Orange Juice Surges, Cotton Ends Limit Up on Hurricane Fears

By Julie Wernau Features Dow Jones Newswires

Cotton and orange juice futures soared Tuesday as traders braced for the possibility that a second hurricane could strike the U.S. later this week in crucial growing regions for both commodities.

Continue Reading Below

Cotton for December rose 4.2% to end at 74.88 cents a pound on the ICE Futures U.S. exchange, reaching it's trading limit, and frozen concentrated orange juice for November surged 6.3% to close at $1.4515 a pound.

Hurricane Irma grew into a category 5 storm Tuesday. The storm is moving through the Caribbean, with the potential to strike the continental U.S. by the weekend. A state of emergency has been declared in Puerto Rico, the U.S. Virgin Islands and Florida.

Florida is home to the most oranges used in U.S. juice and has already struggled over the last decade with crop damage from an incurable disease that causes fruit to drop before it is ripe. The USDA is expected to put out its first estimate for the 2017-2018 crop next month. Last year's final estimate of 68.7 million boxes was the lowest output since 1964.

Meanwhile, the cotton market is still calculating the impact that Hurricane Harvey had on crops in Texas, the country's largest cotton-producing state. The Hurricane made landfall Aug. 25 as a category 4 storm and flooded the Houston metropolitan area.

Recent estimates from Texas indicate that up to 400,000 bales of cotton may have been damaged in the storm. Photographs of cotton soaking in flood water and scattered across fields have been circulating on the internet. The USDA early last month estimated that this year's domestic cotton crop will reach 20.5 million bales, the most production in 11 years.

Continue Reading Below

"We're fresh on the past week's events in Texas, and here's a hurricane that could hit the Carolinas," said Bill Nelson, senior economist at Doane Advisory Services in St. Louis. "No one wants to be caught off guard a second time."

According to the USDA, in 2016, together North Carolina and South Carolina produced 770,000 bales of cotton. News of potential damage to cotton crops comes at a time of strong overseas demand for U.S. cotton. Total commitments against the 2017/2018 marketing year are at 49% of the USDA's export target for the year.

In other markets, raw sugar for October rose 2% to settle at 14 cents a pound, cocoa for December lost 0.1% to settle at $1,946 a ton, and arabica coffee futures for December delivery slumped 0.9% to close at $1.2785 a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

September 05, 2017 16:17 ET (20:17 GMT)