Orange juice prices fall due to poor quality and demand

Orange juice prices have dropped significantly after reaching record highs last year. This decline is due to falling demand, as consumers are less willing to buy expensive and bitter juice. Futures for concentrated orange juice have fallen from $5.26 per pound in January to under $2.50 recently. The price increase last year was caused by drought and crop disease in Brazil, the largest exporter of orange juice. Now, analysts report that demand has drastically decreased. Harry Campbell, an analyst, noted that orange juice sales in supermarkets are slow. One producer shared that deliveries now come with dusters, highlighting how long the juice sits on the shelves. The decline in quality is also a factor. Trees plagued by disease are producing bitter fruit, which has deterred consumers. With lower availability, producers have had to accept all the oranges they receive, leading to a decrease in overall juice quality. Andrés Padilla from Rabobank mentioned that if the taste is more bitter, it worsens the demand problem. Suppliers normally blend older frozen juice with newer crops to maintain quality. However, three years of limited supplies have reduced their inventory. In the U.S., demand for reconstituted orange juice has dropped by over 16% this season. Brazilian experts report that the sugar to acid ratio in oranges is now below ideal levels for producing juice. A bitter compound from poor harvesting has also affected quality, making Brazilian orange juice less appealing in major markets like the U.S. and EU. Looking ahead, a larger orange crop in Brazil is expected next season, potentially increasing production by 20%. Improved rainfall may contribute to this recovery. Yet, as market conditions change, traders who invested in high prices are now selling off their positions. Despite falling futures prices, retail prices for orange juice remain high due to existing contracts made during the price surge. This situation causes consumers to see little relief at the checkout, keeping overall demand low. Analysts warn that the current state of the market is very challenging for the orange juice industry.