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Orange Juice – 2010.03.08

Orange Juice – 2010.03.08

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The nearby orange juice contract made another sweeping move to new highs to start the month of March. This is the latest in a series of moves dating back to lows established in mid-February 2009. The reason for this is a powerful one-two punch of increased consumer sales in the US, which shows up the accompanying chart, along with reduced production in Florida after this winter’s freeze. In February, the USDA pegged the Florida crop at 129 million boxes, down 6 million from the previous month. If production is cut another 2-3 million boxes by the USDA this week, it would take production to the lowest level in more than 20 years. The broad turn in demand is just as significant. As of January 23, 2010, sales in US retail outlets were at the highest level since January 20, 2007. This looks like a turn in an 8-10 year downtrend in sales of OJ, which may be based on a very deep shift in eating and health habits among US adults.

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