Lower supply should keep prices at high levels

Orange juice prices should keep at high levels during this crop (2007/08), due to the expectancy that the global orange crop production should not be so large than it was expected. The main basis responsible for this scenario came from the first forecast released by the United States Department of Agriculture (USDA) about the Florida orange production.

It was forecasted 168 million boxes of 40.8 kilos, lower than the volume expected by the sector, between 170 and 200 million boxes. With that production, the US should increase juice imports from Brazil.

The Brazilian 2007/08 orange crop should also keep below than it was forecasted. According to the Institute of Agricultural Economy (IEA) report, published in June, the volume produced in the Sao Paulo state, main citrus global producer, should total 352.1 million boxes of 40.8 kilos, lower than the 358.6 million boxes forecasted in April. The last report does not consider the damages due to the drought.

In this context of restrict global supply, futures for frozen concentrate orange juice (FCOJ) have been increasing at the New York Board of Trade (ICE Futures). In October, the price averaged 1,950.00 dollars per ton. In the same period of Sept, the value was at around 1,800.00 dollars per ton.

In Brazil, after almost three months of drought, it rained in the orange orchards of Sao Paulo state, helping citrus growers. From now on, new blooming (regarding the 2008/09 crop) are expected to appear, especially of pera orange. Besides, the rainfalls should improve the quality of fruits.

On October 31st, pera orange averaged 12.25 reals or 7.04 dollars per box of 40.8 kilos, in tree, upping 15.46 percent in Real over Sept 28th. For the fruit delivered on citrus plant (spot market), the increase was of 6.68 percent in Real, at 10.70 reals or 6.15 dollars per box.



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