From the August 01, 2009 issue of Futures Magazine • Subscribe!

Orange juice futures squeezed

Orange juice futures got squeezed throughout June before creeping back up at the beginning of July. Analysts expect orange juice to head lower in the fall.

“OJ tends to sell off now through the end of July and first week of August and somewhere in here you have to look to be a buyer,” says Andrew Waldock, principal, Commodity and Derivative Advisors LLC. “Buying OJ below 80¢ has usually been a good play.” Jack Scoville, vice president at Price Futures Group, says orange juice got into an oversold state and now we’re seeing recovery in the contracts. “We were rushing towards contract lows and that seems to have provided some support. Assuming there are no real hurricanes in Florida, it’ll be easy for the market to move back down to the 75¢ or 80¢ range sometime this fall,” he says.

Scoville says there has been a slight uptick in demand for frozen concentrate orange juice as people have moved away from fresh-squeezed orange juice to cheaper concentrate, but there’s still plenty of production available. “We should know by September whether there are any real issues for OJ moving forward. We’ll make a low sometime this fall, October or November, just before harvest, when we start dealing with the freeze season.”

Dramatic moves in OJ are usually related to potential freezes, adds Scoville. “Once we make a low in the fall, we could start to see some buying on an enhanced chance of a freeze this year.”

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