Orange Juice Derivatives

June 03, 2008


Citrus Production: May 1, 2008 - All Oranges




On a global basis, after Brazil, Florida is the world's second-largest producer of orange juice. And, since Brazil produces when the U.S doesn't, and vice versa, together they constitute a year-round market.



Source: Foreign Agricultural Service, Official USDA Estimates


One metric ton of 65 degrees brix[2] equals 344.8 gallons at 42 degrees brix and 1,405.88 gallons at single strength equivalent for 2006/2007 and earlier. For 2007/08 one metric ton of 65 degrees brix equals 344.8 gallons at 42 degrees brix and 1,392.6 gallons at single strength equivalent.

However, while the U.S. drinks, imports and exports orange juice, Brazil drinks very little of its own juice and exports the rest. It imports no orange juice. Brazil is both a big exporter to Europe and a primary juice supplier to China.




Source: Foreign Agricultural Service, Official USDA Estimates


Of the 905,000 metric tons of orange juice consumed domestically in the U.S. in the marketing year 2007-8, over 30% (273,000 metric tons) was imported.



Source: Foreign Agricultural Service, Official USDA Estimates



FCOJ only truly arrived commercially in the mid- to late-'40s, revolutionizing the world of orange juice. The catalyst was a patent issued to Florida researchers for the process to manufacture FCOJ with the addition of around 10% fresh juice to the final product.



Source: University of Florida - Florida Cooperative Extension Service


FCOJ's popularity lies not only in its having a relatively good juice flavor, but also in its ease and convenience, when contrasted to hand-squeezing. As important, FCOJ can stay frozen until needed and is easily transported.

As with any agricultural commodity, weather is the main factor in determining the price of FCOJ. Frosts, freezes (a drop in temperatures below 28˚F for four hours or more will damage Florida oranges) and hurricanes in Florida, and droughts and dry weather in Brazil all have a significant bearing on FCOJ production and price.

FCOJ Futures

FCOJ futures were launched on the NYBOT in 1966, with options on such futures following in 1985. The standard FCOJ contract is for 15,000 lbs of orange solids (3% more or less) with settlement by physical delivery in either tanks or drums.

Although not extraordinarily great, there is depth to orange juice futures. This year (to May 9), the NYBOT has recorded a total volume of 251,179 futures contracts traded, an average daily total volume of 2,955. Figures for options on futures were 92,480 and 1,088, respectively.

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