Orange juice futures soared Friday as Hurricane Katia headed toward Mexico, one of the most important growing regions for oranges used in concentrated juice.
Frozen concentrated orange juice for November delivery was up 4% at $1.5225 a pound on the ICE Futures U.S. exchange, on track for its highest close since May 2.
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Orange juice futures have surged 12% this week with hurricanes threatening key growing areas for juice. In addition to Katia, Hurricane Irma is headed toward Florida, which is home to the most oranges used in U.S. juice.
Florida's oranges are mostly used in the not-from-concentrate market and have become less relevant to the frozen concentrated orange juice market as supplies there dwindle due to an incurable disease that causes fruit to drop before it is ripe and that has invaded 100% of groves.
"There's a whole lot of fear out there," said Brandon Saltmarsh with HomeMaker Juice in Florida.
According to the National Hurricane Center in Miami, Katia is expected to produce total rainfall accumulations of 10 to 15 inches over northern Veracruz, where half of Mexico's oranges are produced. Mexico is the third largest orange juice producer in the world.
The hurricane center said in some instances 25 inches of rain could fall in Veracruz, eastern Hidalgo, Puebla and San Luis Potosi.
"Damage to citrus, rice, and sugarcane production areas is expected in central Veracruz, but mostly near the coast and close to the center of the storm. Damage to crops and property are not expected to be widespread or horrendous, but some losses are expected," World Weather Inc. said in a note.
Meanwhile, in Florida, Mr. Saltmarsh said that with people preparing for the onslaught of Irma, stores across the southeast were ordering extra supplies of juice but he said logistics have been difficult as many carriers didn't want to enter Florida out of fear that they wouldn't be able to get out along crowded evacuation routes.
The U.S. Department of Agriculture is expected to put out its first estimate for the 2017-2018 Florida crop next month. Last year's final estimate of 68.7 million boxes was the lowest output since 1964.
Meanwhile, Brazil, the world's largest grower, has stepped up production. Brazilian fresh orange production is forecast at 471 million boxes, up from 352 million in 2016-2017 and the highest total since 2012-2013.
In other markets, raw sugar for October was up 1.1% at 14.19 cents a pound, cocoa for December rose 0.5% at $1,914 a ton, arabica coffee for December rose 0.89% at $1.302 a pound and December cotton was up 1.4% at 75.32 cents a pound.
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(END) Dow Jones Newswires
September 08, 2017 12:17 ET (16:17 GMT)