OJ: Here’s how it happened

In the last 15 months, frozen concentrated orange juice futures (FCOJ) have been on a tear, trading above $2 per pound, up from 85¢ in fall 2005.

But since early December, O.J. has dropped almost 13¢ and still looks overbought to some traders. Boyd Cruel, senior softs analyst at Alaron, points out that FCOJ has dropped almost a thousand points since making contract highs of $2.068 in December. He says that with no hurricanes to decimate the crop this year and no fear of freezing, the highs are already in. “It could retrace and go as low as $1.60 in February and into March,” he says, adding that if everything remains status quo, there is no reason for this market to move higher.

“The high water mark was $2.06, so we are off about 5%,” says James S. Cordier, head trader at Liberty Trading Group. “Considering the other commodities, orange juice has held up surprisingly well,” he says, noting that crude oil is currently at 18-month lows. Cordier says the fundamentals for orange juice are reassuringly strong and expects this year’s crop to come in at 130 million boxes, the smallest crop in two decades and well below the 145 million and 150 million box crops of the last two years. “Orange juice should be able to ride that fairly well,” Cordier says.

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