Like having a morning fix of orange juice or coffee? Get ready to pay up.
The orange crop in Florida is poised for a historically low harvest following a bacterial disease, and analysts say this is causing prices to shoot up. The disease, known as Citrus greening, has been cutting off nutrients to the fruit and causing oranges to drop from the trees prematurely. This presents a major issue for supplies, since the 6,000 citrus growers in Florida supply oranges for 56% of the orange juice consumed in the U.S., according to the Florida Department of Citrus.
Traders will have to wait until October for the first U.S. Department of Agriculture's orange-production forecast for the next crop year, but things are looking bleak. The USDA's final 2013-14 estimate of 104.4 million 90-pound boxes was the lowest output in 29 years, and another small harvest could push prices higher. Orange juice futures are up 5% since the start of 2014.
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Growers are also up against shrinking demand. Recent data from Nielsen and the Florida Department of Citrus shows consumers are losing their taste for the citrusy beverage. In the four-week period ending August 2, sales were down 9.2% from a year ago.
The average retail price of a gallon of orange juice rings in at $6.44, according to Nielsen data. The price is up 4.1%, year over year.
Making a switch to coffee isn’t likely to save consumers any money, as arabica coffee futures are up more than 70% year-to-date. Back in June, popular coffee chain Starbucks announced that they would be raising prices on some drinks by 5 cents to 20 cents, as well as a $1 increase for the price of packaged coffee that it sells to grocery stores.
Coffee prices have taken another leg up recently, as traders worry that crop damage from a January and February drought in Brazil may be worse than previously forecast. Futures shot to a three-month high of $2.07 earlier this month.
Corn, on the other hand, continues to sit near four-year lows as the Pro Farmer Midwest Crop Tour officially kicked off earlier this week. Participants in the tour annually travel across fields in the Midwest to get a closer look at the corn and soybean crops. After a very good growing season across the Corn Belt, farmers are expected to post a record harvest, pushing down prices more than 20%. The USDA said last week it expects corn production in the U.S. to top 14 billion bushels, above last year’s historic harvest of 13.93 billion.
“A lot of people thought we’d never see corn below $4 (a bushel),” said Angie Maguire, vice president of Grains for Citizens Elevator, a full service agriculture retailer in Charlotte, Michigan. Traders and farmers will continue to keep a close eye on the crop tour, as the next big USDA yield report doesn’t come out until October.