In its first Citrus report of the crop year that began Oct. 1, the USDA forecasts that Florida growers would reap 125 million 90-pound boxes of oranges. That would be the smallest harvest since 1989-1990, when a freeze hit the state’s groves.
Orange juice futures jumped the most in eight months after the U.S. government said that Florida’s crop, the world’s second-biggest, will shrink 6.4 percent to the smallest since 1990 after a crop disease damaged groves.
Orange juice for January delivery climbed 5.3 percent to settle at $1.315 a pound at 1:49 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since March 8. Earlier, the price reached $1.3195, the highest since Oct. 1.
While growers welcome the higher prices, orange processors and juice producers could be in a tough spot if they want to pass on higher costs to the consumer. They are already struggling with declining demand for orange juice.
Annual U.S. retail sales of the juice have fallen to at least a 15-year low, according to Nielsen data released last month. Analysts have said that orange juice, once a breakfast staple, has lost ground to a greater variety of beverages and higher retail prices could turn off even more consumers.