Yahoo Finance Orange juice prices are soaring. Don’t expect relief anytime soon.
Another breakfast staple is getting more expensive.
Orange juice future prices (OJ=F) hit a record high at $3.56 on Tuesday after hitting a record closing high of $3.55 on Sept. 27. Since 2020, the cost of frozen orange juice concentrate has soared 270% as weather and disease put citrus in short supply.
Florida, the biggest producer of oranges in the US, has been hit especially hard due to the impact of Hurricane Irma and Hurricane Ian in 2022, a freeze last January, and the spread of citrus greening, a bacterial disease transmitted by the Asian citrus psyllid insect.
Florida's orange crop is expected to come in at 713,000 tons, the smallest since the 1936-1937 season, David Branch of Wells Fargo told Yahoo Finance in an email. Overall, the US Department of Agriculture (USDA) expects a 33% decline in citrus production for the 2022-2023 season compared to the prior crop year.
"Given where current [frozen concentrate orange juice] futures are trading coupled with lower domestic supply from Florida, I don’t see prices coming down anytime soon," Branch added.
On top of the domestic supply issues, similar impacts from citrus greening and weather have been felt in Brazil, the world's top orange juice producer, and Mexico, the third-largest producer.
"It was [a] dry season [and] it didn't rain that much, so that also added to the low productivity in Mexico," Luis Ribera, an economist at Texas A&M AgriLife Extension Service, told Yahoo Finance over the phone.
Unlike egg prices, which rose sharply this year due to an avian flu outbreak and then plummeted months later, orange production returning to previous industry levels will take more time, especially in Brazil.
"Basically four of every five cups consumed comes from Brazil," Ribera said. "They don't believe that they can recover until the next couple of years. Next year is still going to be low."
However, experts are looking into solutions for the issues, especially when it comes to citrus greening.
In 2022, Purdue University’s Kurt Ristroph received a $1 million grant from the USDA’s National Institute of Food and Agriculture to develop a plant drug delivery system to help plants fight off the disease. Ribera also noted that producers are trying alternative solutions, including fumigation, planting different varieties, and gene editing.
"But so far, there hasn't been a proven solution yet," he said. "The best thing that they can do is to try to take care of their orchards with more fertilization and fumigation."
For consumers who are puckering at the high cost of OJ, prices will improve over the next several years, Ribera said.
"If you're already part of a big player, you're going to invest more into your orchards," Ribera said. "You would expect that in the next couple of years, things are going to get a lot better."
Although orange juice demand tends to remain relatively stable amid price fluctuations, consumer behavior could also eventually drive prices lower.
"Eventually, it is going to affect demand and demand is going to go down, which is going to put pressure for the price to go down as well," he added.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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