Orange-juice futures rebounded from the biggest two-day slump since 2008 on renewed concern that a US government probe of imports from Brazil will tighten supplies. The Food and Drug Administration said it will detain all imports that contain carbendazim, a fungicide that isn’t approved for oranges in the US.
Earlier this week, the US Department of Agriculture trimmed its crop forecast for Florida, the world’s largest grower after Brazil, by 2%. The estimate didn’t include damage from frigid temperatures last week.
Futures prices jumped 9.2% in the past two weeks, and on January 10 reached the highest in almost five years. The rally may boost costs for companies including Pepsi Co, the Purchase, New York-based producer of Tropicana juices, and Coca Cola, which makes Minute Maid.
The US is testing “imports as they come in” Siobhan DeLancey, an FDA spokeswoman, said this week that “We have three preliminary test results that are negative for carbendazim. Once those results are final, we’ll be allowing the shipments to enter the country.”
Concern that the FDA probe and frigid weather in Florida will limit supplies sent futures on Jan. 10 to 2.0775, the highest since March 2007. Prices plunged 14% during the previous two days, after the exchange raised the minimum cash margin needed for speculators to post to take a futures position, and as forecasters called for temperatures in Florida to remain above freezing.
There is “no changes” to Florida’s weather in the next few days, Kyle Tapley, a meteorologist at Gaithersburg, Maryland-based MDA Information Systems, said on Friday in an e-mail. Temperatures are still expected “to remain above frost levels in the citrus belt,” he said.
Coca Cola said 11 January that it had brought the use of the fungicide by some Brazilian orange growers to the FDA attention. The Atlanta-based company said in a statement that Brazilian orange juice is safe and it will take guidance from the FDA in resolving the situation.