Orange-juice futures climbed to a seven-month high on speculation that damage to citrus groves from dry weather in Florida, the world’s second-largest grower, will be more extensive than the government forecast.
Precipitation in the state will be below normal during the first half of January, Donald Keeney, a senior meteorologist at MDA Information Systems Inc. in Gaithersburg, Maryland, said today in an e-mail. On Dec. 11, the U.S. Department of Agriculture cut its forecast for Florida output by 5.2 percent.
Dry weather is causing fruit to spoil as it drops from trees at the highest rate in 43 years, the USDA said, citing data for non-Valencia oranges, which include early, mid-season, and navel varieties. Prices rose 12 percent in seven sessions, the longest rally in three months, signaling higher costs for PepsiCo Inc. (PEP:US)’s Tropicana juices and Coca-Cola Co.’s Minute Maid.
“The drier outlook over the next two weeks may be enough to hold the market up,” Sterling Smith, a market specialist at Citigroup in Chicago said in a e-mailed report.
Orange juice for March delivery rose 1.1 percent to settle at $1.40 a pound at 1:50 p.m. on ICE Futures U.S., after touching $1.41, the highest for a most-active contract since May 1. The rally during the past month has pared this year’s decline to 17 percent.
While normally 255 pieces of fruit would fill a 90-pound (41-kilogram) box, it may take as many as 300 this year because the lack of sufficient rainfall yielded smaller oranges, Jerry Neff, a branch manager at Allendale Inc. in Bradenton, Florida, said in a telephone interview.
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