Orange Juice Prices Dropping for First Time in Years

?The trend toward higher orange juice prices seems to be slowing down as the price of orange juice futures in the United States dropped below $1 per pound for the first time in 2 years.

For the first time in over 2 years, the price of orange juice futures in the United States dropped below $1 per pound. The prices of frozen concentrated orange juice futures have also been dropping due to weaker market demand and ever-increasing supplies of concentrate since the price hit an all-time high in January. At the same time the sales of domestic orange rose slightly in May, breaking a four-month run of slow declines. However, retail sales of orange juice in the U.S. overall still declined over 8% for the four weeks ending this May 12th compared to the same period last year, according to the Florida Department of Citrus.

Although the rate of orange juice sales' almost always slows in direct response to any price increases, the Citrus Department reported that the average price for the most recent period increased by just 4.4 % to $6.22 per gallon, a number that was just two cents less than the record price for orange juice in the U.S. Industry analysts have put forth that some of the other factors at work include the U.S. Food and Drug Administration’s testing of all imported orange juice OJ shipments for a fungicide (carbendazim) that is no longer used here, but was still widely used until recently in Brazil, the world’s largest producer of orange juice.

The testing for carbendazim testing was covered by U.S. media, and although the FDA blocked 30 shipments of imported OJ because they contained detectable levels of the fungicide, the agency also allowed Tropicana and Minute Maid to sell juice with trace amounts of carbendazim because the levels were so low they were not considered a health hazard. Officials at the Citrus Department did acknowledge that the carbendazim controversy may have slowed juice sales, but the agency also pointed out that the recent decline from double-digit territory could be a sign that consumers are adjusting to higher OJ prices overall. Looking at the numbers from the 2011-12 citrus season shows that orange juice sales have dropped by 10.4% from the average price of $6.17 per gallon. The prices are nearly 7 % higher than those for the 2010-11 season at the same time in the seasonal cycle.

Reconstituted orange juice accounts for 38% of the market, and its sales dropped nearly 14% in May compared to just one year ago despite lower overall average prices per gallon. At the same time, the sales of not-from-concentrate (NFC) orange juice, which usually accounts for 56% of the total market, fell by just 3.3% despite a high average price of over $7 per gallon for the four weeks ending on May 12. Purchasers of reconstituted orange juice have traditionally been more sensitive to price than the consumers who normally buy only the higher-priced not-from-concentrate (NFC) orange juice and the acceptance of temporary higher prices was thought to be an indication that other factors may be working on juice consumers' minds.

Although the recent spikes in orange juice prices may have slowed sales by fractional amounts, the overall picture shows that U.S. orange juice sales were not negatively impacted over the long term, and the recent and record-breaking declines in juice prices will almost certainly be met with increased market activity going forward into mid-2012. However, there is no guarantee that lower overall orange juice prices are here to stay over the long haul, and most citrus market analysts expect any price declines to be cancelled out by price increases later in the year. In the meantime, it’s a good time to drink more orange juice.