Orange juice futures hit a record high of $4.1195 per pound, up 10% on Monday morning. The frozen orange juice concentrate has soared 388% since March 2020 as weather and disease crush citrus supply in Florida, the biggest producer of oranges in the US.
David Branch of Wells Fargo recently told Yahoo Finance that Florida’s orange crop is expected to come in around 713,000 tons, the smallest since the 1936-37 season. The US Department of Agriculture forecasts a 33% decline in citrus production for the 2022-23 season compared to last year’s crop.
“Given where current [frozen concentrate orange juice] futures are trading coupled with lower domestic supply from Florida, I don’t see prices coming down anytime soon,” Branch added.
Also, hurricanes that slammed Florida in the last few years have wrecked citrus grove production in the Sunshine State. Brazil and Mexico have ramped up citrus exports to the US in recent quarters, but new estimates show yields have been lowered due to bad weather.
For consumers who are watching OJ prices at the supermarket soar higher and higher, it could take several years for supply woes to be alleviated, according to Luis Ribera, an economist at Texas A&M AgriLife Extension Service, who spoke with Yahoo Finance.
“If you’re already part of a big player, you’re going to invest more into your orchards,” Ribera said, adding, “You would expect that in the next couple of years, things are going to get a lot better.”
We suspect hyperinflating OJ prices will result in consumer behavior to shun this breakfast staple, which could ultimately drive prices lower.