You might need to soon kiss your morning OJ goodbye.
Orange juice prices have seen an uptick in recent months as Florida’s citrus production took a significant hit due to Hurricane Ian and a persistent bacterial disease affecting citrus trees. Experts point to these factors as the key drivers behind the decline in orange yields in the Sunshine State.
According to the US Department of Agriculture’s final estimate for this season, Florida’s orange yield is expected to be 43% lower than initially projected. Originally anticipated to produce 28 million boxes of oranges, the state is now forecasted to supply only 15.8 million boxes, significantly impacting the overall U.S. orange production.
This downturn in production has already resulted in price increases at grocery stores. The cost of orange juice concentrate, for instance, rose from $2.89 in July 2022 to $3.36 this July, according to the U.S. Bureau of Labor Statistics.
Marisa Zansler, director of economic and market research at the Florida Department of Citrus, noted that while consumers have shown a willingness to pay for orange juice so far, continued price hikes could change that sentiment.
The decline in orange production is attributed to a series of natural disasters. Hurricane Ian struck in September 2022, affecting major growers early in the season by causing fruit loss, tree damage, and flooding. Subsequent storms, including Hurricane Nicole in November 2022 and a winter freeze in January 2023, exacerbated the situation.
Florida’s citrus industry has also been grappling with citrus greening disease for the past two decades, which has weakened and killed many citrus trees. The damage from Hurricane Ian further hampered the recovery of replanted trees that were replacing those lost to Hurricane Irma in 2017.
This year’s decline in Florida’s orange production is significant, with California, the country’s second-largest orange producer, expected to surpass Florida’s output. While growers face significant challenges, they remain optimistic, with ongoing research into therapies to combat citrus greening disease and the planting of disease-resistant trees offering hope for future seasons.
However, the economic impact on Florida is substantial, with the citrus industry contributing approximately $6.9 billion to the state’s economy in a typical year. The full extent of losses from this season is yet to be determined, but the impact is expected to be substantial.
Brazil stockpiles at a record low
Florida’s not the only one feeling the pain of climate change and citrus greening disease.
Brazil, the world’s top orange juice exporter, reported in late August that its stockpiles have fallen below a 12-year record — signaling the beginning of a global shortage. Brazil ended its season with 41% less juice in storage compared to the same period last year.
The current shortage, and the likelihood that this year’s hurricane season could once again ravage Florida’s crops, causing even more shortage, has pushed orange juice futures to trade significantly higher this year.
“It does spook traders,” Judy Ganes, a consultant who has followed the industry for about three decades told Bloomberg in August.
Analysts expect continued supply issues and soaring prices to crush demand as the world continues to grapple with the rising cost of goods.
Information for this story was found via Bloomberg, the Tampa Bay Times, X, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.