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Jan. 27 (Bloomberg) -- Orange-juice futures surged for the first time in four days after the U.S. disclosed it had detained imported supplies that tested positive for a banned fungicide, including from Brazil, the world’s top producer.
The Food and Drug Administration said 11 samples from Brazil and Canada, out of 80 shipments under examination, contained carbendazim at concentrations of 10 parts per billion or higher. Orange-juice futures have surged 25 percent this month, touching a record on Jan. 23, after the agency revealed it was delaying imports to conduct testing.
“The probe will continue to drive prices,” Judy Ganes- Chase, the president of J. Ganes Consulting in Katonah, New York, said in a telephone interview.
Orange juice for March delivery rose 2.1 percent to settle at $2.109 a pound at 2 p.m. on ICE Futures U.S. in New York, after gaining as much as 4.3 percent. The commodity rallied to a record $2.2695 on Jan. 23 and has risen more than any of the 18 other commodities tracked by the Thomson Reuters/Jefferies CRB Index.
Higher prices may signal increased costs for manufacturers including PepsiCo of Purchase, New York, and Atlanta-based Coca- Cola Co., which sells Minute Maid and Simply Orange brands.
The FDA began holding and testing imported juice after Coca Cola reported low levels of carbendazim in trace amounts in products from Brazil. The chemical is banned for use in U.S. oranges and has been linked to liver tumors in animals. Testing will continue through at least July.
“FDA is confident that orange juice in the United States may be consumed without concerns about its safety due to the possible presence of such residues,” the agency said today in a statement.
Global output of orange juice will fall to 2.176 million metric tons in the season that began Oct. 1, down 8.4 percent from a year earlier, the U.S. Department of Agriculture said yesterday. Production in Brazil, the top supplier of U.S. imports, will drop 14 percent from a year earlier, while the U.S.’s will gain 3.2 percent, the data show.
“Lower world supplies are working to support the market,” Jack Scoville, a vice president for Price Futures Group in Chicago, said in a telephone interview.
Brazilian exporters are asking the FDA to raise the limit for the carbendazim in juice concentrate to 60 parts per billion, Christian Lohbauer, the head of CitrusBr, the nation’s exporter association, said today on a conference call with reporters.
Exporters in Brazil would need 18 months to phase out the use of carbendazim on their crops, Lohbauer said. The association is studying substitutes and plans to meet next week with the FDA, he said.
On Jan. 12, the USDA trimmed its forecast for the orange crop in Florida, the world’s second-biggest producer, by 2 percent after a dry spell hurt fruit size. The figure did not include potential damage from frigid weather in the state’s citrus-growing region during the first week of January. The agency is slated to update its forecast next month.
--With assistance from Stephanie Armour in Washington and Lucia Kassai in Sao Paulo. Editors: Steve Stroth, Thomas Galatola
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