1 February, 2016-
The natural market reaction to the bad orange season data was bullish. Industry sources in the US say the lower forecast from the USDA was due to both the fruit being smaller than expected and the drop rate being higher than feared. For these reasons, prices for FCOJ futures briefly touched USD1.60/lb solid in mid-November – the highest price since summer 2014.
Also, some concerns about Brazil’s 2016/2017 crop have increased the price. Fruit pricing in Brazil has climbed marginally higher over the past month with volumes now changing hands for as much as BRL17.00/box, compared with BRL16.00-14.00/box at the start of November.
The high pricing is partly attributed to the weaker Brazilian real against the US dollar, but now the smaller crop in Florida is really starting to have an impact. Analysts suggest that the US will not produce any concentrate at all this season and that demand for Brazilian concentrate will be significantly higher as a result.
Exports from Brazil to the US have already shown a marked increase compared with last year, say industry sources.
It is hard to pin down pricing for Brazilian FCOJ at the moment. Some industry sources say the bigger producers are still offering around USD1800/tonne 66 brix FCA Europe in order to make it difficult for the smaller packers to operate. Others, meanwhile, say the market has already climbed to USD1950- 2000/tonne on the same delivery basis.
The supermarkets are refusing any offers based on these new price levels, particularly given the current USD/EUR rate. This means there has only been very limited trading activity over the past month. Buyers are reportedly only covered for the contracts they have already fixed with the supermarkets. There are some contracts negotiated for six months forward, but any longer term contracts have a ‘no fixed price’ clause. Most traders accept that prices will have to increase at some point though, simply due to the supply and demand fundamentals.