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COMMODITIES
By ALEXANDRA WEXLER
Oct. 14, 2013 7:10 p.m. ET
NEW YORK—Orange-juice futures fell Monday after U.S. retail sales of the breakfast beverage dropped
to their weakest level in at least 15 years.
Americans bought just 563.2 million gallons of the beverage in the year ended Sept. 28, according to
Nielsen data. That is the lowest since 1998-99, the oldest data available.
Analysts have said a greater variety of beverages, including acai juice and energy drinks, have taken
market share from orange juice, whose retail prices have soared.
The spread of citrus greening, a disease that chokes off
nutrients to fruit and causes it to drop prematurely from the
tree, has reduced U.S. orange supplies and helped drive up
prices even as demand has slumped. Ten years ago, the
average price for a gallon of orange juice was $4.40 a gallon.
Today, it is $6.20.
U.S. retail-sales volumes of orange juice fell to their
lowest in 15 years. Bloomberg News
Higher prices have kept revenue from orange-juice retail
sales from falling as sharply as volume has. Orange-juice
sales for the year ended Sept. 28 totaled $3.49 billion, down
5.2% from a decade ago, while sales by volume has dropped
by a third over that time.
Furthermore, traders are souring on the market. Open interest, or the number of outstanding positions in
the orange-juice market, fell to a 20-year low of 14,892 contracts Friday, data from the ICE Futures U.S.
exchange showed Monday.
"It's a bit frightening, really—these two data points, one being the open interest and one being the
consumption," said James Cordier, president of brokerage Liberty Trading Group in Tampa, Fla. "This is
what happens before markets go off the board. Orange juice could be seeing the twilight of its contract."
Orange-juice futures, which began trading in 1966, once attracted a broader array of investors and juice
processors, who for decades traded in rowdy pits on the floor of the New York Board of Trade in lower
Manhattan. The contract was immortalized in the 1983 movie "Trading Places," in which Dan Aykroyd and
Eddie Murphy foil a plot to corner the market for frozen orange juice.
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Tough Times for OJ - WSJ.com
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Orange juice for November delivery on the ICE Futures U.S. exchange fell 0.4% to $1.2590 a pound
Monday, its lowest close since Oct. 3.
Futures prices also have been suffering as traders have been liquidating bets on higher prices amid a
shortage of market-moving news. Last week, a U.S. Department of Agriculture production forecast was
supposed to give traders an idea of what to expect from the coming crop, but that report has been delayed
by the U.S. government shutdown. In addition, hurricane season is winding down and no major storms
have hit Florida, which produces about three-quarters of the oranges used for U.S. juice.
"Just the lack of news right now is part of the reason we're seeing that open-interest decrease," said Boyd
Cruel, senior analyst at Vision Financial Markets in Chicago. "People [who have] been playing the
potential for any weather threats have just gotten out of the market."
However, Mr. Cruel said the market could see some renewed interest in the next month as traders begin
to bet that a frost could damage the orange crop in Florida over the winter.
Write to Alexandra Wexler at alexandra.wexler@dowjones.com
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