market Shines

Orange juice prices leapt higher recently as outlooks for the Florida orange crop continue to shrink due to poor weather and crop disease.

The USDA recently reduced its estimate of the US orange crop size by 1.4 percent, partially due to weather concerns in Florida, the source of one quarter of the world's oranges. Large portions of Florida are experiencing dry conditions and temperatures recently dipped into the low 40s, both of which are placing stress on the orange trees. Furthermore, a disease known as "citrus greening" is threatening orange groves, causing trees to lose limbs and prematurely drop fruit.

On expectations for a smaller supply of oranges, the market for frozen concentrated orange juice sprang to the highest price this year on (Wednesday), reaching ($1.40) per pound. Since the beginning of the year, prices have risen by 28 cents per pound (+24 percent).

Going forward, there is little threat of a frost in Florida, removing one uncertainty from this year's crop, but analysts will continue to track precipitation and the progression of citrus greening.

Crude Oil Supplies on the Rise

As a result of extremely high US oil production (coming from new sources such as North Dakota) and struggling US demand, US crude oil supplies have risen to their highest level since 1983. Supplies are more than 10% higher than they were just one year ago. Historically, crude oil supplies peak in May ahead of summer. Nonetheless, current crude oil supplies are higher than the five-year average for May crude oil supplies.

Crude had seen some price support as traders feared that a confrontation with Iran would send crude oil prices skyrocketing. However, Iranian leaders seem more eager to come to the bargaining table as sanctions are taking their toll on the Iranian economy. Thus, the risk premium built into crude prices appears to be getting smaller.

In spite of falling prices since mid-February, it appears that many large speculators are still holding onto their record large positions in the crude oil market.

In the short term, crude rallied upward this week following the Dow Jones stock market as it made new highs. Crude oil for April delivery traded at $93.50 as of midday Friday, up $1.67 (+0.98 percent) for the week.