US Faces Worst Orange Shortage Since WWII, Causing OJ Prices to Surge

by Jennifer Shea
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With Florida’s orange crop at its lowest production level in more than 75 years, the price of orange juice is set to skyrocket.

Florida is responsible for more than 70 percent of total U.S. orange production and more than 90 percent of this country’s orange juice. And last week, the U.S. Agriculture Department predicted that Florida will produce 44.5 million 90-pound boxes of oranges this year. That’s the smallest harvest since 1945, the Wall Street Journal reports.

It’s even smaller than the crop that was trashed by Hurricane Irma in 2017. And it marks the second consecutive year that Florida’s orange crop produced a smaller yield, according to the New York Post.

Orange Shortage Is Due to Citrus Greening

The source of the problem this year is not a hurricane but rather citrus greening. That’s a fatal disease that thins tree crowns, draining the trees of life. It is spread by invasive tree lice. The disease first showed up in Florida’s orange groves in 2005.

In its report last week, the USDA said this year more oranges are on the ground than is typical, and the fruit that is available is very small.

Meanwhile, citrus-bearing acreage in Florida has halved since 2001. Orange groves there have been paved over by suburban sprawl or succumbed to citrus greening disease.

Demand for OJ Had Been Gradually Declining in the U.S.

While demand ticked up during the pandemic, orange juice consumption has been in the midst of a long, slow decline as Americans opt for less sugary drinks, according to the Journal. And the supply of oranges had been falling in tandem with demand.

Still, orange supplies worldwide are a different matter. The USDA expects Brazil’s orange crop to be 12 percent bigger than last year’s, for example. That’s despite drought and frost issues in Brazil.

But that has not stopped traders like hedge funds and other speculators from betting that orange juice prices will jump even higher. They’ve set off a rally in juice futures that were already at elevated levels due to the pandemic.

“We’re seeing it’s a commodity of interest at a time like this,” Peter Mooses, senior market strategist at RJO Futures, told the Journal. “There’s a big demand for oranges.”

But Brazil, Mexico and other countries are likely to step in to offset the decline in production from U.S. orange suppliers. And that has some raising eyebrows at the recent rally in juice futures.

“The fundamentals do not support prices at these levels,” Brandon Saltmarsh, president of HomeMaker Juice in Florida, told the Journal. “There’s still too much juice in the world.”

Outsider.com