About Orange Juice (OJ)

Oranges have been a staple of the American and World diet since the end of World War II, and the advent of refrigerated shipping containers. The United States is the worlds largest producer of Oranges, and almost 80% of the United States production is turned into Frozen Concentrated Orange Juice, or FCOJ. FCOJ is the deliverable product for the Citrus Association of the New York Cotton Exchanges of the Orange Juice futures. Oranges are turned into concentrate by removing the water from the solid substance, or the natural sugar known as pack; the pack is then put into containers and frozen for easy transportation to anywhere in the world.

The US crop year for Oranges runs from December through November. Florida, the largest domestic producer of oranges, has a crop season from January through mid June or July, with a break in late February and early March. The bulk of Florida’s crop is turned into juice, because of the sweetness content and the type of oranges grown. California’s orange growing season usually runs from April through August, but the Californian oranges are mainly produced for whole consumption. Brazil, in recent years has also become a major producer of Oranges.

Like most other agricultural markets, the price of Orange Juice (FCOJ) is dependent on the crop size. The major determining factor in the yield per tree is the weather. There are two types of frosts, soft and hard, which have drastically different effects on the Orange Juice market. Soft Frosts damage the exterior of the orange, making the oranges unappealing for retail consumption. Soft frosts reduce yields slightly, but create more orange juice supply because the damaged retail oranges are sold for juice. This is especially true of soft frosts hitting the California growing region. Hard Frosts kill orange trees, severely reducing yields for years in the future, and damage the pack, or sugary meat of the orange, so the damaged fruit is unsuitable for squeezing. Hard Frosts are probably the most bullish event that can happen to the Orange Crop because the damage takes roughly five years to be undone.

National Weather Service as well as the United States Department of Agricultural are excellent sources of information on factors that may affect growing conditions and production.

The Florida Citrus Association is probably the best source of information on the demand for Frozen Concentrated Orange Juice. The Florida Citrus Association releases the movement of pack frozen concentrated orange juice from Florida to wholesalers, super market chains, and other manufacturers of food products. The federal school lunch program, and other federally sponsored food programs can have a large effect on the demand for frozen concentrated orange juice. US Exports of frozen concentrated orange juice are another excellent source of information on demand.

Like other agricultural products, the demand for frozen concentrated orange juice is affected by large macro trends such as income levels, consumer tastes, and population growth rates. The major consuming countries of frozen concentrated orange juice are the United States, England, Canada, and Europe. The growing affluence of South American and other developing countries will also be major forces effecting the demand for oranges and frozen concentrated orange juice.

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