A worker separates oranges for sale at a citrus fruit farm in Pida de Gerais, Minas Gerais, Brazil, June 6, 2024.
Pedro Villela | Getty Images News | Getty Images
The orange juice industry is in trouble.
Prices for breakfast staples have recently climbed to record highs due to a perfect storm. climate driven Extreme weather, ongoing supply constraints and a citrus disease known as greening.
Prices surged late last month, driven by research center Fundecitrus warn Brazil, the world’s largest producer and exporter of orange juice, is likely to have one of its worst orange juice harvests in more than three decades.
The crisis has even prompted some orange juice makers and blenders to explore whether alternative fruits such as tangerines, apples and pears could be used to dilute the drink.
“With no short-term solution in sight and the risk of disease worsening, the situation remains serious,” Kees Cools, president of the International Fruit and Vegetable Federation (IFU), told CNBC in an email.
On September 28, 2023, bottles of Simply Orange orange juice were displayed for sale in a grocery store in Los Angeles, California.
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Frozen concentrated orange juice futures on the Intercontinental Exchange in New York closed Monday at $4.29 a pound, nearly double the price a year ago.
The benchmark contract has given up gains in recent weeks, retreating from an intraday high of nearly $5 a pound on May 28.
How is this going?
Analysts at research group Mintec said Brazil’s A huge influence in shaping the orange juice industry, it typically produces around 300 million boxes of oranges (each box weighing approximately 40.8 kg) per cycle. However, the combination of extreme weather such as floods and droughts and greening has led to a significant decline in crop yields.
Fundecitrus predicted in a report released on May 10 that Brazilian orange production will reach 232.4 million boxes in the 2024-2025 season. Compared with the previous cycle, this was a decrease of 24%.
The IFU said: “Returning to normal stock levels in Brazil will require several consecutive bumper harvests. 40% of Brazil’s plantations are affected by greening disease, and the risk of this number is increasing, coupled with unstable climatic conditions to achieve such bumper harvests The possibility is very low.
“Therefore, high prices are expected to continue. Although demand has declined slightly, it is not enough to rebalance the market,” he added.
Workers at a citrus fruit farm put oranges in baskets onto a truck for sale in Piedade de Gerais, Minas Gerais, Brazil, June 6, 2024.
Pedro Villela | Getty Images News | Getty Images
An incurable disease that causes bitter, stunted fruit known as green fruit disease, along with harsh weather conditions, is a long-term disadvantage for farmers in orange-growing regions around the world.
Greening severely hampers orange production in Florida, ‘Sunshine State’ The IFU said production has plummeted to about 17 million boxes from 242 million boxes 20 years ago.
High incidence of citrus greening disease
Andres Padilla, food and agribusiness research specialist at Rabobank, said the high incidence of citrus greening could limit productivity in the coming months.
“Citrus greening disease remains a significant threat in all producing regions, and weather fluctuations will also limit potential growth for the upcoming 2024/2025 harvest,” Padilla explain In an April research note.
Padilla said citrus growers in Brazil have stepped up their opposition to greening in recent months, noting that greening is more common in smaller groves where farmers often have limited resources and cannot do what is needed to control the disease. The speed at which infected trees are removed.
Padilla added: “Another impact of citrus greening is that farmers will have an incentive to harvest earlier, thereby reducing the likelihood of increased fruit drop, which can negatively impact fruit quality and potentially reduce juice yields.”
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