Commodities: Orange Juice

Prior to 1945, orange juice was always freshly-squeezed – something that left the commercial orange juice industry susceptible to supply shocks due to the highly perishable nature of the juice. The invention of frozen concentrated orange juice (FCOJ) in 1945 – and the increase in home refrigerators – opened the gates to an international marketplace. Frozen concentrate remained the most popular form of juice until 1985, when reconstituted and not-from-concentrate juices overtook the frozen type.

Contract Specifications

Production        

Typically, orange trees take about four years to bear fruit and eight years to reach their prime. Trees can remain productive for 20 to 25 years. Brazil and the U.S. are the world’s largest producers of orange juice (Brazil surpassed Florida as the dominant producer years ago), followed by Mexico, the European Union, China and South Africa.

Price Drivers

One reason Brazil was able to overtake the U.S. as the top orange juice producer is weather: Florida’s frosts and hurricanes can result in lower outputs and reduced long-term productivity of the trees. Factors that influence orange juice prices include:

• weather, especially cold/frost
• shipping and production costs
• food-safety concerns (such as when Brazil’s orange juice supplies were tainted with fungicide)