Orange juice spikes

2013-06-01T00:00:00Z Orange juice spikesWalt Breitinger Times Columnist nwitimes.com
June 01, 2013 12:00 am  • 

As hurricane season looms, orange juice prices have risen sharply on speculation that storms could cut into orange production.

Scientists at the National Oceanic and Atmospheric Administration have projected a hyperactive hurricane season, increasing the likelihood a major storm could damage Florida orange groves. Florida is the world’s second-largest orange-producing region, second only to Brazil.

Even without hurricane damage, there are concerns Florida’s crop will fall short due to citrus greening, a disease that is causing trees to prematurely drop fruit. Since last October, the USDA has downgraded its estimate of the size of Florida’s orange crop by more than 10 percent, helping to lift prices higher. During that same period, futures prices have risen by more than 50 cents per pound (up 48 percent). As of Friday morning, frozen concentrated orange juice for delivery in July was worth $1.55 per pound, the highest price in more than a year.

China loves pork

China’s insatiable appetite for meat was further exemplified this Wednesday when a Chinese meat processor tendered an offer for Smithfield Foods, the world’s largest pork producer. This purchase, if consummated, would be the largest Chinese takeover of an American company -- representing an expansion of China’s commodity control beyond metals and energy.

China is the second-largest importer of U.S. pork, second only to Mexico, and this deal is expected to give the Chinese greater access to American meat production. China currently consumes nearly half the world’s swine population, and demand for meat continues to rise in that nation as it industrializes.

Hogs for June delivery traded over 95 cents per pound this week, the highest price in more than 10 months.

Interest rates rise

To stimulate the economy, the Fed has been pulling interest rates lower over the past few years, dropping short-term interest rates near zero and pushing long-term rates, like mortgages to extreme low levels. As financial markets prepare for the U.S. Federal Reserve to begin reducing its multiyear stimulus effort, interest rates have been climbing. Over the last six months, interest rates have rebounded, with the average 30-year mortgage rising to 4 percent from 3.5 percent.

The Federal Reserve is not guaranteed to withdraw stimulus in the coming months, so many traders are closely watching Fed statements and economic data to discern if and when stimulus may stop.

Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. He can be reached at (800) 411-3888 or indianafutures.com. This is not a solicitation of any order to buy or sell, nor does it provide any recommendations regarding the market.

Copyright 2014 nwitimes.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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