Top Commodities Today - Frozen Concentrated Orange Juice Outlook October-December 2015 : FCOJ futures fell 10.67% in Q1. In Q2, the selling continued, sending the price of the commodity another 5.28% lower. During Q3, after an attempt at a rally that took prices over $1.34 per pound, FCOJ shed another 10.93% of value. FCOJ futures on ICE are down 24.63% through the first nine months of 2015. FCOJ traded from a low of $1.0345 to a high of $1.48 per pound over the first nine months of 2015. FCOJ futures closed Q3 at $1.0555 per pound.
Due to drought conditions in California, orange supplies have decreased, but supplies from Brazil, the world's largest supplier of oranges, have been ample and the weakness in its currency has encouraged selling.
The price of orange juice can be very volatile. Over the past 40-plus years, FCOJ futures have traded as low as 37.4 cents and as high as $2.2695 per pound. Higher prices generally come in winter as freezes or weather disturbances cause speculative buying. FCOJ prices were above the $1.50 level last year due to an outbreak of citrus greening, a crop disease that has attacked and killed orange trees in Florida. However, demand for orange juice suffered in 2014. Both Tropicana and Minute Maid (owned by Pepsi (NYSE:PEP) and Coca-Cola (NYSE:KO) respectively) reported a decrease of 30% in orange juice sales in 2014. The lack of consumer demand came from both high historical prices as well as competition from other fruit juices and power drinks, which have become very popular, particularly with younger consumers. We are now close to long-term support on FCOJ prices.
Due to drought conditions in California, orange supplies have decreased, but supplies from Brazil, the world's largest supplier of oranges, have been ample and the weakness in its currency has encouraged selling.
The price of orange juice can be very volatile. Over the past 40-plus years, FCOJ futures have traded as low as 37.4 cents and as high as $2.2695 per pound. Higher prices generally come in winter as freezes or weather disturbances cause speculative buying. FCOJ prices were above the $1.50 level last year due to an outbreak of citrus greening, a crop disease that has attacked and killed orange trees in Florida. However, demand for orange juice suffered in 2014. Both Tropicana and Minute Maid (owned by Pepsi (NYSE:PEP) and Coca-Cola (NYSE:KO) respectively) reported a decrease of 30% in orange juice sales in 2014. The lack of consumer demand came from both high historical prices as well as competition from other fruit juices and power drinks, which have become very popular, particularly with younger consumers. We are now close to long-term support on FCOJ prices.
Frozen Concentrated Orange Juice Outlook October-December 2015
FCOJ is both illiquid and suffers from very low volumes on the futures exchange. There are many sessions when FCOJ trades fewer than 1,000 futures contracts in a day. During the coming three months, it is possible that El Nino could support prices for this thinly-traded commodity. In my Q2 report, I wrote, "...decreasing demand should eventually send prices lower to test the $1 level on active month ICE futures." On September 29, FCOJ futures feel to lows of $1.0345. The risk of short positions has increased as we are close to the target lows, and now the risk of rallies increase as weather gets colder in Florida orange groves.
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