Orange-juice futures plunged to a 17-month low as speculators unwound bullish bets and U.S. consumer demand dwindled.
Hedge funds and money managers cut net-long positions by 33 percent in the two weeks ended April 3 to the lowest since at least December 2009, government data showed on April 6. Consumption has declined as part of “a longer-term trend” amid competition from other fruit juices and drinks, Joe Glauber, the chief economist for the U.S. Department of Agriculture, said today in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.”
Futures have plummeted 35 percent from a record $2.2695 a pound on Jan. 23. Groves in Florida, the world’s second-biggest citrus grower, avoided freezing weather in the first quarter, and concerns eased that supplies would be disrupted by a U.S. probe of imports containing a banned fungicide.
“This market has nothing bullish going for it,” Michael Smith, the president of T&K Futures & Options Inc. in Port St. Lucie, Florida, said in a telephone interview. “Demand is weak, and unless we get a huge weather event, this market could go down to $1 by the end of the year.”
Orange juice for May delivery fell 3.8 percent to settle at $1.4695 a pound at 2 p.m. on ICE Futures U.S. in New York. Earlier, the price touched $1.4365, the lowest for a most-active contract since Oct. 14, 2010.
A cut by the USDA in its forecast for the Florida crop failed to bolster prices. The state’s output will be will be 1.4 percent smaller than projected a month earlier following adverse weather, the agency said.
Net-long positions fell to 5,879 futures and options contracts on April 3 from 8,764 on March 20, Commodity Futures Trading Commission data show. U.S. retail sales slumped 12 percent to 41.2 million gallons in the four weeks ended March 17 from a year earlier, the Florida Department of Citrus said last week.
The U.S. Food and Drug Administration said yesterday that it has detained 30 orange-juice shipments since January after samples tested positive for carbendazim, the banned fungicide. Fourteen of the shipments halted were from Brazil, the top producer.
A Brazilian industry group said in February that producers will stop using the fungicide.
The FDA has been testing imports and domestic supplies for carbendazim, which has been linked to liver tumors in animals. Futures rose to the record amid concern a citrus-greening disease in Texas and a drop in imports would reduce supplies.
PepsiCo Inc. is the maker of the Tropicana orange-juice brand, and Coca-Cola Co. sells Minute Maid.
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