It’s not looking like a good year for America’s orange juice.
Shriveling from adverse weather and a deadly disease, Florida’s famed orange groves are projected to bear one of the smallest crops in decades, according to new government data. All this at a time when stay-at-home life during the pandemic has caused Americans to guzzle more juice from the fruit.
While it’s bad news for citrus lovers, the looming supply deficit could draw more investors and lift futures markets for orange juice.
“Bullish” numbers from Tuesday’s U.S. Department of Agriculture report should support prices, Jack Scoville, a vice president for Price Futures Group in Chicago, said by email. Demand from consumers at home “remains strong.”
Florida’s orange output will be just 54 million boxes in 2020-21, down from 56 million projected last month, and down 20% from a year earlier, the USDA said Tuesday. It will be the least fruit since 2017, and the second smallest crop since 1947. The top-growing state’s oranges are used mostly for juice production. Plantings have also plunged, with total citrus acreage last year falling to a record low in a government data series that began in 1966.
Futures in New York rose as much as 2.9% Wednesday to $1.245 a pound, on course for the biggest increase since December. The price has surged about 30% in the past year.
Orange plague
The government said high volumes of the fruit were dropping off trees due to a disease that’s now plagued the industry for years, called citrus greening. Transmitted by a tiny insect some farmers have dubbed “little monster,” the scourge has decimated groves during the better part of this century.
The weather also hasn’t agreed with the state’s orange trees. Some groves were hurt by lack of rain last year, while others are recovering from root damage caused by storm floods in recent years, according to Raymond D. Royce, executive director at Highlands County Citrus Growers Association in Sebring, Florida. The association accounted for about 13% of Florida’s total output last year.
The crop woes in Florida are compounding a global supply crunch, with both Mexico and top world producer Brazil making less.
Meanwhile, orange juice has seen a renaissance in the U.S. thanks in part to the Covid-19 pandemic. The fruit juice has slumped for years, shunned by consumers looking to cut sugar from their diets. But the raging virus and the stay-at-home life that many Americans have been forced to adopt has changed that. With health and comfort at top of mind, vitamin C has new appeal, and consumers are buying their juice mainly at grocery stores.
Coca Cola Inc., maker of Minute Maid brands, and Pepsi Co. which sells Tropicana, are key players in the segment, and the former has injected money into the sector over the past decade.
In the season beginning Oct. 1, U.S retail sales of the beverage climbed 10% from a year earlier to 95.2 million gallons, according to Nielsen data.
Even after increasing last year for the first time since 2013, the nation’s annual aggregate consumption is about half of what it was two decades ago.
Chilled Out
Americans' love for orange juice shrank in recent decade
Annual consumption, USDA
While Florida’s oranges are suffering, other citrus crops are expanding.
“There is positivity to be found elsewhere in the industry,” Shannon Shepp, Executive Director of the Florida Department of Citrus, said in an emalied statement. “Grapefruit production is up, growers continue to make great strides against citrus greening and consumers are more focused on health and wellness than ever before.”
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