Orange juice. OJ. The drink that sits on the breakfast table in all the feel-good 90s movies – because a weekend breakfast (in America, at least) wouldn’t be complete without it.
But right now, orange juice isn’t so easy to get hold of. The market has been hit by bad weather and a bacterial disease (called ‘greening’) that has significantly reduced producers in the three main growing countries: Mexico, the US, and Brazil.
According to Trading Economics, orange juice has increased 202.60 USd/Lbs – or 98.16% – since the beginning of 2023, in line with benchmark tracking. And in October 2023 orange juice reached an all-time high of 431.95.
The global orange juice market is projected to grow by 2.26% between 2023 and 2027, when it’ll reach a market volume of USD $36.55 billion. But while orange juice consumers are facing significantly inflated prices, that growth may be unstable – although the surge in prices has caught the attention of investors around the world, who are turning their focus towards OJ instead of more conventional commodities.
The Guardian reported that at the end of October 2023, contracts for future deliveries of frozen concentrated orange juice on New York’s Intercontinental Exchange were selling at $3.97 per pound.
Because just like in other commodity trades, when the market is volatile it offers higher potential earnings. Securing an orange juice futures price now means traders could have an edge if prices continue to be volatile – in short, buying future stocks is a way to speculate on future price movement, and gain profit by cementing an opinion about where the market might be heading.
Yes – although not as much as in previous decades. Orange juice saw a resurgence in demand during the COVID-19 pandemic, but overall it has been on the decline – with sales in the US declining almost every year between 2004-2018. In 2013, the Wall Street Journal reported on Nielson research showing that orange juice sales had hit their lowest level in at least 15 years.
But there are signs that the market could regain growth traction. A recent report by 360 Research outlines a positive picture for orange juice, driven by growth strategies adopted by key players including PepsiCo and Coca-Cola. The US, China, Germany, South Korea and Japan are all cited as ‘notable markets’ for growth.
While short-term consumption trends seem to be falling back to pre-pandemic levels, producers and investors are banking on the potential for new markets to open up.
Investing in the orange juice market is widely accepted as a bet on climate change. There is demand from emerging markets – but growing conditions are unpredictable, so prices are highly volatile. It’s also a seasonal commodity, and just one poor growing season has a significant impact on the market.
The increase in interest from investors around the world shows that there’s potential for profitability here. But stakeholders in the market should proceed with caution – and stay on top of the latest market shifts.
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