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In our October 12th issue, in both issues in December and in the January 11th issue we laid out the potentially bullish forces at work for the orange juice market. Cold weather in Florida with temperatures below 28 degrees should have put a dent in the Florida OJ crop and should provide support for another leg higher into the spring. Traders see losses of 2-10 million boxes from the freeze, which should help tighten the situation further. The USDA’s January production forecast came in at 135 million boxes, unchanged from December. This is down from 162.4 million for 2008/09 and 170.2 million for 2007/08. Shaving off more production in a period of rising demand should help hold the trend up. We continue to believe that there is more to this bull market than the normal buying ahead of the freeze season.

If we continue to see signs of improving demand for juice in the US and an expanding global economy, the OJ market is likely to need sharply higher prices just to encourage future growth in production. Indeed, the H1N1 virus may have sparked a more permanent shift in consumer demand. The enclosed chart shows a long term bearish demand trend for orange juice, but there has been an improvement from the last few years and higher lows in sales. This could be indicating a shift to higher demand ahead.