Consumers Seek Healthy, Long-Lasting Foods
The price of orange juice has increased by 30% since January. Demand for Vitamin C-rich foods has skyrocketed as consumers try to stay healthy during the COVID-19 pandemic. Additionally, this year’s orange crop is projected to be smaller than usual. The combination of increased demand for orange juice and lower supply of oranges is driving OJ prices to record highs.
The orange juice industry has faced challenges over the past decade as people have become more wary of sugary drinks. However, OJ is regaining popularity both because of its high Vitamin-C content and because it lasts longer than fresh fruit. At a time when people are visiting the grocery store less frequently to avoid the risk of infection, demand for foods with longer shelf-lives is up.
Orange Grove Conditions in Florida and Brazil
The spike in demand for oranges has been so rapid that farmers may not be able to keep up. This year, orange groves are set to produce about 1.6 million metric tons of crops. A decade ago, when orange juice was more popular, a typical harvest was 2.5 million tons.
The orange industry is also looking toward what is projected to be a difficult hurricane season in Florida, an important orange-growing region. Brazil, which is also a key orange producer, has already seen its crop damaged by bad weather conditions, pushing the yield to one of the country’s lowest in two decades.
Despite rising prices, Americans are still eager to stock their fridges with orange juice. Between mid-March and mid-April, Americans bought 44 million gallons of OJ—a 46% jump from the same period last year.
Because of the supply-demand imbalance, orange juice futures traded in New York have increased by about 27% so far this year. The market could see orange prices climb above 2016’s record of $2.35 per pound.
So far this year, orange juice has been the world’s top-performing commodity. Investors will be carefully watching growing conditions and trends in demand to see if OJ prices will continue their upward climb.
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