OJ Squeezes Higher, Coffee Spills Lower

This week, orange juice prices flowed to a six-month high, while jitters about coffee sank that market near a three-month low.

Frozen concentrated orange juice futures exploded after a USDA report on Thursday confirmed that Florida’s orange groves are in serious trouble. The USDA is projecting the smallest crop in 71 years after Hurricane Irma devastated a crop that was already reeling from the citrus greening disease. Some private forecasters are expecting that the crop is another 40% smaller than the USDA’s estimate, which could juice prices higher even higher than Friday’s value of $1.55 per pound.

Meanwhile, coffee prices fell as timely rains in Brazil helped boost expectations for this year’s harvest. Brazil is the world’s largest producer of the arabica coffee variety that most Americans enjoy, and outlooks for a healthier harvest there knocked coffee futures to $1.26 per pound on Friday.

For now, coffee appears to be heading lower, but buyers may perk up if they see stronger signs of demand from China in the coming years. That nation is still dominated by tea drinkers, but coffee consumption has doubled in the last five years.

**Silver Keeps Shining

This week’s slide in the value of the U.S. dollar contributed to speculation in precious metals with silver leading the way. Geopolitical turmoil in Asia, Europe and Washington D.C. provide a menu of bullish news while our U.S. Federal Reserve Board remains “dovish” regarding raising interest rates. If the Fed drags their feet regarding increasing rates, metals tend to benefit.

A round of economic news on Friday caused silver to shine; higher inflation levels, consumer optimism, and stronger retail sales all signaled a better economy and, hopefully, demand for silver.

As of midday Friday, silver was worth $17.35 per ounce, near the highest price in almost a month.

**Beans Bounce on Firm Demand

Soybean prices finally found their footing, reaching $10.00 per bushel on Friday for the first time since late July.

Farmers rejoiced as the USDA projected increasing demand for U.S. soybeans over the past few months, reducing the excess from last year, or carryover, by 12%. A relative shortage of soybeans now will increase demand for the crop and prices, a welcome relief for producers who are nearly halfway done harvesting this year’s record-breaking large crop.